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  • Writer's pictureRebecca Herbst

Introducing the Fi-lanthropy Calculator

Updated: Feb 16

Yield & Spread has a unique mission. We promote financial literacy as means to better ourselves but we also seek to give back. I personally believe that when we know how much money we need to live a happy and fulfilling life, it helps us get off the hamster wheel of wanting more, more, more and allows us to create more space to give some of that wealth to others. Especially to people who are desperately in need.


If you're new to this blog, you'll learn that I am a member of both:


  • The FIRE community: I retired early and left the traditional workforce at the age of 32

  • And the Effective Altruism community: These are the top three ways I give back. (1) I pledge to donate a portion of my income to charitable causes each year, (2) I plan to donate the vast majority of my wealth upon my death, and (3) I also direct all proceeds from Yield & Spread to effective charities.


Before I discovered Financial Independence, I was royally intimated by investing. I had no real financial plan and did not have a good understanding what I needed to be happy. I had a scarcity mindset. Before I discovered Effective Giving, I thought that donating was something that only the wealthy did. And since I knew so little about money, I of course did not think I had enough to give meaningfully. As I began to pursue FIRE, I realized that I actually had quite a lot of money. In fact, enough to retire early and live off my investments! My financial confidence helped me understand that I could quite easily help others by making regular donations to highly impactful, cost-effective charities. And that it would barely impact my plans for early retirement.


So if you are on the journey to FI and you are wondering what your legacy will be, I want to do everything I can to support you. You can pursue Financial Independence AND you can make a difference.


Curious to how you can achieve FI and give back? Check out our Fi-lanthropy Calculator! Designed to help you understand how a commitment to charitable giving will affect your FI timeline and retirement portfolio. Spoiler alert: it's a lot easier to give back than you might think!




The Fi-lanthropy Calculator explores the impact of taking a giving pledge on your FIRE plans. For those of you not familiar with the concept of a giving pledge, check out communities like One for The World or Giving What We Can. Both groups have thousands of people who have committed to donating a portion of their income to charity each year. They donate to charities that are highly effective -- where the best charities have shown that they are 100x more impactful per dollar donated. The calculator will help you understand how much you can give to charity with confidence.


Let's me walk you through a little illustrative example of the calculator to see how you truly help others.


Let's say you make $70,000 a year after taxes, and spend $40,000 a year, meaning you have a personal savings rate of 43%. You already have $100,000 in your investment portfolio. You have not yet taken a giving pledge but are considering donating 1% of your income annually on a go-forward basis. 


Using the Fi-lanthropy Calculator and building upon the traditional FI guidelines put forth by the 4% rule, you would find that taking a 1% giving would increase your FI timeline by 0.5 years, or 6 months of working. In the scheme of 17+ years of working, this is barely a noticeable change in life plans.



The above chart shows how your pledge amount would impact your FI timeline.

In this scenario, taking a 1% pledge would only add a half a year of working.


Assuming your income and expenses remained the same, it means you would donate $700 a year, or $21,000 over the course of 30 years. According to The Life You Can Save's Impact Calculator, this means you could help to purchase 10,500 bed nets to protect those living in malaria-stricken areas from infected mosquitos, and help save 5 lives! That's incredible, no!? What an amazing thing you could do for others, without a negative impact on your quality of life. I would actually say this would improve your quality of life knowing you were able to help others!


Not only can you make regular donations throughout your years of working, you could also consider donating part of your nest egg upon your death like me. In this same example, in 17.5 years from now, you could retire with an estimated portfolio value of $1,017,500. It is highly unlikely you would spend down on this given the 4% rule, but let's say you were just left with $500,000 upon your death. You could easily donate that amount which equates to the purchase of 250,000 bed nets, or 125 lives saved!!!



The above chart shows your portfolio value over time and highlights your FI number

as well as your portfolio value at traditional retirement age given the example outlined here.



There are of course a number of assumptions here, and you can read more about those directly in the calculator. But the whole idea here is that I want you to see just how much good you can do, while also working towards Financial Independence and building the life YOU want to live.


And for me, the life I want to live includes charitable giving. I genuinely believe we can all be superheroes and help save lives. If you have a shred of a doubt, check out the calculator. I bet it will change your mind.


Want even more help with your financial plans for give? Apply to our coaching program for aspiring philanthropists!


 

Disclaimer:

The information contained in the Yield & Spread website, course materials and all other related content is provided for informational and educational purposes only. It is not intended to substitute for obtaining accounting, tax, or financial advice, and may not be suitable for every individual. Yield & Spread is not a registered investment, legal or tax advisor or a broker/dealer.


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