Friday, January 23, 2015

Annual Budget - Charitable Giving

Paul wrote to the Corinthian church, "The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver." 2 Corinthians 9:6-7

Many followers of Christ choose to give generously to charitable works, including us.  We feel strongly that we ought to give around 20% of our net income (around 10% of gross income) to worthwhile causes, including our local church and a few other worthwhile causes.  In the past, we have given to special projects, like water well drilling in Africa or microfinance in the developing world, and we like to regularly support summer camps for kids, overseas work in the developing world and various organizations here in Canada, especially our local church. 

We have found that choosing to give our first and best toward charitable work keeps our attitudes around finances humble and focused on our Lord.

Do you give?  Why or why not?

Thursday, January 15, 2015

Annual Budget - Savings

Proverbs 21:20 says: "The wise man saves for the future, but the foolish man spends whatever he gets."

So, we try to save a bit of money each year.  Traditionally, we've been saving between 10-15% of our total income each year toward things like:

1) Retirement or, as I prefer to put it, the day when I no longer collect a paycheque or work for money. 

2) Education for our children. We won't be giving our children a 'free ride' but we have felt it prudent to ensure we give ourselves some options financially when our children attand post secondary school.

3) Medium Term expenses like vehicle purchases and home renovations.

This past year, we spent a good chunk of change on home improvements so we saved a little less but that's fine as over the long term we'll enjoy what we done to improve our living space and it isn't like we are falling behind or cashing in investments to pay for things. 

The main strategy with our savings has largely been to maximize the amount we receive in matching amounts from my employer.  They have 2 programs to invest in at work that match my contributions with dollars from the company (50% match on both programs right now) and I fully take advantage of both of those.  In addition to that we set aside a bit of money each year to deposit into a Registered Education Savings Plan which offers a 20% matching grant from the federal government. 

All told, I have invested, out of my pocket, about 10% of my income and government grants and matching contributions have added up to another 4% this past year.  This seems like an excellent use of our resources.  Havings some money saved will give us options in the future and the resources to pursue different kinds of opportunities.

Certainly, we do not want to be found hoarding our wealth like the rich man of Luke 12 nor do we want to squander it and become dependent on others for our day to day needs.  This is a fine balance and generous and cheerful giving is an important aspect of saving for the future.

Here is another thoughtful treatment of the topic of savings:

Wednesday, January 7, 2015

Annual Budget - Taxes and Payroll Deductions

So we can see from my pie chart (click to enlarge) that nearly 30% of my total earnings went to federal income tax, provincial income tax, EI premiums, and CPP contributions.  If I didn't contribute to my RRSP, work pension, deduct work expenses or donate to charity the percentage to taxes would be 34%.  Clearly, there are incentives to contribute to retirement plans and donate to charity under Canadian tax law.  I am not bashful about using these incentives to the maximum practical level.  Clearly it is good practice to give generously and save for the future so I would do that anyway without the tax help but the tax laws make it easier to do so.

I don't begrudge paying income tax and Jesus certainly advised the same as recorded in the book of Matthew. 

The writer Paul also notes in the book of Romans that we should submit to those in authority over us and he explicity notes paying taxes as a form of obedience. 

There is a very thorough explanation of this theology by John Macarthur here -

Your thoughts?

Monday, January 5, 2015

Annual Budget - 2014 in Review

Each year, we review our annual spending, saving, and giving to help us stay accountable to our objectives and to give us feedback on how we've been doing.  Additionally, the review gives us an opportunity to plan for the New Year.  Click on the image to enlarge.

What is your process?