It can only be a human reaction, but the fact is that we all must help ourselves, and then we must try to help others, too.  You know, make sure your own oxygen mask is on before trying to help others with theirs.  Is this not a transferable analogy?

Philanthropy When You’re Still Poor

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I’ll use the terms “poor” and “broke” here quite loosely.  You know who you are.   The way I see it, there are three ways you can help others financially:

(1) Don’t invest for yourself, but give to others.
This is the group of people who can barely make their own ends meet but you’ll see them giving away money to charities, relatives, church groups all the time.  That’s great, but it’s like negative amortization.  Your own situation will just get worse even as you give money away to others.* [*NB: this probably goes against the law of attraction, the law of gratitude, etc. etc. so adjust your expectations accordingly.]

(2) Tithe While You Invest.
This is another way of saying what most of us do: work to get ahead, but give a little back along the way.  Most of my readers are into investing for themselves, and many of you also give to your favored charities.  You’re taking care of yourself and others at the same time.

(3) Wait Until You’ve Made It and Then Give Back.
I’m not sure I know anyone specifically in this category, but we can imagine the person who focuses all their energies on their career, increasing their income, their networth, their home equity, etc., etc., and waits until the kids have paid-off college careers before they start focusing on giving a bit back to those with low-incomes or little chance of income growth.

Of course, I know there are many ways of giving back that go above and beyond the financial.  I’m sure most of us have volunteered in some capacity at some point or other.  Or donated items to the food bank (again, that’s a financial move, though).  And if you’ve taken a day off work to help someone close to you, that’s a financial move, as well.

Are the Rich More Selfish?

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There was a recent article getting passed around the web about a study of high-income and low-income individuals’ spending and giving patterns.  The study concluded that, ironically, (in some sense, depending on how you look at it), lower-income groups (or those who perceived themselves to be) tended to be more generous with their money in relation to those they perceived as worse-off than them than the higher-income groups.

In other words, individuals who perceived themselves to be high-income tended, on average, to be less generous with their money than the lower-income folk were.  Now, before you argue, let me just say that “for every study there is an equal and opposite study.”  That’s why you can’t simply cite a study, you have to know how to critique it and analyse it.  The study can be wrong or invalid.

That said, it does raise interesting questions about our capacities to give and our responsibilities to do so.  In the past financial crisis, we saw millions of homeowners lose their homes and taxpayers, (or should we say the future taxpayers, our children?) bear the burdens of the many bailouts (the money of many of which has been recovered, it’s fair to say).

It’s all relative.  Are you low or higher income?  Are you well off?  It just depends on what context you look at your situation from.  I’d propose that we can all always give within our means, whatever our means are.  Do what you need to do to get ahead yourself, but figure out your own capacity to give and then do so.