by Dave Ramsey
Another giving adventure my kids got to see in action was a “12 Days of Christmas” gift-giving campaign for a family that had lost their jobs and were too proud to ask for help. Some members of our church youth group asked our family to do the driving, and for twelve consecutive nights, we secretly put gifts, necessities, food, and even a Christmas tree on the family’s front porch. To my knowledge, the family never found out who did it. Getting to sneak up and play Santa on a front porch was great fun for our kids.
The worst giving adventure we experienced was when I took one of my kids to deliver groceries to a family who had called our church asking for help. We went to the store and the church food pantry and bagged up what we thought were some great meals. When my preteen and I walked to the front of that house, we were feeling pretty proud of ourselves about helping someone in need. But when we set the groceries on the kitchen table, the woman became irate, saying she had asked for a certain kind of potato chips and a certain bag of candy. The lesson here is that giving isn’t about getting the response you want. It’s about the condition of your heart and spirit. Every situation won’t go perfectly, but you can at least be caught trying.
AGE-APPROPRIATE GIVING
RACHEL: Not long ago, I got into a conversation with a man at the airport while waiting on a flight. He asked what I did, and I told him I was on my way to speak to a group of parents about kids and money. He lit up and started telling me how he and his wife try to be intentional about training their kids how to handle money. The conversation shifted to giving, and he told me that he makes his children use their own money to buy birthday gifts for their friends whenever they go to a birthday party. I’m not sure I’d personally recommend that, but what he discovered by watching his kids was really interesting.
He said that the younger his kids were, the more generous they were. They would spend more money on a toy for a friend than they would spend on themselves. But as they grew older, he noticed a shift in how much they’d spend on others versus how much they’d spend on themselves. At some point as they grew up, the lines crossed and they became more interested in getting themselves something nice and less concerned about what they got their friends. I thought that was an interesting observation. At least in this one example, the kids were much more open and excited about giving when they were younger than they were when they got older. That won’t be true 100 percent of the time in every family, but I do believe little kids have more of a free spirit when it comes to giving. Maybe they haven’t yet learned to hold money tightly the way the world eventually warns them to do. So, when your children are young, encourage that spirit of giving and sharing. Do whatever you can to keep that childlike spirit alive!
Introducing the Give Envelope: Ages Six to Thirteen
We’ve already talked a lot about the Spend and Save envelopes for kids; now let’s talk about the most important one: the Give envelope. In the Ramsey house, when we received our five-dollar commissions each week, Mom and Dad had us put at least one dollar in our Give envelope. That actually breaks down to 20 percent, but there’s no real magic behind that number; it’s just what worked well in our family, and it was easy math since we were paid in single dollar bills. You can decide the amount or percentage that works best for your family, but I’d suggest at least 10 percent of your child’s money. That’s a great baseline for giving as an adult, so it’s best to get that into the kids’ minds as early as possible.
When I went to church each Sunday as a little girl, I took my Give envelope. Around age six, I started putting my own dollar in the red velvet offering bag as it passed by. That was such a great experience for me. Too often, parents just give their child a dollar for the offering as they walk into church each week. When that happens, the child isn’t really giving anything—he’s just a little deliveryman for the parents’ money. There’s no emotional connection between working for the money and choosing to give it away.
The fact that Mom and Dad made me work for the money I put in the offering bag gave me the opportunity to learn how to truly give, and it made it so much easier for me to keep giving as I got older and my income increased. John D. Rockefeller once said, “I never would have been able to tithe the first million dollars I ever made if I had not tithed my first salary, which was $1.50 per week.”
Now, as a working adult, I tithe every single paycheck and don’t think twice about it. I understand, as I have since I was a little girl, that my income isn’t really mine. There’s a portion to be shared with others. That’s the legacy of giving that my parents passed down to me.
Adding Service to Giving: Ages Fourteen and Up
As your kids become teenagers and have more independence, it’s time to introduce the concept of giving of their time and talents, as well as their money. Encourage them to find ways they can serve by doing things they already enjoy and are good at. In the Ramsey house, all three kids were expected to participate in some kind of mission trip, and all three of us had life-changing, mind-blowing experiences as a result of these trips.
Remember how my parents always looked for ways to pop the safe little bubble we sometimes lived in? Well, there’s no better way to pop the American middle-class bubble than to send your child on a mission trip to a struggling part of the world. Seeing other countries, other cultures, and how the people live—sometimes in extreme poverty—can permanently change your teenager’s entire worldview.
Most of the time teens come back totally changed people. They may get to see a part of the world where people literally have nothing—often not even what we’d call necessities—yet they have a joy that is indescribable. Of course, you don’t have to travel overseas to find that kind of poverty and need. If a global mission trip isn’t in your family budget, you can still find plenty of opportunities for you and your child to serve here in the U.S. The goal is to make sure they see this as an opportunity to give their most valuable resource: their time.
