How to Calculate Your Tithe (Or at Least How I Do It)

A couple good comments on how to calculate your tithe (what to include, what not to include, etc.) left on my post titled Calculating Your True Gross Pay for Tithing Purposes. Here's the first one:

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.

Interesting approach. I'll detail how I handle this in a minute. For now, here's the second comment:

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 should I tithe on that which goes into my company-matched 401(k) account now or when it's withdrawn (presumably at retirement)?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.

These are very good issues and they both get to the practicalities of what to tithe on and when.

Let me start by making a couple statements before I tell you what I do:

1. God doesn't really care about your money. Tithing is about a heart-issue between you and God -- that you put Him first in everything, which includes your finances. As I've noted before, the purpose of tithing is to teach us to put God first in our lives. So as long as you're trying to do the right thing and attempting to be "honest" in your tithe, I think that's what matters to God. In other words, I don't think He's going to disapprove of someone who tries their best to pay a tithe and for some reason or other ends up "only" giving 9.9% to Him.

2. My answer is not the right answer -- there are a couple ways you can do this. Mine is just my preferred method.

That said, here's what I do:

I track all my income and expenses in Quicken, and I count all the following as income:

• My gross pay
• My employer's 401k match
• Any bonus I get
• Interest (in both taxable and tax-deferred accounts)
• Dividends (in both taxable and tax-deferred accounts)
• Cash gifts
• Net side-business income (sales less expenses -- this is gross income to me personally from business actions)
• Realized capital gains (in both taxable and tax-deferred accounts)

Here's what I don't count:

• Unrealized capital gains (in both taxable and tax-deferred accounts). In other words, if a stock has a paper gain, I don't tithe on it since I haven't yet realized the gain. But if I sell it and get a gain, I tithe on that amount.

Quicken tracks all of this nicely and gives me a total income number that I can then just take 10% of and pay my tithe off that.

This said, I will have a tithing nightmare when it comes retirement time.

As the commenters note above, they prefer to NOT tithe on tax-deferred accounts at all until retirement (at which time everything will be tithed on.) This should be rather easy to calculate as I'm assuming they'll just tithe on what they withdraw.

My case is a bit messier. Technically, I just need to tithe on the unrealized capital gains in my tax-deferred accounts since everything else has been tithed on already. That means I need to keep accurate records of the cost basis for every security for all of my purchases (not reinvestments of dividends, since I've already tithed on them) so when I sell them I know what my gain is and I can tithe on that. It's do-able because Quicken will help me, but it's not the cleanest alternative at retirement. The commenters' systems are much better at this time than mine.

But my thinking is that I want to be generous towards God and if there's any sort of question about how tithing can be done, I want to fall on the side of paying God first in every case. That's why I tithe even on my increase that I have realized but don't really have access to (like an employer match in a 401k.) This is not to say that my way is right and the other way is wrong, it's just how I feel comfortable conducting my finances. I think the other option is just as valid and, as I said, much easier to implement at retirement.

What I'll probably do at retirement is simply tithe on all my withdrawals. Yes, I realize this will mean I'm "double tithing" on some money, but it's not really that big a deal. It will be much simpler to calculate this way. In addition, God has blessed me with so much that I don't mind giving some extra. I'll have plenty to meet my needs and it's fine with me if I'm a bit more generous to God than what is "required." It's all His anyway. ;-)

Comments

[Kris]

I have a question. I only recently joined a church that there is tithing. We live paycheck to paycheck and have debt. I already feel like we can't live on what we have. How do I begin the process of tithing? A percentage point at a time? To take 10% off the top would mean not paying bills. Any suggestions?

[D]

1st - Excellent FMF! It is always best to do what is write in your heart and soul. Who cares what someone else does!

2nd to Kris' comment - Kris, what I personally have found in life, from the depths of debt overload, to paycheck to paycheck, to getting by - there is always something for tithe. God will provide. I don't know how this works, but there is always enough. And enough is all we need.

If you have debts - renegotiate the interest or payments, without increasing the debt or time.

Look at where your $$ goes - track for 30 days in a notebook. You may be surprised, by something you took for granted, that you can pass up and put in a safe place for the basket.

[Missy]

I look forward to your Sunday Posts! I find the post inspiring and they just make me feel good. My husband and myself both tithe and since we have been doing this for the last 5 years or so we have always had enough. How does that work? Don't know. It just does. If you are faithful and obedient God will bless you.

See you next Sunday!

[Isaac]

Excellent post FMF. I totally agree with all that you had to say. I have seen evidence of that working in the lives of others in my church. One couple sold some stocks in order to have money to buy a house. They debated wether they should tithe on their gains. In the end they decided that they should tithe on it. So they wrote their check and trusted God. When they finally purchased their new home, they were able to get the seller to lower the price. The lowered amount was equal to the tithe on their gains. Keep in mind that this was in the midst of the last real estate boom about 3 years ago in Southern California, when houses were going for 10-20% above listing price, not below. It just proves that when we are obedient and trust God he takes care of us better than we could ever imagine. To all the doubters out there, tithing works, test God and he will never fail.

