Actually, effective saving is not synonymous with hoarding. Good savers are much more like minimalists, retaining and investing in only those items that will bring them frequent happiness and use. In fact, among the first steps you take after resolving to save better – after identifying your financial goals and understanding your current financial situation – should be getting rid of quite a few old possessions. Here’s why.
Space Is Valuable
It’s easy to ignore the value of space: It seems free. However, when you pack your storage spaces with junk you don’t need, you pay in a variety of ways. First, it is more time consuming – and therefore more expensive – to clean and maintain areas that are piled high with possessions. To care for all your belongings, you must devote entire weekends and ample supplies or else pay a professional to keep your spaces in good condition and order.
Additionally, by filling storage spaces with unnecessary belongings, you potentially endanger more valuable items. For example, a garage housing outdated tech, outgrown clothing, and other unwanted stuff usually cannot fit a vehicle, so your car is left to rot outside in the sun and rain. Finally, many people accumulate so many items that they must acquire offsite storage, which requires an overt monthly payment to storage companies. Even ignoring the initial investment of acquiring so much stuff, possessions are costly.
Donation Has Financial Benefits
While some people find it financially gratifying to sell what belongings they can, often it is less work and more beneficial to donate unwanted stuff. The government rewards those who make significant charitable donations by offering tax deductions, meaning with enough donations, you will pay fewer taxes and have more income left over for your own use.
Deductions through charitable donation work identically to the standard deduction. Every dollar or dollar of value in items donated can be deducted from your income to help reduce the amount you pay come April 15. However, this statement can be misleading: You don’t necessarily save $1 for every dollar you donate; rather, you reduce your taxable income, thereby reducing your taxes.
For example, if you earn $50,000 every year and use the standard deduction, you will owe $7,175 in taxes. However, if you earn $50,000 and donate $9,000-worth of possessions – perhaps through something large like boat donation – your taxable income is $41,000, meaning you would pay just $6,375 in taxes: a savings of $800. You must donate a significant amount to have a greater impact on your taxes than the standard deduction, but by donating, you escape storage-related expenses and often improve your community – which is the final reason donating is excellent for saving.
Your Community Impacts You
It is undeniable that charitable activities have positive effects on the community. Those less fortunate than you benefit greatly from your charitable donations; whether you give money or items, the disadvantaged desperately need your support. Such gifts typically help the less fortunate improve their lifestyles in some distinct way, such as providing safe, reliable shelter and food or clean, professional clothing suitable for job interviews. By addressing such fundamental needs, you can help those in your community improve, which steadily makes the area around you safer and more pleasant.
A happy, healthy community is excellent for your finances for a few reasons. Most obviously – and least meaningfully – it makes your property values skyrocket. Additionally, giving to people in this way improves your self-worth, which makes you more capable of productive behaviors like saving money. By investing in your community through charitable donation, you are investing in your own future. Thus, you shouldn’t perceive giving stuff away as a waste; you should see it as an opportunity to support your values in a way that will increase your financial success.
Like Saving Advice? Subscribe!
Subscribe to get the latest Saving Advice content via email.