CREATING LIFELONG GIVERS
DAVE: When Rachel was in kindergarten, her teacher gave the students an assignment to draw a picture and write down what they would do if they had $100. I don’t know how long it has been since you’ve had a kindergartener, but to a child that age, $100 might as well be $10 million. The teacher then copied and bound the pictures and captions into a small book. She sent the book home with the kids, and we noticed it as we were looking through Rachel’s school papers from that week. Sharon and I sat on the floor in front of the couch reading the little book and laughing out loud. Those little kids sounded a lot like “grown-ups” today. Scott said if he had $100, he would buy a car that changes into everything. Allison was more realistic—she said she would buy a little dollhouse with her $100. Andrew, the budding terrorist of the class, said he would buy a football, a gun, and a bomb. (It was comforting that our child was in the same class with him.) Reid said he would buy a convertible. Kathy would buy a swimming pool with a whale like Willy from the movie Free Willy. Anna Kathryn would buy a house with a cat. (I guess with $100, she could at least get the cat.) Rachel was never our shy child. She was always doing something loud and outlandish, so we started to dread a little what her page might say.
When Sharon and I finally turned to Rachel’s page, we were completely caught off guard. We looked at each other and realized we were both crying. Rachel’s response was, “If I had $100, I would give it to the poor people.” Maybe we were proud or being a little cheesy, but just four short years before this, we were in bankruptcy court, broke and broken. So to see one of our children understand that giving really matters gave us encouragement that, with God’s help, we really could change our family tree. We really could raise children who not only got money but got great joy from giving it.
Catching your kids at outrageous giving, or even with a spirit of giving, is enough to bring any parent to his or her knees. But just like we didn’t get it right every time, they won’t either. The key is to praise them when you catch them in the selfless actions. Tell them the beauty of seeing
God working in their hearts. And when they don’t get it right, give them grace. Not every child is a natural giver, but the good news is that giving can be nurtured in them.
CHAPTER SIX
Budgeting
Tell It What to Do
RACHEL: It was the hallway that went on forever. Finally I reached the door at the end of it, marked by a nameplate with the title “Executive Branch Manager.” I took a deep breath and knocked on the door. I was fifteen years old, and I had a one-on-one appointment with the head of my local bank. It wasn’t a social call. This was not going to be pretty.
The day before, when I came in from school, I found a letter from the bank on the kitchen counter. The envelope wasn’t thick enough to be my normal bank statement, and it was rare for me to get mail from the bank, so I was curious as I opened it. When I read the opening lines, my heart skipped a beat. I discovered some new terms that day—phrases like overdraft and insufficient funds. The bank was writing to inform me that I had bounced three checks. That’s right: Dave Ramsey’s daughter bounced three checks. That’s like the city’s best dentist having a daughter whose teeth are rotting out of her head.
A little later, I heard the sound of the garage door opening. Dad was home. This could be bad. I had no idea what he was going to do. He came in and immediately read my face. The first thing he said was, “What’s wrong?” Apparently, I’m not great at hiding my emotions. I walked across the kitchen, handed him the letter, and held my breath. Here it comes, I thought.
But it never came. He put the letter on the kitchen counter and looked me in the eye. I’m not sure what I was expecting, but I know it wasn’t what he actually said. In a perfectly calm, not-mad-at-all voice, he said, “Okay, Rachel. First thing in the morning, you’re going to call the bank and set up a meeting with the executive branch manager. Then you’re going to go meet with him in person by yourself. And you’re going to sit across from him and apologize for lying. You told him you had money in his bank to spend, but you didn’t. That was a lie.”
I was always a pretty respectful teenager, but I am my father’s daughter, and sometimes my emotions get the best of me. I cocked my head sideways, put a hand on my hip, and asked, “Seriously? This can’t be for real.”
“Oh, yes, Rachel. I’m dead serious.” The way he said it got the point across. I knew there was no use pushing it further.
The next morning, a Saturday, I called the bank and got a 9 a.m. appointment with the manager. I couldn’t drive yet, so Mom dropped me off at the entrance. As I walked through the bank doors, it suddenly struck me that I had never been inside a bank by myself before. I didn’t know who to talk to or where to go. I walked up to the teller behind the counter and asked if she was the branch manager. She laughed a little and said, “No, sweetie. His office is down the hall and to the right.” So I started that long walk down the seemingly endless hallway.
When I found the branch manager’s office, he introduced himself and offered me a seat. I sank into a huge leather chair and shifted nervously, my feet barely touching the ground. The manager flashed a smile and said, “Before we talk about whatever it is you want to talk about, I just want to tell you I’m a big fan of your dad. I think he’s doing a wonderful thing, talking to millions of people on the radio every day about how to be responsible with money.”
Ouch.
“Now, what can I do for you today?” he asked.
I looked across that enormous desk and said, “Well, sir, I’m here to apologize for lying to you.”
“Excuse me?”
I handed him the letter I got from the bank and said, “Well . . . I, um . . . I told you I had money in your bank to spend, and I didn’t, so three of my checks bounced. I’m here to ask for your forgiveness.”
He stared at me for what seemed like forever, then said, “Ms. Ramsey, did your father put you up to this?”
I completely broke down. Tears poured down my face, and I said, “Yes! Isn’t it horrible?”
