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A dollar donated to a cost-effective charity can do over a hundred times more good as a dollar spent on personal consumption (MacAskill 2015). This might seem to lead to the conclusion that all money not spent on the essentials of life should be donated to charity. However, allowing oneself some discretionary spending may well be necessary to happiness, productivity and commitment to giving.

Some members of the effective altruism community suggest setting a “charity budget”: a clearly defined amount of money to be given to charity each year (Wise 2015). This allows people to make a decision once per year, rather than every time they purchase something for themselves, which can help to reduce emotional distress. Others have argued that self-investment (for instance in respectable clothing) can increase one’s efficacy in many ways, and that therefore it may be worth prioritizing a certain level of self-investment over direct donations (Hurford 2014).

Further reading

Hurford, Peter. 2014. You have a set amount of “weirdness points”: spend them wisely.
A discussion of how, for instance, wearing respectable clothes can be a good investment.

MacAskill, William. 2015. Doing good better: How effective altruism can help you make a difference. New York: Gotham Books.
Chapter 1 introduces the idea of the ‘100x Multiplier’, according to which people in developed societies can do at least 100 times more to benefit others as they can to benefit themselves.

Wise, Julia. 2015. Burnout and self-care.
A post on budgeting and preventing burnout.