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As an ex-nurse, a mum and a financial adviser I know a fair bit about helping others, and I have a hypothesis. I think that when it comes to giving to others, we should be applying the same checks as we do when we give medicine to patients. These checks are referred to as the 5 Rights, and are; right person, right medicine, right dose, right time and right route or method.
We as humans, and especially women, love helping other and we know that giving makes us feel good, enhances relationships, improves our health and can even extend your life expectancy. But I think those benefits only really come through when we give in the right way for the right reasons, which will be different for each person.
Interestingly, despite earning less and holding less wealth than men, women have been shown to donate more often than men across a range of income brackets and that often the amount they give is higher than men as well.
Women give more of their time as well, and although men do a fair amount of volunteering, when broken down the gender differences in volunteer activities become more noticeable. Women are overrepresented in areas of health and social work, and in informal and caring roles, where men’s volunteer work tends to be more formalised, involve leadership roles and be more focused in areas of politics or economics.
Does this matter? It could matter hugely for your career and earnings in the future.
If during an interview for a promotion Dave shows that he has built up leadership and governance skills through his role on the school board, while Sarah talks about volunteering at the SPCA and local nursing home utilising her interpersonal skills, who do we think is most likely to be promoted to a leadership position?
The implications of the roles we take on outside of work could create a tangible difference in how that knowledge, time and experience translates to job interviews or prospects of a promotion with a potentially exponential flow on effect to our careers and finances.
Add to this the fact that ‘giving’ isn’t always to strangers or outside the home. Women still do more housework and childcare than men, even when both parties are employed in full time work outside the home, with natural consequences for the time and energy we have available for our careers. Lastly, let’s not forget the Bank of Mum and Dad. The financial burden on families who are aware that in the next 5-10 years they will be relied on to help their kids by funding tertiary education (maybe) and a deposit into a first home (almost certainly) as well as caring for elderly parents which may include a financial component is, frankly, overwhelming.
I’ve spoken before about the fact that in NZ, women have roughly 20% less in their KiwiSaver at retirement than men. What we haven’t looked at before is the impact that financial support for your community and even your family, may have on that retirement.
For this reason, I think it’s time we start taking a better look at how much we are giving and where that’s leaving us.
Now, I am fully aware that idea of not being able to help, especially when it’s our own families, can be quite confronting, and many people will shy away from the idea of it but stay with me for a moment; there is a way to take care of yourself and those you care about.
So, bearing in mind many of us want to help our families and communities in some capacity, how do you make it work?
Let’s come back to our checks and turn them from nursing to financial ones.
Check that you are giving…
To the right people – do you really enjoy helping this person or group, or do you feel obligated to do so? Our sense of duty within the family can be deeply intwined with personality, upbringing and culture, but even acknowledging how you feel about it is a good starting point.
The right ‘medicine’ – is it time, money or other resources that you should be giving in this instance?
The right ‘dose’ – how much of that time or money can you afford to give?
The right time – is now actually the right time to be donating or volunteering or are you tapped out with other commitments?
The right method – do you need to formalise it in a way that allows you to keep track, eg. Set up regular donations, and are you doing things like claiming your tax refund on school fees, charitable donations etc?
The first thing I would say if you are wondering how much you can give, regardless of who you are giving to, is that you need to have a clear understanding of your financial position. How much is coming in and how much is going out, and how much will you need in the future, particularly at retirement. That last piece is the curly one, as it is variable for each person, but a financial plan utilising cashflow modelling can help you identify what level of savings or post-retirement income you’ll need. If you either; have a current deficit (more is going out of your bank accounts than is going in) or your future planning shows that you won’t have enough to live on in retirement, you are giving too much and need to review.
The other criteria for knowing that you are giving too much? You feel that you are.
We know that over 60% of women in Aotearoa worry about money daily, but if you haven’t typically been a worrier and you’re now feeling anxious about your finances, or you are specifically concerned about the amount you are giving one person, that’s reason enough to stop, take stock, and get someone outside the situation to help you review.
We’ve heard all the cliches – put your own oxygen mask on first, you can’t pour from an empty cup, etc – but we’re still just goddamn awful at applying them to ourselves.
What should you do if you are jeopardising your own future through your excessive generosity?
First, start tracking where that money is going. If it’s a regular donation to charity that should be relatively easy, if it’s ad hoc support to family possibly not, but it is crucial that you at least try.
Secondly, spend some time reflecting on why you’re giving and whether it’s something you want to continue fully, partially or not at all. In a situation where you want (or need) to continue, such as supporting an elderly parent, consider whether there are wider resources you could draw on? Other family, or community supports for example, to lighten the load a little. If you want to explore what the implications of adjusting your level of support might be, that again is where sitting down with a financial planner could help. We are also used to introducing and facilitating difficult conversations, with couples and families.
Lastly, pay yourself first.
This means knowing how much YOU need for your future, (with a buffer because we never know what life will throw at us) and making sure each pay period you are putting enough away to keep future you safe and sound. Once you have taken care of that part, the remainder can be shared between necessary expenses, enjoyable spending and supporting the people and causes we love.
Follow these steps, be pragmatic with your adviser, honest with your family and compassionate with yourself.
This time, when you donate to your kid’s college sports team, or chip in for their wedding, or shout your parents' dinner out you won’t feel anxious or resentful because you’ll be giving the right amount for the right reasons at the right time.
Elizabeth.
Elizabeth is the author of a new monthly blog What Would She Do? A column for women, by women.
Read more about Elizabeth and her new blog
Disclaimer:
Elizabeth Tsikanovski (FSP693611) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Elizabeth’s disclosure statement on our website.