In 2019, we highlighted the topic of Thankfulness leading into the Thanksgiving holiday. Most of you will be reading this the day after enjoying your Thanksgiving turkey, but I still think there is value in revisiting some of the more important points we made in our 2019 posts on thankfulness. For those that missed our posts from last year, you can check them out from the following links: Week 1 Week 2 Week 3. These are our key takeaways as to why revisiting thankfulness can be a helpful action for your finances.
Thankfulness can Combat the Desire for Instant Gratification
“Patience is a virtue”. We’ve all heard this famous quote, and while it might be easy to grasp, it can be painstakingly difficult to abide by. In a world where we can scroll through our social media accounts, google any question we have, or simply ask Alexa our questions, it’s tough to see the value in delayed gratification. Why should I wait for something later, when I can have something else right now? When it comes to finances and investing our money, the answer usually means that choosing the “right now” stuff means having less money and choices in the long run. We encourage our clients to “pay themselves first” and automate their saving and investing to combat our preferred emotional response of instant gratification. In turn, they can reap the benefits of this approach when they have more choices and flexibility later on in life.
Thankfulness can Lead to Generosity
If you are focused on being thankful and content with what you have, it can help your focus to begin to shift externally. You can look for ways to be generous with the giving of your time and resources to causes that you care about. Usually this involves some sort of charitable giving, and these decisions force us to re-evaluate and adjust our spending accordingly. Knowing a charitable donation is a priority can help clients be motivated to track their spending and reduce their expenses so that money is available for these donations. However, if you find that money is consistently running short when you’re ready to be generous, it can also force you to re-evaluate your budget to be more in line with your values.
Generosity can be a Smart Financial Decision
Although the recent increase in the standard tax deduction ($24,800 for married filing jointly in 2020) has meant that a lot of previously itemized charitable donations aren’t as valuable come tax time, there are still benefits from a tax perspective. For individuals who must take required minimum distributions (RMD’s) from a qualified retirement account, making a qualified charitable distribution (QCD) can be a good way of avoiding income tax on these withdrawals and will ultimately lead to a lower taxable income. Additionally, making a charitable contribution from a non-qualified account can also be a good way of donating highly appreciated assets which would normally be subject to capital gains taxes when you sell. Finally, for those who have a long term strategy of being philanthropic with their resources, a Donor Advised Fund can be a creative way to maximize tax deductions in the current year.
Being Content doesn’t mean you are Giving Up
I personally like Tony Gaskins quote on the subject, which says “being content doesn’t mean you don’t desire more, it means you’re thankful for what you have and patient for what’s to come.” I love this thought because it doesn’t have to be one or the other when thinking about contentment vs. a drive for more. We encourage our clients to have big goals in their financial plan, but to appreciate what they currently have and to adopt a patient mindset when thinking about the future.
We hope this post on thankfulness has helped you in some small way and that you have found actionable insight for your own life. Take time this Thanksgiving to appreciate the people around you and to adopt an attitude of thankfulness around your personal finances.