Friday, January 05, 2007

Charging yourself a "luxury tax," for charity

I recently came across this Boston Globe profile of a Bostonian who's into socially conscious finances. The whole article is interesting, but the one part that really struck me is that she "taxes" herself-- for every dollar she spends on entertainment, eating out, etc, she donates another to charity.

What a terrific approach! It's a way to simultaneously discourage yourself from too much "luxury" spending and encourage yourself to give more to others. And I like the idea that it links personal indulgences with the needs of others in your mind-- not to discourage you from ever treating yourself at all, but just to remind you that while you ought to have some pleasures to enjoy, others who are less fortunate ought to as well. You could probably adjust the ratio, too, depending on the ratio between your average or goal for entertainment spending and your average or goal for charitable giving; you could give 25 cents or 50 cents or $2 for every dollar spent on luxuries, instead of $1.

Despite how much I love this idea in principle, I don't think it's right for me, because a) I am terrible at keeping exact records of how much money I spend on what, and b) I like to give a set dollar amount equivalent to a certain percentage of my income. But I still think it's an awesome idea, and I implore you to try it out and then tell me all about it!

What do you think about this idea? Do you have any gimmicks to help you cut your spending and/or give more to charity?

(There's some other good information in the article related to Susan's Money Makeover-- assessments of various SRI funds, and smart tips like "If you have a mix of people and non-profits as your beneficiaries for retirement accounts, life insurance, etc, leave the tax-free accounts to people and the taxable accounts to the non-profits since they don't have to pay taxes.")

1 comment:

Brian H said...

I donate a flat 10% to charity.

I never let myself by anything spur of the moment. I always wait a day or two, then go back to the store if I still want it. 3 times out of 5, I don't go back.