Blog | Personal Finance

You’re Not Really Rich If You’re Not Giving Back

Why giving is so powerful and why lack of charity makes you poor in mindset

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We’re officially in the holiday season. For many, this is traditionally a hectic time. Between family commitments, parties, and gift shopping, a lot of time, energy, and money is spent trying to hit the holiday bullseye. This year, thanks to the pandemic, it’s an even more stressful time...and a lot of people are suffering both from illness and from broken spirits.

Even in normal times, many people find the holidays to be more stressful than joyful. The Mayo Clinic has a whole article devoted to beating that holiday stress, and there’s some good tips there. This year, I’m sure it will be even more stressful for people as they choose between seeing loved ones and risking exposing themselves and others to the coronavirus.

It’s no wonder that people find this time of year so stressful. According to MarketWatch, households are expected to spend an average of $1,387 during the holidays. While that’s a 7% drop from 2019, given the state of the economy that’s a lot of money for most households…maybe even money they don’t have to spend. Yet, they do so because that is the expectation.

Scrooge and a poor mindset

Interestingly, in popular culture, it's the rich who are often depicted as miserly and grumpy come Christmas time. One of our most treasured Christmas stories, “A Christmas Carol”, is the poster child for such a sentiment.

No one would argue that Scrooge is an admirable character. In fact, he's simply nasty. But the reality is that anyone can be a Scrooge, whether rich or poor. Scrooge is simply a poor mindset. My poor dad always said, “I’ll give money when I have money.”

My rich dad said, “The reason your dad is poor is because he doesn’t give.”

The Scrooge mindset is a poor one that puts money over people. The reality is that the Scrooge from “A Christmas Carol” might be rich in money, but he was poor in mindset. That, of course, was the point of Charles Dickens’ famous story.

My poor dad had a Scrooge mindset, thinking he needed money in order to give to people. He didn’t mean to be a scrooge, and if you called him one, I’m sure he would have bristled. But the facts remain that he was.

You don’t have to be rich or poor to have a scrooge mindset. You simply have to view giving as something that takes away from you rather than something that gives back to you.

The power of giving back

Kim and I have talked for many years that one of the best reasons to become financially free is so that you can give. We preach that giving back should be part of the way that you budget your money.

I learned this lesson from my rich dad, who believed in the law of reciprocity. Said in a scientific way, this can be stated as for every action there is an equal and opposite reaction. Or said religiously, there is Jesus’ words, “Give and it shall be given back to you.”

No matter how you say it, giving is important because none of us become successful on our own. I had a rich dad who invested in me and taught me how money works. He did so generously and without charge.

If you want money, give back

My rich dad said, “If you want a smile, the best way to get one is to give a smile.” He also said, “If you want a punch in the mouth, the best way to get one is to give a punch in the mouth.”

My rich dad’s point was that you get what you give. In Asian culture, we say this truth in a Karmic way, “Give what you want.”

Many people say, “I don’t have any money to give, but I do give my time.” The problem with this thinking is that, again, you get what you give. If you give time, you get time. But if you want money, you should give money.

This is why if you want to be rich, you must get in the practice of giving money regularly. This is also why I made giving 10% to charity a core part of my board game, CASHFLOW, which is designed to teach you how to be rich, both in money and in mindset.

The reality is that in order to be truly generous, you need to give your time, your talent, and your money. Most people are comfortable with the first two, but if you want to get rid of your poor mindset, you need to do all three.

Giving back makes you happier and healthier

I’ve had many partners and advisors who have shared their knowledge with me and brought me into their projects to invest. While we both benefited from these investments, it is the shared giving of our time, talent, and resources that brings us the most joy.

This is natural. Science has shown that giving back produces true biological changes that contribute to happiness. Those that give are happier than those that receive. When you give, endorphins are released in your body that give you a feeling of a high. And giving itself, when done for the right reasons, reduces stress and makes you healthier.

