Doing Good In This World (Using Money)
What's the meaning of life? In my opinion, each person has to decide what that is for themselves. For me, it's making the world a better place, and being happy doing it.
I am lucky to have worked myself into a job where, day to day, I'm doing just this. Educating people and doing scientific research is good for the world, and I work hard at it. So in terms of time, I feel pretty good about my contribution.
Then there's money. Money can be used to help the world too. There are two questions that everyone should answer for themselves: how much of their money will they give and what will they do with it?
Each person will have their own amount of money that they should give. I think it should be thought of in percentages-- the more money you make, the higher a percentage of your income should go toward charity. How much is that number? I have no idea, and most people I ask have no idea either.
The philosopher Peter Singer has a simple argument that relates to my previous post on the omission bias:
1. Suffering is a bad thing
2. Relieving suffering is a good thing
3. If you can relieve suffering and you don't, it's a bad thing.
4. You should relieve suffering.
It's hard to find fault with this argument. As for Peter Singer himself, he gives 25% of his income to Non-governmental organizations (NGOs) to help the world out. He considers spending money on luxuries to be wrong. I understand that most people in America and Canada will have an instinctive negative reaction to this idea. Before you react too strongly, please take a bit of time to consider it carefully, rationally. Our culture has an ethic that it's perfectly fine to spend the money you earn on yourself, which I think is a questionable value.
Anyway, I'm making plenty of money. In our culture, studies show that happiness increases with income until you reach about 40k per year, and then it plateaus. That means you habituate to your lifestyle, whether that means being able to afford to eat out once in a while and go to movies or to fly to Paris for dinner in your private jet, after about a year you get used to it and return to the normal of level of happiness that you're used to.
What this means to me is that everybody who's making over 40k should be donating some proportion of their income to charity.
I love the book "All Your Worth." It's a simple money-management plan that's helped me enormously. The basic idea is to spend no more than 50% of your income on necessities, 30% for discretionary spending, and the remaining 20% for saving and investing. Conspicuously missing from this is charity.
Perhaps 20% is excessive for savings. What my wife and I have decided to do is to spend 2% of our income on some charity. We will take it out of the savings each year. We actually save 18% of our income for savings, currently, so in the end we'll be saving 15% for investment, and giving 2% each year to charity.
What percentage of your income to do you give to charity?
More importantly, what percentage of your income should you give to charity?
I'd love to see your answers to these questions in the comments.
Note that I have not mentioned what charities to give to. That will be the subject of a future post. I separate them deliberately: the choice to give and the choice of what cause to give to should be separate choices, because choosing what cause to support is terribly difficult, and can cause paralysis, resulting in your not giving anything at all.
Pictured is Bill Gates, the world's richest man, who, with his wife Melinda, are donating an enormous amount of money to awesome charities. More on this great man in my next post.