Several people I know, all under 30, want to do good. They want to do so much good, in fact, that they donate a large fraction of their income to charity.

This is almost always a bad idea. It’s admirable, but it’s the wrong decision. If you’re under 30, don’t give away large amounts of money, and send this blog post to anyone who does. The reason is simple:

Wealth almost entirely belongs to the old. The median 60-year-old has 45 times (yes, forty-five times) the net worth of the median 30-year-old. 99% – not 80%, not even 95%, but ninety-nine percent – of American billionaires are over 40.

Old people, of course, have more time to accumulate wealth. They’ve also had more time to learn skills, make friends, earn degrees, gain experiences… everything that gives someone higher earning potential. They also have almost all the political power. There are a hundred US Senators, and not a single one is under 40. You can’t even be President until you’re 35. It’s not surprising, then, that old people utterly dominate lists of the wealthy.

What does that imply? Any money a 25-year-old can give – even if they donate half their income – is chump change. It’s a single drop in a large bucket, compared to what they can donate later in life, when they’re older and much much richer. It doesn’t matter. At all. It means nothing.

What does matter is that 25-year-old’s human capital and social capital. The job they have, the skills they know, the connections they make… those determine, when they’re 60, whether they’re worth $1 million or $10 million or $100 million. If they donate half their wealth to charity, their human and social capital now determine whether that donation will be tiny or huge.

So, don’t donate that spare cash. Invest it in yourself. Donate a small amount, to keep yourself in the habit, and use all of the rest to make yourself a better, smarter, friendlier, and more capable person. Buy books. Take classes. Get a better job. Move to a better city. Throw parties. Get a gym membership. Go out dancing. Travel places you haven’t been. Build things you haven’t built. Start a business. Learn a craft. Do anything that levels you up. It not only feels good, it’s the virtuous thing to do.

EDIT: To all the new visitors from Instapundit – Rational Conspiracy welcomes you! However, please do read Money: The Unit Of Caring and Purchase Fuzzies and Utilons Separately before commenting, as these posts address many common misconceptions about charity. Also, if you’d like to know more about me and what I do, check out my medical company, Panacea Research.