Along with homes decked out in festive lights and the chance of snow blanketing our neighborhood streets, something else magical tends to happen during the holiday season: We give.

Last year alone, Americans gave an estimated $450 billion to local and national causes. A large portion of that number was given between December 1 and the new year. Similarly, studies show that many individuals also look to give to their children or grandchildren. So, if you’re feeling a little like Saint Nick right now, this might be the reason why. And while it’s wonderful to participate in the joy of giving, there are also ways to apply a little strategy to your money to make your thoughtful dollars go the distance.

Two hands holding a black paper heart

Whether you’re giving to a specific organization or loved ones, here are some tips and tricks on how to make your money stretch.

Emily Dafferner, a CERTIFIED FINANCIAL PLANNER™ with Reliant Investment Management, says there are two types of charitable giving that are most common: direct charitable giving and indirect charitable giving. She also sheds light on a living transfer of wealth called generational planning (giving to kids and grandkids).

“Direct giving is the most common. It’s giving something tangible — like cash — to a charity or cause you support,” Emily explains. “Indirect charitable giving would be more long-term and strategic. This involves coming up with a long-term plan to give money over a period of time.”

Forms of indirect giving can include donor-advised funds, setting up private foundations or creating charitable remainder trusts. Both of these avenues require thinking strategically about when, how, and how much money an individual or family wants to give to a cause they find important.

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“Anytime you’re giving, the tax implications are important,” Emily explains. “There are people who give because they’re generous, and then there are people who know there’s a tax benefit. But in order to get that, you have to know what the tax benefit is.” This is where seeking out the knowledge and resources of an investment group can come in handy.

“We like to encourage clients to think about having a long-term giving strategy,” Emily adds. “This basically means having a plan for their giving. This allows you to plan and strategize — and for the charities to strategize, too.”

While planning out your giving might feel less spontaneous, long-term giving allows you to incorporate a charitable spirit into your life all year long. Plus, the tax benefits are nice. “When you give, it encourages similar generosity or giving behavior and habits in those around you, whether you’re seeking to intentionally teach this to your children or just hoping to rub off a little bit of influence on your friends and family,” Emily says. “Remember, your actions say as much — or more — as your words.”

In addition to its tax benefits and influence, charitable giving can also have health benefits. When you give, it can lead to reduced stress and even feelings of happiness and satisfaction.

Woman writing in notebook

There are two common types of charitable giving: direct and indirect. Each one requires strategic thinking of when, how, and how much to give.

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Another form of giving is generational planning. While it may not be considered charitable giving, it has similar effects and long-term tax implications and benefits. “The way we like to think of this is a living transfer of wealth,” Emily says. When it comes to leaving behind wealth for family members, it’s most often thought of in an “after death” scenario. However, by setting up funds before then, donors can see the direct impact of their wealth at work, the value of which shouldn’t be overlooked.

“There’s a benefit to giving while the kids or grandkids have a specific need. You get to see your dollars at work,” Emily explains. “You can think of it as an investment. You put money in the market, and you watch your investments grow. In the same way, you make investments into your kids or in a philanthropy in your local community. You see tangible change in their lives — whether it be education or a new house built for the homeless.”

To put it simply, spreading your wealth while you’re alive can be immensely gratifying. “Every dollar counts and can help someone in need,” Emily adds.

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