This week’s picks for the best in personal finance from around the web.

Bear markets are a learning experience. Really. (USA TODAY). No one knows the future, but all investors should be familiar with the lessons of past bear markets.

Older Americans are ill-prepared for hefty health-care costs (CNBC). How to buck the odds and be one of the few who is prepared.

Congress proposes three changes to Social Security that make sense (Forbes). Changes to cost-of-living adjustments, taxable income thresholds, and the amount workers contribute to Social Security are all up for consideration.

Protect your family from the unexpected (Fidelity). One family’s experience, and its lessons for the rest of us.

Buy experiences, not things (The Atlantic). We’ve reported on similar research in the past, but it’s worth letting these findings truly sink in.

And from the blogosphere…

Why volatility matters (Abnormal Returns). Great point about having a strategy vs. having a strategy you can follow.

Economics advances one funeral at a time (Bloomberg View). The dangers of predicting the impact of government actions such as Quantitative Easing.

Strange influences on financial decisions (Squared Away Blog). Social Security claimant, know thyself.

When history and finance go wrong (Think Advisor). Beware the planning fallacy.

Six reasons to live more simply—and give more generously (Randy Alcorn). Good, challenging thoughts.

We’d love to hear your responses to any of the above. To weigh in, just meet us in the comments section.

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

When I first proposed the idea of a workshop on biblical generosity at a church where I do some teaching, there was part of me that wondered what on earth I was getting myself into. And now, as the date draws near, that voice of doubt has grown louder.

But as I study the Bible and do some other reading in preparation for the workshop, I’ve also been greatly encouraged. I’ve been reminded of key biblical teachings that have long informed my family’s giving, and I’ve seen with fresh eyes other teachings that I didn’t even remember.

Here are some of the teachings that have stood out the most.

Biblical generosity isn’t about God’s need for money. It only takes about a second of contemplation to realize how ridiculous it is to think that God may run a bit short on cash from time to time. But if we need proof, we need look no further than Psalm 50 where he reminds us that he created the world and everything in it, and: ” If I were hungry, I would not tell you.”

God wants our hearts. There are many things that can distract us from our relationship with God, but money is the biggest distraction. In fact, Jesus described money as his chief rival for our hearts. Giving breaks the hold money can have on us because our hearts follow our treasure.

We’re designed to be generous. We were made in God’s image and one of God’s central characteristics is generosity. One of the most well-known verses of Scripture tells us, “For God so loved the world that he gave his one and only Son so that whoever believes in him shall not perish but have eternal life” (John 3:16).

No wonder people say you can’t out-give God. Try topping that gift!

So, if God is all about generosity, and if we were made in his image, that means generosity is woven into our DNA. It’s not surprising, then, that secular researchers who study human happiness have found that generous people are happier than those who are not generous. To live generously is to live in synch with our design.

How shall we then give?

Okay, so far so good. But how do we give? Fortunately, the Bible gives us plenty of guidance.

Choice gifts. Proverbs 3:9  teaches us to give the “firstfruits”—the first portion of any “increase” we receive. For a farmer living in Old Testament times, that meant the firstborn of the livestock or the first portion of the harvest, which Abel got right and Cain did not. For most of us, that means giving the first portion of our paycheck or any other increase we receive.

Financial planners like to say, “Pay yourself first.” God’s Word says, “Pay your purpose first,” and our primary purpose is to love God 

Proportionate gifts. In God’s economy, we’re not all to give the same amount; we’re to give based on a percentage of income (see Deuteronomy 16:17 and 1 Corinthians 16:2).

That’s why the widow’s two small coins amounted to a far more choice gift in Jesus’ eyes than the much greater sums given by the elite. She gave proportionately much more. 

Gifts guided by the 10% benchmark. Ah, the tithe—certainly one of the most controversial aspects of biblical generosity and perhaps one of the most controversial aspects of Christian living.

Some argue that the tithe is so yesterday, a legalistic Old Testament standard with no relevance in an era of grace. Others camp on Jesus’ statement that he did not come to abolish the law, but to fulfill it, which, they say, means the tithe is as relevant today as ever.

Here’s how I would wade into these shark-invested waters. The tithe is the historical biblical starting point of generosity, and it is not the intended stopping point.

There are at least two examples of giving 10% before the law (Genesis 14:17-20 and Genesis 28:20-22). And when God told Moses what to teach the Israelites, he included an instruction to tithe.

Ultimately, there were three tithes. Again, we would need more time to unpack that. But tithing is where God started his Old Testament followers.

In the New Testament, when Jesus discussed OT laws, he raised the standards—from murder to anger, and from adultery to lust. We don’t have a clear parallel when it comes to giving, but the principle certainly seems valid.

We would do well to start where God started his Old Testament followers, and then keep going.

