We all want to donate to charity, give to churches, and help family and friends; however, all these endeavors come at a cost.
As a young Marine, I helped my mom financially, not understanding that I was actually holding myself back in the long run.
This article is for the many people who want to help others while making the world a better place—which is very possible. However, first, they must understand the rules of sustainable income. Let’s begin.
The Pros and Cons of Closed-End Funds
The best way to give. We all love to give; however, we shouldn’t donate money directly if we are broke. Let me explain.
Let’s say the Smith family earns $8,000 per month in earned income, and their monthly expenses are $8,000/month. They include tithes and offering $500/month to the church in your budget.
I grew up in the church and am a huge fan of attending church and celebrating the Lord. However, we must also be realistic.
Sometimes, the best way to assist the church or a charity is with time and energy. However, we must first establish a sustainable income before helping others financially.
Let’s say the Smith family loses one of their jobs, and their household income shrinks to $4,000/month. Now, they can barely afford their expenses, let alone give to the church.
While giving to the church was amazing, they don’t have a bank account to draw on in times of emergency. They will probably have to use credit cards or personal loans to survive these times. They get further away from God and financial freedom.
Learning to create a gift budget. We can still give while creating our sustainable income; we just need to build a realistic budget.
The Six Types of Income Investing
The first issue with the Smiths is that their expenses equal their income. First, they need to lower their expenses by creating entertainment and food budgets.
If they truly want to give to the church, they should get a roommate and donate SOME of those rental proceeds to the church. However, their priorities are getting out of debt, lowering expenses, saving an emergency fund, and increasing income.
Creating a sustainable income stream. When you start giving, you want to be able to do so indefinitely. This means using recurring income to donate to the church.
There are many ways to create recurring income, but my favorite is to invest in stock market dividends. I can decide what to do with my dividends as they come.
Once you have enough sustainable dividend income (or rental, business, royalty income), you can give until your heart’s content. Let’s re-examine the Smith’s financial situation.
The Smith’s lower their expenses from $8,000 to $7,000, by paying off their cars and budgeting with intention. They also add a roommate for $1,000.
Stock & Bond Investing in Your 40s
The Smith’s now have $2,000 of free cash flow to begin building their income-investing portfolio. They talk to their pastor to let them know they will contribute less for a few years.
The Smiths give themselves five years to create a sustainable dividend income stream of $2,000/month. Can they achieve this financial feat?
Of course, they can. I know because my wife and I created a $2,000/month income stream in about five years. They must use all the tools in their toolbox to pull it off.
Using your sustainable income stream. Let’s review my $2,200/month sustainable dividend income stream. As you see, my Wells Fargo brokerage account pays me $580/month.
I can simply turn that passive income stream into my donation fund. At the end of the month, I can withdraw $400, and reinvest $180.
Saving & Investing with $500 per Month
I can now use that $400 to give to the church, help families, and donate to charity. The best part is that I can do this indefinitely.
If a spouse loses their job, the family can convert its income stream into a method to pay bills. The key is that their sustainable income stream gives them financial options.
When the Smiths returned to church with a $2,000/month income stream, they now had the financial wisdom to give while protecting themselves from future financial hardship.
The trouble of giving in your youth. I served in the Marine Corps for 24 years, during which time I saw many young people sending money home.
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At first, I thought that this was a noble thing to do—and it is. However, it’s sort of like giving someone a life raft when you are also on a life raft. It’s better to build a boat first.
As I watch people donate large amounts of money to family, friends, churches, charities, and GoFundMe, I want them to understand what’s at stake.
Your financial goal as a human is to turn one dollar into two dollars. If you don’t know how to do that, then that needs to be your first lesson.
Once you create the second dollar, you can give it away as long as the first dollar remains. That needs to be your mindset moving forward.
Over the past month, I have seen three friends (all in their late 40s) create GoFundMe campaigns to pay for tragedies in their households.
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We should not be reaching out to others in our late 40s; we should be in a strong enough financial position to help others at this point.
That’s why sustainable income must be our top priority from our 20s until our 80s. I want to put this in even more perspective.
A businessperson’s example. Let’s say you are a single business person making $200,000/year. This affords you the opportunity to give $100,000/year to charity.
You donate every year for twenty years until one day, you lose your job. You have some savings, but your donations stop immediately. Your next job pays $100,000.
Although you help many people, you can’t continue to give as much as you wish. You never turned one dollar into two. But let’s replay this scenario.
Learn to Barter and Trade Today
Instead of donating $100,000 per year, you could purchase a small community center and pay it off in ten years. Then, you could create a sustainable income stream of $2,000/month over the next ten years.
When you lose your job after ten years, you own a community center and have a matching sustainable income stream. You can continue to assist and give until your heart’s content. That’s the magic of focusing on your priorities first.
Conclusion. I hope everyone understands my logic: While it’s okay to give, building a sustainable income stream is the top priority.
Dividend ETFs vs. Bonds 2
First, creating your income stream gives you insight and wisdom you can use in all facets of your life. You can also evaluate the places you are giving to and see if they use the funds effectively.
Second, sustainable income streams will help you later in life. Instead of being a burden to your kids in your 70s and 80s, your income stream will allow you to be a blessing.
Lastly, I believe God wants us to learn to budget, save, invest, and give—in that order. We can donate our time and energy even if we don’t have cash.
I watched hundreds of Marines giving money to what I call “a black hole.” The parents are horrible with money, and the Marines continue to enable them.
As you build your sustainable income stream, you will have a newfound appreciation for budgeting, saving, and investing. You will also ensure that any money you give goes to the right place.
More importantly, you will be in a position to analyze if the people and places you give to are doing right with your money. You will become a good steward of God’s resources, which is the ultimate goal. Good Luck!
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