Do you tithe? Do you give money to your religious organization? How do you decide who to give your money? Do you consider tithing to include money given to charitable organizations? I’d be interested to read your opinions. Comment away.
I spent a while reading the Money and the Bible section of Free Money Finance Blog, where there are excellent posts on the point of tithing. I originally prepared this post as a skeptical comment for posting on a blog but it kind of grew to be much longer:

… Of course, 10% of gross given to God sounds like a wonderful deal… for the churches. I mean here they get 10% gross of all their members’ salaries and income to do with as they interpret what God pleases… And that all sounds dandy and fine, until… you have to figure that there a number of problems associated with tithing.

• 1. tithing started prior to national tax rates in excess of 20% of ‘gross income’, ‘compulsory contributions’, house taxes (depends where you are), VAT, fees, etc.. It is quite shocking once you begin to add up just HOW much money you give to Caesar, as an employee. In Roman times, tax rates were not as high!
• 2. Then of course, you have to give 10% of gross salary to ‘God’, too. That’s 10% of gross from a salary that is NET of tax, ie. well in excess of the actual money you get to spend.
• 3. These days, governments do try to care for poor people in the community, in many countries (hence we pay taxes as a form of social redistribution), based on humanistic principles that we should look after those less fortunate. Our contexts have changed…
• 4. You aren’t really giving the money to God, anyway. You are giving the money to a bunch of people who may or may not be like minded. In other words, when you donate to your church, what exactly are you donating to. In the U.S., there is little or no oversight of religious donations, even when the scandals involving ministries are quite gross. One is only reminded of the scandals of televangelists.
• 5. Lastly, think about that the reasons why this kind of commandment is frequently mentioned. Those in power in the religions (and Christianity is NOT exempt) use guilt to extract their pound of flesh from the congregations, otherwise many of them would cease to exist, they would have no power to run flashy TV stations, radio channels, expensive websites.

So when you hand over your money to your church or religious group or whoever, while you are fulfilling your good stewardship as a general command, who are you really serving? Your own bad feelings at not giving or God’s good graces? And who are you giving it to? What will they do with the money? Who will supervise them? Can they demonstrate that, in the essence of moneyspeak, they will have good governance over their financial resources?

Investors, if you tithe, you still must do your due diligence. I’m not saying don’t tithe, I’m saying – Pray about it, Think about it.

I’m revisiting a topic I started last October with a similar title. The original post is linked here with a link to Rich Dad Poor Dad guru, Robert Kiyosaki.
Learn to Invest Like a Pro: Why the Rich Get Richer – Yahoo! Finance

The lesson my rich dad was drumming into my head, and I mean to drum into yours, is that investing should make me richer every month, not poorer. It should put money in my pocket every month, not take money out. To him, it was a miracle that so many financial services salespeople could convince financially naive people that it was smart to pay money to invest.

What a wonderful quotation this is! It has been in the back of my mind for a long time… But I tried to articulate it, however, it wasn’t convincing to other people… I’m glad that you wrote it that way, Robert.

Do you have investments that make you poorer? No? Are you sure? Let’s see.

About 2 years ago, my wife signed us both up for an invesment/insurance product from Cigna. The initial payments were small, and the whole policy was supplementary to our primary life insurance policies.

The deal with Cigna was this: Pay about US$30 each per month. 50% will be for additional life insurance, 50% for mutual funds. The money was deducted from our credit card each money for the life of the policy. Is this a smart or dumb move?

To many in the mutual fund or life insurance industry, they would say smart, because you are getting an investment and life insurance thrown in. To me, I would now say dumb. Here’s why:

1. you’ve added an extra $60 expenses to your credit card each month.
2. you are paying THROUGH THE NOSE for this service in commissions and expenses: the list starts – credit card expenses, upfront commissions, mutual fund expenses, management fees on the mutual funds, (since we’re buying in a second currency) currency exchange fees and currency exchange. I’m not sure what other expenses there are as the documents are all in Chinese.

3. Risk: there are additional risk factors posed by such an agreement.

• currency exchange risk: it’s denominated in US$ and Euros, but both of these currencies are expensive relative to ours.
• mutual fund risk, will it do well or not over the life of the policy.
• risk of not fulfilling contract payments, so policy becomes void.
• country risk (where we live now has a country risk factor that is higher than the Western world).

Overall, right now it’s looking like a dumb decision, because we are the investors who are taking the risks, but it looks like we are the ones paying for it. One of the rules of investing is that to invest well, you need to be rewarded for those risks. If you are not, then why invest. Moreover, because the policy is early in its life, the returns are well under water, compared to even just the amount of money invested in the mutual funds.

Would you purchase such a mixed vehicle for a policy? How would you look at this investment? Comment away, please.

Many accounting systems work on the basis of accounting for every single cent you ever spend. I used to read about all those blogs who encouraged people to keep their accounts to the nearest cent. You know what. I tried that for two months and while it was instructive, I didn’t find it that productive a use of my time for three reasons:

1. I hated looking for money I couldn’t account for, especially when it was 50c or some such small amount.
2. Such detailed accounting seriously wasted my time. I have spent two hours looking for sums as small as $2.
3. My wife didn’t have the personality for such detailed accounting, either. She could never remember how much she spent exactly. Moreover, it caused the occasional fight when she lost a receipt or forgot how much she spent. Of course, I did this, too.

So, instead, I created my own way to manage my money by setting up money pools and limits. I used them to macro-manage my spending and my wife’s (she hated accounting with a passion). The system basically worked best when combined with pay yourself first … Once you got down to your last $10, that was it!

Here are the steps.
1. Figure out your total monthly income.

2. Figure out your general expenses, category by category, expense by expense.

3. Decide how much you want to save regularly as a fixed amount or percentage of your income. Then allocate the rest to other categories. Don’t forget to include ‘play money’ for your discretionary expenses.
4. Reconcile the numbers in 1, 2 and 3 to make things work balance.

5. Set limits on your spending, real limits are better than artificial ones. So, make sure that the limits you impose are pretty rigid overall. For example, you can put budgeted money in one bank account and use that for your essential expenses. Put the rest in another place. This act of creating reservoirs makes things much more difficult for you to overspend.
6. Put your savings money away somewhere without an ATM card or credit card. Lock it up. Forget about it. Oh, and pay yourself first EVERY month. Don’t be tempted not to.

7. Put some money in an EMERGENCY account, for real issues, too.

8. Then put the discretionary cash where you CAN use it. Monitor your cash, but make sure you have enough.

9. The first few months will be difficult towards the latter part of the salary period, but your behavior will adjust slowly. Soon you will find that you have extra money at the end of the month.

10. And, stick to the plan. Once it becomes a habit, you won’t need to keep detailed accounts. But do monitor your expenses from time to time to make sure that you aren’t facing rising bills or expenses on some aspect of your accounting.

Tip: Oh, and quit using your credit card for discretionary items as that really screws your balanced budgeting up! I know! I made that mistake!