Regular/consistent gifts. Paul taught the Corinthians to set aside a sum of money to be given on the first day of each week. Pair this with the teaching to give from our “increase,” and a case can be made for giving each time we get paid.

Quiet gifts. Our giving should not be about getting our name on a plaque or a brick. It should be done without fanfare.

Strategic gifts. In large part, Old Testament tithes were to support teachers of God’s Word and to help widows and the poor. These purposes are also taught in the New Testament (see Galatians 6:6 and any number of verses about helping the poor). Of course, funding the spread of the Gospel is strategically important as well.

How much of our generosity dollars should go to our local church is a point about which there is some disagreement. Some look to Malachi 3:10 as evidence that a household’s tithe should go to the local church, and then offerings above that amount are free to be used to support other Christian ministries. Others say today’s churches don’t typically function in the exact way that the “storehouse” referenced by Malachi did.

At the very least, we can say the local church is typically a wise choice for entrusting a significant portion of our generosity dollars.

Gifts given as an act of worship. Matthew 5:23-24 is a passage I didn’t remember. It brings home the point that biblical generosity is an act of worship. As such, when we give, it matters greatly whether we are living with integrity and are at peace with others.

Gifts given as an acknowledgement of God’s provision. For anyone who works hard, it can be tempting to believe in your self-sufficiency. Regular giving serves as a helpful reminder that it’s God who provides for us. King David’s acknowledgement of God after he and his people gave generously toward the construction of a temple serves as a good example.

Blessed to be a blessing

Another controversial aspect of biblical generosity has to do with the blessings that flow from living generously. There are many verses that speak to this, describing barns “filled to overflowing,” not having enough room to store all the blessings, generosity leading to prosperity, sowing generously leading to reaping generously, and more.

While we’ve all seen this principle over-emphasized in certain quarters, denying it exists in Scripture isn’t the answer either. As with many things of faith, the attitude of the heart seems central, as God teaches us to give not “in order to…” but “because of…” Paul addressed this issue head on when he asked, “Who has ever given to God that God should repay them?” (Romans 8:35)

God is the giver. Anything we give is simply a small portion of all that he has first lavished on us.

There are all types of blessings people experience as a result of living generously, including material blessings, which God’s Word describes as seeds intended for even more generous sowing.

Those are some of the key lessons I’ve learned about generosity through a fresh study of God’s Word. Now it’s your turn. Do you disagree with anything above? What are some of the key lessons you’ve learned about biblical generosity?

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

It’s easy to quantify the value of contributions made by cash, check, or credit card. But non-cash contributions can be much tougher to value. How much is that Reagan-era suit worth? Or that treadmill that’s gathering dust in the basement?

Thrift store guidance

The Salvation Army and Goodwill provide guides for donated items on their web sites. However, both contain very limited numbers of items and their valuations span a confusingly wide spectrum with little guidance to figure out which specific amount to use. For example, The Salvation Army says a woman’s dress is valued anywhere from $4 to $20. A computer system? Goodwill says it’s worth somewhere between $50 and $250.

There’s an app for that

Valuing non-cash donations has become easier—and potentially more profitable—in recent years with the introduction of several free online programs and smartphone apps. The leading makers of these tools are the companies that make tax preparation programs for do-it-yourself filers.

You don’t need to be a TurboTax user to use ItsDeductible. You can set up an online account that’s accessible from your computer or through a smartphone app (iPhone users only). Valuations for the more than 10,000 items in its database are based on average eBay sale prices.

Setting up an ItsDeductible account requires your name, e-mail address, password, security question, tax-filing status, and income bracket. To enter a donated item, you first enter the name of the charity and the date of the donation. Then you choose from 22 major categories, each of which splits into numerous sub-categories.

If you’re donating a woman’s dress, for example, you start with the “Clothing, Footwear & Accessories” category, choose “Women’s Clothing,” and then choose among six more specific options. After selecting the one that best describes your item, you make a judgment call as to whether it’s of “medium value” or “high value.”

If you’re donating a computer, ItsDeductible gives you the choice between PC or Apple and laptop or desktop. It even asks you to note the computer’s processor speed, and again, whether it’s of medium or high value.

ItsDeductible also enables you to track cash donations and miles driven for charitable work (the tool tallying the mileage deduction is based on current IRS guidelines).

One fun feature of ItsDeductible is that it keeps a running tally of your tax savings based on your tax bracket. You can view and print summaries of your donations or import the data directly into TurboTax Deluxe.

As with the TurboTax product, you don’t need to be a TaxACT user to use its Donation Assistant smartphone app (Apple and Android). However, you do have to be a TaxACT user to access the tool from your computer.

Valuations for the more than 1,300 items in its database come from an independent company that visits thrift stores to check on prices.

Setting up the Donation Assistant app requires only an e-mail address and password. It then operates in similar fashion to ItsDeductible. Categories split into sub-categories and you indicate whether each item’s condition is “good” or “best.” You can view summaries on your phone, e-mail yourself a report, or import the data directly into TaxACT Deluxe.

