By Lesley Scorgie / Illustration by Christine Stephens
Sir John Templeton is arguably one of the most successful investors of all time. Born in Tennessee in 1912, he graduated from Yale with an economics degree in the midst of the Great Depression. In 1954, he created Templeton Growth, Ltd., his flagship mutual fund. Each $100,000 invested back in 1954 would have grown to $55 million in 1999, if all distributions had been reinvested. (In other words, leave the investment untouched and behold the power of compound interest.) Beyond being worth millions, Templeton is known for his philanthropy – it’s his full-time pursuit these days at age 94. Even when his net worth was puny, earning $50 a week after university, he invested his time, talent and treasure in worthy causes. In 2007, he was named one of Time’s 100 Most Influential People – not because he was rich, but because he gave. A lot.
Philanthropy is essential in any sound financial plan. In fact, after working as a financial consultant, and reviewing piles of files, I’ve concluded that it’s one of the top three characteristics that wealthy people share along with spending wisely and investing for the future. Regardless of your motivation, there’s a return on investment (ROI) for giving back, big or small.
Typically, ROI is the direct dollars an investor earns as a reward for the risks they’ve taken when investing their money. But if we revisit the conventional definition of the term, ROI can include expanded networks (the people or businesses you’re involved with), sales increase, promotions, job offers, extra publicity, and more. When you give, people pay attention. Instead of being average, you become a hero.
Cardel Homes, a Calgary-based residential home builder, figured out pretty early in its corporate life just how big the ROI on giving can be. Not only do consumers base purchasing decision on the quality of Cardel’s work, they also support the builder because it helps fund non-profits with some of its revenue. The company recently partnered with the YWCA of Calgary to hold Walk A Mile In Her Shoes – men walking in heels – to raise money for a women’s shelter. It also lets non-profits use the 155-seat Cardel Theatre up to six times every year for free. The payoff for Cardel’s director of marketing? Increased sales and lower advertising expenditures. Why? Consumers talk, and word of mouth is a powerful tool.
It’s much easier to give back, of course, when your personal financial house in is order. This means examining your money situation, even the ugliest debts that you’d rather avoid. Here are a few starting steps:
First, get rid of bad debt and get comfortable with the good stuff. Clean up your credit cards and consumer loans. These debts don’t help you grow your asset base like a mortgage could. Consolidate expensive balances by transferring high-interest debt to lower-interest options. For example, you could transfer your Visa card balance (approximately 19.5% interest) to a credit line (way lower interest rate). Set up all your debt payments automatically, so they’re taken out of your bank account on the day that you get paid.
Second, start saving and investing. No one else is going to do it for you. What sets rich people apart from average investors is that they save 15% of everything they make – not just the standard 10%.
Third, make the most of your investments. Only one in four Canadians take advantage of savings plans such as RRSPs offered through work. These plans often have matching programs whereby an employer will match an employee’s contributions up to a set percentage or amount every year. Free money is free money – take it! You don’t have to be rich to start investing; just $25 a month is a start.
Fourth, always find a way to give back.
I know, I know. Firsthand experience certainly taught me that it can be hard to find extra dollars kicking around. When I graduated from the University of Alberta and moved to Calgary in April 2005, I’d just spent $45,000 on schooling and living expenses over four years. For a girl on her way to financial freedom by 30, I was facing a less than attractive monetary reality: a mortgage, student debt, credit card expenses, car payments, and more living expenses. But even though money was tight, I still found a way to give back. I started volunteering – helping to build a playground at a women’s shelter, serving lunches at The Mustard Seed and packing hampers at the food bank. It wasn’t long before I was settled into my new life and was able to start donating dollars, too.
Most young people in Canada struggle with massive amounts of debt and negative savings rates. But regardless of your age, income bracket or financial status, you can still give. Think of it this way – time, talent and treasure. All three are valuable and come with an ROI. As Sir John Templeton said, without giving he “would have been unable to attain so many goals.
Lesley Scorgie is the author of Rich by Thirty: A Young Adult’s Guide to Financial Success (Key Porter Books). Listen to Unlimited’s monthly Rich by Thirty blogcast.
Category: Money
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