How to spend smarter this holiday season

How to spend smarter this holiday season

In this Master the Green you'll learn:

💰 Money can bring you happiness - if you spend it right

💰 How to increase the ROI of your charitable giving

AND

⛳ Golf's highest paid nonprofit executive

One part golf, all parts money

Let's tee this one up🏌️

Big Green on Black Friday

It was a record-breaking Black Friday, but not in the traditional sense.

Bargain hunters spent $10.8 billion online on November 29, the highest total ever.    

Spending peaked between 10am-2pm with online shoppers dolling out some $11.3 million per minute. 

But what kind of return can should consumers expect from their purchases?

In the words of Warren Buffet,

“Price is what you pay, value is what you get.”

Buffet was referring to the of investments, but the same adage can be applied to spending. 

As the father of two young boys, I can attest to the fact that the amount spent on a Christmas gift rarely correlates with the value received.  If you have young kids, I’m sure you can relate.    

The $50 toys are rarely played with beyond Christmas break, and the $5 ones endure. 

That’s one of the reasons why tickets to sporting events are at the top of our list this Christmas season.   

Getting a better value for your dollar

In their book, Happy Money, co-authors Elizabeth Dunn and Michael Norton identified a number of ways spending can increase happiness.

Among them:

1. Buy Experiences, Not Things

Experiences (like travel, concerts, or classes) tend to bring more lasting happiness than material goods because they create memories and can enhance social connections.

2. Make It a Treat

Limiting access to something you enjoy (like a favorite treat or indulgence) can help you appreciate it more, preventing adaptation and keeping the joy alive.

3. Buy Time

Spending money to free up time or reduce stress (e.g., hiring a cleaner or using services that save time) can lead to greater happiness than spending on material items.  

4. Pay Now, Consume Later

Paying for things in advance (e.g., a vacation) allows you to enjoy the anticipation and reduces the pain of payment when you’re experiencing the purchase.

This is the opposite of how credit cards work. Makes you think 🤔

5. Invest in Others

Spending money on others, such as through gifts or charitable giving, often brings more happiness than spending it on yourself, especially when it strengthens social ties.

Increasing the ROI of your charitable giving

As a former nonprofit executive, I’m intimately familiar with the last idea Norton and Dunn shared. 

For the better part of a decade, a considerable amount of my time, effort, and attention was focused on investing in others.  A large part of my job was also to inspire others to invest their resources, primarily dollars, in the missions we supported. 

Nonprofit organizations rely on public support to fulfill their missions. They receive this support through charitable gifts (or donations), hosting fundraising events, applying for grants from foundations or government agencies, and some, like the Habitat for Humanity ReStore, also generate income from operations while fulfilling their missions.

Charitable gifts are essential to most nonprofit organizations’ lifeblood and they’re also the means by which most of us choose to support our favorite causes. 

But before you stroke that check or swipe that card this year, there’s a few things you should know about giving to charity.

4 ways to evaluate your favorite charity’s impact

1. Executive compensation

You may not realize this, but the PGA Tour is a nonprofit organization. 

And in 2021, more than $10M of the PGA Tour’s $1.5B in expenses were paid to one person – commissioner Jay Monahan.

How do I know this?

Because they are a nonprofit, or 501(c) organization, the PGA Tour must file a Form 990 annually which details important information about their financial activities.  These filings are public information, and compensation of executives is included as part of this filing.

Executive compensation is just one of the metrics you can use to evaluate if your chosen charity is a good steward of its resources.

Here are three more that shouldn’t require too much sleuthing on your part –

2. Clearly stated mission and goals

Every organization (and even person) should have a clearly stated mission that informs their objectives. This is especially true in the nonprofit sector where companies rely on public funds to fulfill their goals.

The best nonprofits operate with clear transparency. As a potential donor, you should be able to evaluate whether the organization's activities and outcomes align with its stated mission and goals. The clearer the alignment, the more likely it is to make a meaningful impact in its intended area.

You can look for specific, measurable, achievable, relevant, and time-bound (SMART) objectives and outcomes. Nonprofits should have clear indicators of success that can be tracked and evaluated.

Another source of information that may be publicly available is feedback or reviews from beneficiaries, partners, volunteers, and other stakeholders. This can provide valuable insights into the perceived impact of the organization's work.

Look for external recognition, awards, and partnerships with reputable organizations. While not definitive proof of impact, these factors can indicate a level of credibility and effectiveness.

3. Financial transparency

Transparent financial practices can indicate responsible leadership, which helps to ensure resources are directed towards achieving the organization's mission.