Which approach is best?

In a comparison of a handful of donated items, Goodwill tended to have the lowest valuations.

Of the two electronic tools tested, ItsDeductible provides valuations on the most items as well as helpful additional tools such as the charitable mileage tracker. Still, if you’re a TaxACT user, you may prefer Donation Assistant since it feeds directly into its tax filing software just as ItsDeductible feeds directly into TurboTax.

Chances are good that the items you donate are worth more than you think, and with several easy-to-use valuation tools freely available, there’s no reason not to claim the full, fair value on your tax return.

A more detailed version of this article first appeared in the November 2014 issue of the Sound Mind Investing newsletter. To read all of the articles and receive our latest investment guidance, sign up for a web membership. At just $9.95 per month, and with the freedom to cancel any time, it’s a low-risk/high-reward investment in your financial success.

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

This week’s picks for the best in personal finance from around the web.

Market turbulence serves as a reminder to tread lightly (NY Times). This is a good time to remember some of the most essential principles of investing.

What breaking the 200-day moving average for stocks really means (MarketWatch). It’s a metric that’s been talked about a lot this week. Find out more about what it means and why it matters.

The case for quitting your job (Wall Street Journal). Recommended reading, even if you like your job.

Beware of shifting options within Medicare plans (NY Times). How to avoid getting paralyzed by all the choices.

A 401(k) Conundrum: Can You Make Cash Pile Last for Life? (Bloomberg). And you thought building the pile was tough.

And from the blogosphere…

How scared should investors be? (Total Return – a Wall Street Journal blog). A man who knows his bubbles doesn’t see one right now.

What are the odds we’re heading toward another crash? (A Wealth of Common Sense). An oxymoron investors have to live with: “healthy correction.”

Here’s what to say when you don’t know why the stock market fell (The Upshot – a NY Times blog). Profit taking? Ah, no.

The importance of ignoring the noise of the market (The Sketch Guy – a NY Times blog). This point is worth repeating again and again, and besides, this post makes it in an especially humorous way.

The poison of the prosperity gospel (Randy Alcorn). It packs pews, but deceives hearts.

We’d love to hear your responses to any of the above. To weigh in, just meet us in the comments section.

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

It’s getting a little stormy out there on the market seas, which often feels uncomfortable and scary. Experienced investors expect times like this, but that doesn’t mean they like them.

Especially during such times, we all need to understand two realities about risk tolerance.

Your risk tolerance might not be accurate

The first reality check is that market downturns help us find out whether the risk tolerance assumptions we built into our investment plan during better times were accurate. During bull markets, it’s easy to think of yourself as a risk taker. But when the market changes direction, your feelings about risk may change as well.

Your risk tolerance really shouldn’t change based on market conditions. So, if it, in fact, did change recently, that probably means it wasn’t accurate in the first place.

All of our strategies except Dynamic Asset Allocation (DAA) require that people determine their optimal asset allocation by taking our investment temperament quiz (membership required) and then pairing their risk tolerance with their investment time frame. (The “Dynamic” part of DAA refers to the fact that the strategy, in essence, has users change their asset allocation as market conditions change, whereas with the other strategies a user’s asset allocation stays the same throughout a given year).

Our investment temperament quiz helps people determine whether their risk tolerance makes them a Daredevil, an Explorer, a Researcher, or a Preserver. How that temperament matches up with your investment time frame determines your optimal asset allocation between stock funds and bond funds.

This might be a good time to retake the quiz and see if your risk tolerance really is what you assumed it to be.

Time frame trumps risk tolerance

While risk tolerance certainly informs a person’s ideal stock/bond mix, the reality is that time frame is of greater importance.

To invest in the stock market requires a willingness to accept some degree of risk, perhaps more than newer investors realize. Someone right out of college, or anyone with more than 20 years to invest for that matter, simply can’t say I want to invest but I don’t want to take any risk. When you have that much time, playing it super safe is the riskiest thing you can do. If you park your retirement funds in a CD, inflation will likely outpace the interest you’ll earn.

That’s why for anyone with more than 20 years to invest, no matter what the quiz says about their risk tolerance, our asset allocation matrix calls for a 100% allocation to stocks. It’s only when you have less than 20 years to invest that the matrix begins to call for the use of bonds.

By the same token, someone without much time to invest can’t afford to throw caution completely to the wind. However, even for people in their later years of retirement, we would only recommend a 100% bond allocation to the most conservative investors. Most investors, even in retirement, need to maintain a healthy allocation to stocks. That’s because of increased longevity; most older investors need to continue accepting some degree of risk in order to give themselves the best opportunity to generate the investment returns they’ll need.

How has the market’s recent performance impacted your view of risk tolerance?

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.