Calculating Your True Gross Pay for Tithing Purposes

I had several good comments/questions on my post titled Pay Yourself Second and I'll be giving you my thoughts on these over the next few Sundays. Here's the first:

I've always wondered if your tithing should include 10% of investment earnings? That would be your true gross.

Just to put a little context to this question, we were talking about paying God through tithing (first) before paying yourself through saving (second.) I noted that I felt the tithe was to be on your GROSS pay -- not your net. That's where this question came from.

In my opinion, the reader is headed in the right direction -- the direction of adding up all your sources of income and tithing off them. Yep, ALL the sources of income. For me, this includes:

• Income from my job (including bonus)
• The employer match portion of my 401k
• Side-business income (including this blog)
• Capital gains (when sold/realized -- not paper gains)
• Interest
• Dividends
• Monetary Gifts

Quicken makes it easy to add all these up as one of its standard reports lists income and then expenses. I take the total income number, multiply by 10%, and thus have the amount I should have tithed through that part of the year. I check this against my tithe "expense" in Quicken to determine whether I'm ahead or behind and I adjust accordingly (write a check to catch up or cut back on the next check to scale back a bit.) There's a little leeway every year, so I try to be a bit over -- maybe 10.3% or so just to be sure I get in the full tithe. ;-)

Comments

[D]

When I calculate my 10% I only include investment income that actually touches my operating account. Any income and growth on tax deferred accounts I leave out, for this money will be tithed when it becomes my future income. I use Quicken, so when I run my report I just uncheck the tax deferred accounts.

Just another twist.

[Dorky Dad]

What a great topic! Both FMF and D touch on a point I've often pondered... should I tithe on that which goes into my company-matched 401(k) account now or when it's withdrawn (presumably at retirement)? I consider myself a steward of the money entrusted to me, so this isn't an issue of greed or trying to defer rendering unto God what is God's. This is a practical question because if I tithe on the gross then the question arises, "Do I only tithe on the actualized gains at time of withdrawal/retirement?" I know myself and don't trust that I'll accurately maintain detailed records of the cost basis of all holdings in my 401(k) for the next 30 years. I choose to take the practical route and tithe on my gross income minus my and my employer's match to 401(k) contributions so that when it's time to retire, I'll simply tithe on the entire withdrawal rather than just the 10% from any gains.

Maybe someone else has considered this and has a solution to keeping track of the cost basis of investments in a 401(k) over a long period of time? Based upon my employment track record, it wouldn't surprise me if I worked for at least another 7 or 8 different companies before retiring, so relying on my current retirement plan administrator isn't a practical solution.

[R]

You have given me, too, something to think about about 401(k) matches. I do my tithing and giving using a spreadsheet, and I include income from all the sources you have identified except for the 401(k) match and an employer pension plan.

Just for information on technique, I use a spreadsheet to keep track of income and places I give to. I try to maintain percentages on the various places I give to, such as church, a compassion ministry, etc. Of course, the spreadsheet is very helpful in helping me watch the percentages. My wife and I strive to give 10% to our local church ministries and then various percentage amounts to other ministries. I recommend a book, The Eternity Portfolio, by Alan Gotthardt (also, see http://eternityportfolio.com ). It helps you look at how to structure your giving based on your income, your passions, etc. It helps you develop a strategic perspective on your money that's for use now and for eternal purposes.

[Lord]

Perhaps you should go whole hog and count FICA too, but then again you will be counting it when you receive it. Or how about moving to reverse tithe where you give 90% and keep 10%. Now that is impressive.

[FMF]

I'm working on the reverse tithe, actually. You?

[tithe and offering dude]

when to tithe, what to tithe, where to tithe, how to tithe, can be so complicated. Spirit led giving, once and for all answers the age old question, "should i give of my gross or net" or from "this or that" the answer is ask the Holy Spirit. if we tell you no, will you give that money, if we tell you yes, will you. Why does giving have to come down to that? Why is the Holy Spirit kicked out? i believe in spirit led giving. Can you tell? but before you draw conclusions, i do give above ten percent, i just don't believe it is a minimum mandate. that's all.

[Steve]

I give far less than ten percent. Is God counting. Everyone is trained to walk on egg shells in regards to their giving. If they ask for a tithe, give them nothing. That is what God says. "Give them no possession, I am their possession." That is, the Levitical tithe. Giving gifts of money is okay if they are not heretics. Heretics should be cut off.

[mike]

I'm not going to subject God to the stringency of Quicken or my own sharp pencil when it comes to tithing. I just want to be sure I don't "under-tithe". If I give more, call it a love offering or whatever. Hence, I tithe off every dollar that comes my way, whether it's a tax return, investment income, retirement fund (the principal was already tithed upon, but that's OK), other income. To me, all those dollars are "increase". Besides, it's a whole lot easier to give the extra than to labor over "pencilling out" how much of my retirement check or tax-return has already been tithed upon. That's nuts!

[JN]

The tithe is God's, per Leviticus 27:30. Is anyone so arrogant to try and keep what God says is His? Regarding WHICH to tithe, paper gain or cash gain, I am unsure. OT farmers brought the tithe based upon the size of their herds, not how many sheep they sold. Wealth was measured the same way. 1 Cor. 16:2 is quite clear to bring the tithe weekly, but today's financial instruments compound the issue. In the example of CDs and fixed deposits inaccessible for periods of time, the answer is clear, wait until the term is over and then tithe on the interest earned over that period. But what about day traders? How should such an investor age his investment capital before tithing on it... paper gain, short-term cash gain (weekly) or longer-term cash gain (longer than weekly)? Investments with up-and-down equity makes this answer elusive.

[JN]

I have concluded that I will tithe on investments only when I withdraw profits out. That way, every cent of increase is accounted for in my giving.

[Deb]

I am an early retiree and will be receiving the payout of my 401k and pension soon. I think I understand about tithing on 401k. Since I tithe on the gross, I think I would tithe on the company matching portion. Let's say that is 10% of my total 401k, I would tithe on that portion.

Secondly, I am getting my pension in one lump sum and investing it. How do I tithe it? I think I tithe as I get the distributions. Correct? I would tithe on any tax refunds I receive on interests. Make sense? By the way, I am not a stickler for numbers. I look forward to the day when I am tithing way over 10% and living a debt free, balanced life on the remainder!!! thanks!!!

[FMF]

Deb --

You'd tithe on the company match, the earnings of the company match, and the earnings of what you contributed as well.

AS far as your pension, I think tithing as you get payments is fine.

BTW, I don't think you need to tithe on tax refunds as you've already tithed on them when you tithed on your gross pay. (Better solution is to change your deductions so you don't get a tax refund.)

[greg]

How do I figure a tithe for self employed, with an adjustable Gross Income, I would love to be able to give 10% of my total income, but that would put me so far in debt that I wouldnt be able to stay afloat.

[Taryn]

What an interesting idea- I never thought to tithe on the company matching. huh.

Lets not get too legalistic here- I think that the bible is helpful in showing us one way to tithe- but in my opinion the point is not to give 10% of you income- but to do all of the wonderful things you just posted about. Heart matters. No?