Approaching 40: Money
Managing your money can be a full-time job, but doing it right can help you earn even more
Money
The saying goes that “money can’t buy happiness (but it can help a lot)”. There is also “more money, more problems”. Yes, both of these are true but perhaps more than anything, knowing your money can help you be happy and avoid problems. Here are some insights into money that I have had so far.
Charity
Obviously, all money is a gift from God, and ultimately it is Him who provides us with everything we have (gratitude to Hashem for reaching this age will be a prominent theme in these posts). As such, we have an obligation to share this gift with others who are not as fortunate. To me, choosing where to give is among the hardest things to figure out. For some reason (the algo?), I have seen a bunch in the past few weeks about effective altruism. For the most part, this seems to be a secular rehashing of many of the tenets of charity that already exist in Judaism. It basically boils down to finding the places and charities that will benefit the most from your donation. My donations generally go to three areas: my shul/synagogue, the local support charity during the various holidays of the year (in America this is often the same thing as your shul or the Rabbi’s discretionary fund), and Israel’s “Habitat for Humanity” equivalent. In general, I do not give to beggars or door-to-door/shul-to-shul solicitors.
Shul/Synagogue/Church
I donate here primarily because I spend a lot of time in shul and also because it costs money for you to be there (heat/electricity/water/building maintenance, etc.). Being a member of a shul also provides one with a sense of community and, God forbid, if something were to happen, in theory gives you rights to be partially supported by that community (this goes both ways, obviously). I even try to donate of my time and talents to the shul since this is spiritually fulfilling and is a mitzvah in its own right. In general, try not to freeload; I even give small donations if I visit a shul on a Shabbat and sometimes even during the week.
Local Charity
In Israel, since shuls are often mostly religious and not communal institutions, each town or neighborhood often establishes its own local charity to support those who have fallen on hard times. I rely (perhaps blindly) on these charities to properly vet the recipients and also to make sure that they do not become dependent on donations in order to live their lives. People fall on hard times for reasons out of their control, and it is important to have these safety nets in place. Additionally, the holidays themselves can be expensive affairs for even relatively affluent families and I would not feel comfortable celebrating my own holiday knowing that there were others I didn’t help in making sure they could celebrate their own holiday in a respectable manner. As such, I try to donate sums that would make a difference in providing for the holiday, not token amounts.
Tenufa BaKehilla
I donate on a monthly basis to Tenufa BaKehila because having proper housing is an indicator of so many other risk factors. If one has a stable, livable home, then they are able to do so many other things. So for me, this is a great avenue for “effective altruism”. I only found out about them because they were featured a few years ago in one of the Shabbat newspapers that I think I have mentioned elsewhere on the blog (if not, note to self to discuss them). Giving monthly is also a good way to fulfill the concept that giving a smaller amount more often is perhaps more impactful for the person giving than giving one large donation may be.
Maaser from supplemental income
I also do my best to donate 10% from any other income sources I have, such as when I help someone with their website or sell some items, thereby fulfilling at least on some level the possible obligation to tithe.
Overall, I see giving to charity as an obligation. Judaism, and many other religions, are built on a foundation of helping others in their time of need. While financial assistance isn’t always what is needed, it is always something that helps. Part of being an adult is realizing that some of your hard-earned money needs to be shared.
Sharing times and experiences with friends
Another thing which has become relatively common, particularly in the past few years is spending money to be with friends instead of families. As your children grow older and they are off on their own more frequently, time returns in your schedule to go be with friends again. Whether this be for bar mitzvahs, weddings, birthdays, etc., it is always expected to bring a gift and to cover your share of the event. Work this kind of event into your budget (see the next section) so that you can enjoy this stage of life which is kind of a breath of fresh air after a decade-plus of intense child-rearing.
Budgeting/Financial Advisor
Some of the best money I spent in the past two decades was to sit down with someone who could analyze our spending and let us know how far away and/or obtainable our financial goals were. It was a few years after aliyah (moving to Israel) and we were itching to buy a house, but I wasn’t convinced that it was a financially beneficial thing to do. This wasn’t a marriage issue, this was a money issue, and a financial advisor is like a therapist for your money. Our advisor helped us with all sorts of things, including understanding how retirement works in our country as well as how to set up a proper budget. It soon became clear that we could in fact afford a home and soon after we set off to find one (it took a while, but in more ways than one my life has mirrored “Make Way for Ducklings”).
Since meeting with a financial advisor, we have been tracking our budget monthly, and then using that data to inform our spending going forward. At the beginning of each school year, I sit down with my wife and we discuss the purchases and spending we need to do in the coming year relative to our income and then set the budget. Whatever is leftover (some months are better than others and thankfully there is a little lee-way in the budget) we invest in the market. This approach has grown our savings and I recommend you do it as well.
Accountants
Yes, you read that correctly, I have more than one accountant. The US is unique as in addition to being tied for the best country on Earth, it is also unique in that it is among a bunch of other third world countries that tax its citizens no matter where they may live. They do give a nice deduction, but you still need to file with the IRS each year, even if you don’t live in the USA. You can renounce, but that also costs money and then you’ll need a visa to go visit the other most awesome country on Earth. So I have an accountant in the US and I also have one in Israel. There are Israeli ones that can do American taxes and I may need to do that at some point, but for now having two works for me.
In any case, you want an accountant like you want to have a doctor. They are experts in making sure every penny you own is owned legally and since they know the system(s) better than you do, can make sure that your money is arranged in a way that is most beneficial to you.
Trust me, I have tried to do my taxes on my own, and I have failed miserably. In my 20s there were a few years that I was +/- a couple hundred dollars after filing on my own or using tax software, but then there was a year where I was several thousand dollars in the hole, which I knew just couldn’t be true. I called up the accountant in my shul and I figured I had nothing to lose by paying him to review my taxes. It ended up being a worthwhile investment and I never again touched a Form 1040 and for this I am thankful.
Also, I’m going to give a you a super duper time-saving hint that I only started doing last year. That thing is to “label” every donation receipt you get during the course of the year. Yes, believe it or not, I would spend hours in past years trying to figure out and remember every donation I gave and then go and find a receipt for it. This is a massive waste of time. Go start labeling now. (Oh, and get yourself a second email for spam and account signups while you’re at it, then use that second email to sign up for my blog).
Now you may want to ask yourself, what is the difference between a financial advisor and an accountant? To me the difference is the difference between your primary care physician and a specialist. You financial advisor gets you money in order and nice and healthy so you can achieve your goals and grow your wealth. The accountant is the specialist that comes in and surgically analyzes your money to make the most of it when it comes to paying taxes.
Will and Health Proxy
The final item is obviously something no one wants to talk about, and even more so wants to spend money on. And it is also something for which I am a little bit behind on myself. This is a will and health proxy. Especially in Israel, this is critical, because the custody system in Israel is crazy so having a plan in place will help your kids should the unthinkable happen. Technically you can write out basic wishes yourself and then have them signed, but I would advise readers to set aside funds in the budget to go get one done professionally. The going rate for everything and having it all properly registered is in the NIS15,000 range.
I also have a health proxy saved with our lawyers back in the United States. It definitely makes for an interesting conversation with your wife and it is even more interesting when you want different things. Either way, knowing how you want to be treated when you can’t make those decisions on your own is very important because it is at those moments that you don’t want to be wasting time or getting in fights over how the recovery (or worse) process should go.