Given this, you’d think that people would be happier during the holidays. But perhaps it’s because we don’t really want to give or be generous that we’re so stressed come the holiday times. And perhaps it’s time to really focus on the great gift we have each year to focus on being thankful and for giving back to those we love, including ourselves.

At Rich Dad, we believe the greatest gift you can give is the gift of a healthy self. When you are healthy, wealthy, and wise, you are able to be present with those who you love—and that is the greatest present of all.

If your inner Scrooge is coming out during the holidays this year, don't fret. You're not alone-and there's something you can do about it, starting today.

Pay yourself first to give back more

Kim and I often talk about the concept of paying yourself first. Most people look at their budget each month and focus on what they have to pay to others. By the time they finish paying their bills, there is very little left for discretionary spending...let alone charity. This too is a poor mindset.

Even when we were poor, Kim and I would make sure paying ourselves first was the primary expense in our budget. This gave our bookkeeper, Betty, a heart attack. But we were firm on this. Our most important expense was paying ourselves.

This doesn’t mean we used that money for whatever we wanted. The reason why paying ourselves first was important was so that we would be sure to have money both to invest...and to give back. Again, you get what you give. We knew that if we prioritized investing and giving, that we would get more money back.

And we didn’t stiff our creditors either. We just negotiated with them for longer payment terms or extensions to due dates, in order to make sure to pay ourselves first each month.

Eat less and work out more

The holidays are a time when most people blow their diets, and in grand style. When we do this, not only do we feel horrible, but we also let the guilt of making such decisions make us grumpier and grumpier. Our subconscious knows when we're making bad decisions, and unless we own them, we'll usually start blaming others, often in inexplicable ways.

It doesn't have to be that way. Rather than pack on the holiday fifteen this year, make it a point to eat sparingly. Think of every calorie saved as an investment in your health for the year to come. Can you enjoy yourself? Certainly. But you don't have to do it to the extreme.

But eating right isn't enough. Make sure to take some time during the busy holiday season to exercise. Whether going for walks after dinner, hitting that home gym hard in the morning, or riding your bike in the afternoons, there are ample opportunities throughout the day to get some exercise in. You'll feel better, and you'll find that joy returning even when things get stressful.

Give yourself the gift of financial education

Most people have some downtime during the holidays. You could fill it with an extra helping of pie, too much wine, and hours on the couch watching football-or you could spend it improving your financial IQ—because the smarter you are about money, the more money you’ll make. And the more money you make, the more money you can give back to charity.

Go to the library and get books on finance, accounting, and investing. Find some great podcasts (like the Rich Dad Radio Show) and listen to them as you cook holiday meals. Subscribe to helpful newsletters like Rich Dad Advisor Andy Tanner's. Or even play CASHFLOW online for free with friends and family.

And with your newly-gained knowledge, start making a plan on how to put it to use in the New Year. Set a goal to see how much you can learn and make between now and next holiday season—and how much you can give.

Give back to others

We've found that when we're overly focused on ourselves, we become the worst people to be around. One of the best ways to beat the Scrooge spirit is to do what Scrooge himself did—give your time, talent, and money.

Take some time to serve those less fortunate than you this holiday season. You can go through your belongings and give away things you no longer use. You can serve at a local food bank or shelter. Or you can give to a favorite charity. The options are nearly limitless on how to give back.

One tradition that you might want to start is to participate in Giving Tuesday, which caps off consumerism’s biggest time of year, Black Friday and Cyber Monday. Giving Tuesday is focused on getting people to give to their favorite charities, and it’s a good antidote to a weekend where a lot of money is spent on things that will probably be forgotten in a year’s time.

As you work on becoming a better version of yourself, you'll find that you're a better person to those around you. Put these three things into action, and you'll discover that there can be no better time than holiday time.

Happy Holidays from all of us at Rich Dad!

Original publish date: December 22, 2015

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