Look for published annual reports that include financial statements, program highlights, and key accomplishments. These reports are easily accessible on the organization's website.

High functioning nonprofit organizations should also have regular financial audits conducted by reputable public accounting firms. These audit reports should be published on the organization's website, along with any management responses to audit findings.

As stated above, nonprofits in the United States are required to file Form 990 with the IRS. Financially transparent organizations should also make this document readily available to the public, either on the organization's website or through platforms like GuideStar.

4. Outcomes reporting

Outcomes are what a nonprofit organization’s mission and resources are able to produce. They should provide a clear indication of the impact the organization is making. These metrics can often be found in an organization's annual reports and may include figures like, number of meals served, jobs created, hours of programming provided, or funding distributed.

However, without the proper context these numbers may not provide a full picture of how well the organization fulfills its mission. Review the organization's data collection methods and analysis processes. Data should be collected consistently and rigorously, and the organization should be able to demonstrate how it uses data to assess its impact.

Look for case studies and success stories that illustrate the organization's impact on individuals or communities. Personal stories can provide a qualitative understanding of the organization's effectiveness.

Best ways to give to your favorite charity

Back in my fundraising days we would recruit donors who wanted to share their time, talent, or treasure to help us fulfill our mission. We tend to myopically focus on giving financial means, but if you're not able to write a check to support your favorite cause you can always volunteer your time or use your expertise to provide support.

If you are going to give financial resources here are a few of the best ways to do this and take advantage of tax benefits at the same time –

Qualified Charitable Distributions (QCD)

You must be over the age of 70 ½ to take advantage of QCD’s, but they are one of the most tax efficient ways to give to charities. To execute a QCD, you have to send money directly to the charity from a Traditional IRA. In return, your distribution will not be subject to ordinary income tax, which makes it one of the few ways to get money out of an IRA without paying income tax.

Donor Advised Fund

A Donor-Advised Fund (DAF) is a philanthropic vehicle that allows individuals, families, or organizations to make charitable contributions to a fund, receive an immediate tax benefit, and then recommend grants from the fund over time. It's essentially a dedicated account set up for the purpose of supporting charitable organizations.  Think of it like a 529 Plan, but for giving to charity.

Because the current standard deduction is so high, many people do not itemize their deductions. This means that it’s likely that you don’t receive any tax breaks for making charitable contributions. However, one strategy you can use is to make a large contribution, equal to several year’s worth of charitable gifts, to a donor advised fund. You’re able to take a charitable deduction in the year you make the gift, and then grant those dollars to the charities in future years. 

Giving appreciated stock

Giving appreciated stock to charity is another way to capitalize on the tax benefits of charitable gifts.

If you itemize, you’ll still receive a tax deduction for the full market value of the stock at the time of the donation, just as if you were giving cash. You also benefit from avoiding capital gains tax on any appreciation on the stock you are gifting.

When's the last time you thought about ROL?

If you invest, you're familiar with ROI or "return on investment," but when's the last time you thought about ROL or "return on life"?

Earning a return, minimizing taxes, and managing risks are all super important aspects of personal finance, but they're moot if you don't know the "why" behind the money decisions you make.

That's where I come in.

 If you're looking for a better ROL (in addition to investment advice and financial planning) there's three ways I help people like you:

1.  Ask me anything – Do you have money questions?  Are you over asking friends or the internet for advice?  As a newsletter subscriber, I’m happy to take 30 minutes out of my day to help you.  I'll do my best to be sure you leave with something of value to consider.

2.  Get a one-time financial plan - Over the course of 90 days, we'll strive to help you get financially organized and offer up recommendations to achieve your financial goals.  You'll leave with answers to questions like:

Am I saving enough for retirement?

How can we pay less in taxes?

Do we need life insurance?

3.  Get fee-only financial advice - Hiring a financial advisor is a decision most people only make once in their lives - so we don't take it lightly.  We'll go through a three step process to show you how we work with clients, and let you make the decision if it's a good fit for you or not. 

If you've never considered hiring an advisor before, this is a great way to see what comprehensive financial planning looks like.

Schedule a 30 minute call to get started today.


John Prendergast

CEO Obsessed with client experience in wealth mgt. 40M+ client interactions delivered. Host of The Augmented Advisor 🎙️| Founder Blueleaf - an all-in-one platform with an exceptional experience at an exceptional value.

3w

"Price is what you pay, value is what you get" - perfect timing with holiday spending! Judson Meinhart, CFP®, BFA™, CTS™

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