More than a decade and several counseling sessions later (kidding), I can laugh about it. But you know what? I haven’t bounced a single check since. Plus, the bank manager felt sorry for me and waived my overdraft fees! Dad set me up to learn a powerful lesson in an unforgettable way, and I’m so glad I learned it at fifteen instead of twenty-five.
Studies show that about one-third of banks’ total revenue comes from fees; they’re literally counting on people messing up their accounts.1 Largely because of that painful meeting with the bank manager that Saturday morning, I’m not one of them. Although some may think that Dad’s idea was an extreme way to make a point, that was the first and last time I ever got careless with my checking account and budget.
BUDGETING FOR YOUNGER KIDS
As we get into the budget discussion with kids, I need to set up one ground rule for you, the parent: You have to do a household budget every month. You can’t teach your children to do something you aren’t willing to do yourself. More is caught than taught, remember? With budgeting, that means your kids need to see you do a household budget and live by the principles you’re teaching them. If you aren’t already doing a budget or if you honestly don’t know how, don’t worry. We’ve got tons of tools, books, classes, and free budget forms to walk you through every detail. Check out daveramsey.com to get started.
Create Teachable Moments
Kids under fourteen don’t really need to do a written budget. At this age, their envelope system is their budget. By teaching your children to work and divide their money among the Spend, Save, and Give envelopes, you’re already teaching them the basic framework of budgeting. This doesn’t need to go on paper, but I still recommend writing down their bigger saving goals like those we talked about in Chapter 4. This at least gets them used to the act of writing down goals as they work toward them.
Even though they aren’t writing up their own budget forms every month, there are still some creative ways to get your younger kids involved in the activity of budgeting. A friend recently told me about her Saturday morning budget sessions. She and her husband do a monthly budget together, and because she is the nerd of the family, she gets it back out every Saturday morning to catch up on her online banking and double-check everything against the budget. So practically every Saturday morning, her four-year-old daughter, Abby, finds her at the kitchen table with her laptop, budget forms, cash envelopes, and a calculator. Abby knows exactly what her mom is doing too. She runs to her playroom, grabs her Dora the Explorer toy cash register, and sets it up on the kitchen table beside her mom’s computer.
Abby will sit with her mom for maybe ten minutes, asking questions about money and offering her the plastic nickels from her toy cash drawer. “This is for the budget,” she’ll say. Abby’s mom will show her daughter the long list of things they have to do with their money each month. No, she doesn’t sit her four-year-old down and make her fill out a preschool budget form, but my friend is intentional about sharing that experience with her daughter. Think about that: Abby will go her entire life seeing a monthly budget as a perfectly normal, healthy thing to do. Even at four years old, it would be weird for Abby to come downstairs on a Saturday morning and not see her parents working on the family budget.
Get Your Kids Involved
DAVE: The oldest child is often the one the parents experiment on. So as Denise, our oldest, grew from a small child to a preteen, we realized our teaching of money skills had to grow up with her.
One evening I was sitting at the kitchen table writing checks for that month’s bills. Denise was probably a little under ten years old at the time, and I heard this tiny chipmunk voice ask, “Whatcha doin’, Daddy?” I hate to admit it, but I was in accounting mode so I did not see it as a sweet moment. I just saw a kid with great potential to bother me. But when I turned and looked at her face, I saw someone interested in her daddy and the grown-up mystery he was working on. And it occurred to me that it was a teachable moment. I suddenly had the bright idea to teach her how to fill out
a check. I remembered learning how to fill out checks in my lawn-cutting business as a young boy, and I thought it would be a great lesson for Denise. She climbed up in a chair beside me and, propping herself up on her knees, began writing out checks as I instructed her.
Then the unexpected happened. She filled out the check for the electric bill and wrote in $238 and stopped. She looked at me as if a light bulb had come on over her head, astonished that electricity could cost so much. Then I let her know that amount was for only one month. “So that’s why Mom is always on us to close the door when we go outside to play,” she said.
Wow! Not only did Denise learn how to fill out checks that night, but she also surprised me by recognizing value. She became my bookkeeper there for a while. Eventually her attentions moved elsewhere, but I will never forget that experience. And of course, I’ve often wondered what the clerk at the electric company must have thought when she opened our envelope and saw the check with a third grader’s printing on the “Pay-to-the-Order-of” line.
Teach Budgeting by Example
RACHEL: One day when I was about seven years old, I went grocery shopping with my mom. The cashier rang everything up, and I watched Mom pull two $100 bills out of the white Food envelope she always kept in her purse. I looked up at her with a shocked expression on my face and said, “Mom! It costs $200 to buy groceries for us?”
She looked down and said, “That’s right, Rachel. And when your brother gets a little older, it’s going to cost a whole lot more!” So even as a little girl, I was able to start making the connection between working, budgeting, and spending money on necessities like food. That powerful example only happened because I had parents who lived on a budget and a mom who took the time to show me how it all worked.
Your children will also learn the language of budgeting by simply listening to the conversations in your house. I can’t tell you how many times I heard my parents say the phrase “It’s not in the budget!” when I was young. Sometimes budget felt like a cussword to us kids, but that phrase taught us something important: A budget creates boundaries. That’s the great thing about being purposeful in how you plan your money—it sets limitations for you.