[Terry]

I earn minimum wage, have outstanding student loan debt, and a creditor preparing to sue me. The creditor will be able to garnish my wages or my bank account (which never has more than one paycheck worth of cash in it). I am having a hard enough time paying the rent and student loan payment on time. Will the creditor give me a break on any amount I tithe? If not, how can I make it all work?

[Rod]

Terry,

FMF makes a great point. Tithing is about the heart, about trusting God. Do you believe he died on the cross for your sins, yet do you trust him with your money.

I, like you, personally walked away from a business and faced many of the same things you are now facing. Someone shared this principle with me and it changed my life. Have you read Mal 3:8-10? vs.3:8 “Will a man rob God? Yet you rob me. “But you ask, ‘How do we rob you?’ “In tithes and offerings. Mal 3:9 You are under a curse—the whole nation of you—because you are robbing me. Mal 3:10 Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it.

Yes, the Word is convicting, but that is not my point. God actually says TEST ME, PROVE ME! NO where, I mean no where else in the bible does GOD say test me.

Test Him...He loves you and cares for you! Matthew 10:31 "Do not fear therefore; you are of more value than many sparrows. John 3:16!

In Christ,

rod

[Randy]

I've recently started working and would like to know:
If I'm tithing, do I tithe 10% of my income after TAX, or before TAX?

[Jake]

Randy --

The Israelites were commanded to give 10 percent under a covenant that could not make them perfect (Heb. 7:19; 9:9). How much more joyfully should we give to God under the new covenant? We have the sacrifice of Jesus Christ, which does cleanse our conscience (9:14). And yet it seems that in America today, even though we have so much more than the Israelites did, people give on average less than half the percentage the Israelites did. Many people today give less to the church than they spend on luxury items. Some people simply cannot give very much, but many people could if they wanted to. God calls on us to examine ourselves, to examine our priorities, and to be generous.

The old covenant gave us condemnation; the new covenant gives us justification and peace with God. How much more should we be willing to give freely and generously so God's work can be done in the world — to proclaim the gospel, to declare the new covenant ministry that gives us true life, and gives that message of life to others?

A person who has faith in Jesus Christ does not worry about whether tithing is commanded in the New Testament. A person who is transformed by Christ to be more like Christ is generous. Such a person wants to give as much as possible to support the gospel and to support needy members. Christians should give generously — but giving is a result of their relationship with God, not a way to earn it. We are given grace through faith, not through tithing.

Some people act as if Christ liberates us from the law so that we can keep more for ourselves. That is false — he liberates us from the penalty of the law so that we can be free to serve him more, as loving children and not merely as slaves. He frees us so we can have faith instead of selfishness.

When it comes to money, the real question is, Is your heart in the gospel of Jesus Christ? Are you putting your money where your heart is? You can tell where your heart is by seeing where you are putting your money. "Where you treasure is, there will your heart be also," Jesus said (Matthew 6:21).

[Jake]

also

Paul cited the example of the Macedonian churches, who had given generously, even to the point of self-sacrifice (8:1-5). The example is powerful; the implications are strong that the Corinthians needed to respond to Paul's sacrifices by making sacrifices themselves. But Paul did not make a command (8:8). Instead, he asked first for a turning of the heart. He wanted the Corinthians to give themselves to the Lord first, and then to support Paul. He wanted their gift to be done in sincere love, not from compulsion (8:5, 8). Paul reminded them that Christ had become poor for their sakes; the implication is that the Corinthians should make financial sacrifices in return.

But then Paul reduced the pressure, reminding the Corinthians that they could not give more than they had (8:12). Nor did they have to impoverish themselves to enrich others; Paul was only aiming for equity (8:13-14). Paul again expressed confidence in their willingness to give, and added the peer pressure of the Macedonian example and the boasting he had done in Macedonia about the generosity of the Corinthians (8:24-9:5).

Paul again noted that the offering must be done willingly, not from compulsion or given grudgingly (9:5, 7). He reminded them that God rewards generosity (9:6-11) and that a good example causes people to praise God and puts the gospel in a favorable setting (9:12-14).

http://www.wcg.org/lit/law/tithing.htm

[FMF]

Randy --

Check out these posts:

http://www.freemoneyfinance.com/2007/01/calculating_you.html

http://www.freemoneyfinance.com/2006/12/pay_yourself_se.html

Personally, I pay my tithe first, then taxes and the rest of my expenses.

[Jose Chavez]

need help with my company on how to tithe. if i sell $3000.00 per week and but it cost me $2000.00 a month to pay and restock wath is my currect tithes? thanks

[FMF]

Jose --

Read this:

http://www.freemoneyfinance.com/2007/01/whats_the_gross.html

[Heidi]

Thank you for this blog. It has been a blessing and now I know what to do! :)

[Craig Frerichs]

I don't tithe on tax deferred interest. If I have to withdraw tax deferred money before I qualify for retirement income then I owe an early withdrawal tax with the regular income tax. Early withdrawal tax is already 10%. If people should tithe on tax deferred interest then the early withdrawal tax law should be changed. Laid off employees should not be required to pay an early withdrawal tax or a lot of that tax should be exempt. Laid off employees need that 10% more than the government does.