Last time we looked at Baby Step 6, paying off your home early. We talked about how much freedom paying off your house would give you, allowing you to really save for retirement, give and live like no one else! Today we’ll be closing out the baby steps with a look at building wealth and giving to others. In my opinion giving to others is of the best reasons to build wealth. You always get back more than you give!
Dave Ramsey’s 7 Baby Steps
- Step 1 – $1,000 to start an Emergency Fund
- Step 2 – Pay off all debt using the Debt Snowball
- Step 3 – 3 to 6 months of expenses in savings
- Step 4 - Invest 15% of household income into Roth IRAs and pre-tax retirement
- Step 5 - College funding for children
- Step 6 – Pay off home early
- Step 7 – Build wealth and give!
Baby Step 7: Build Wealth And Give
Baby steps 1-6 are all about getting your financial house in order, paying off debt, and then planning for the future. Step 7 looks at what Dave Ramsey likes to call the “Great Misunderstanding”. The misunderstanding, in Ramsey’s eyes, is the mistaken belief that many people hold that the way to have more, is to hold on tightly to what they have. In reality, it doesn’t work that way, generous people tend to be more prosperous. The reason? Giving to others makes you less selfish, and less selfish people have more of a tendency to do better in both relationships and in wealth building.
He gives an example to think about the concept – if you take your money, and close your fist around it, you have that money and it’s not going to get away. On the other hand, you can’t receive more money in your hand either, it’s closed up tight. When you freely give with an open hand, however, your hand is already open and is ready to receive blessings as well as give.
The idea of holding money with an open hand might seem to violate common sense. We feel that if we don’t hold on tightly to our money and our relationships, they will slip away. I’m not saying literally hold your money with an open hand – it represents our attitude toward money. When you give, you open yourself up. You allow the dollars to leave and the freedom to enter.
Giving works because it is in your personal blueprint to be a giver, and you unleash good things in your life that you will never see until you learn the art of unselfish giving. Giving lifts us out of ourselves; we take our eyes off our rights, our problems, and our stuff. The new view gives us renewed vision and hope. Giving is powerful. – Dave Ramsey
So once you’ve reached the point where you have all your debts paid, and you’re blessed enough to be building surplus wealth, do yourself a favor, and start giving to others. You’ll be surprised at how freeing and wonderful it can be! Not only will you be giving blessings to others, but you’ll be receiving blessings in return (and not always in a monetary sense).
There are men who gain from their wealth only the fear of losing it. – Antoine Riverolli
Surplus wealth is a sacred trust to be managed for the good of others. – Andrew Carnegie
Reasons Why We Should Give
When you talk about giving, there are a lot of good reasons why we should do it. Here are a few:
- As a Christian, I believe that everything is God’s, and as a result, we are only stewards of everything we have. Psalm 24:1 says “The earth is the Lord’s, and the fullness thereof”. We need to be good managers of what we’ve been given, using it for the good of others. The fact that that the money is someone else’s (God) make’s it easier to give away too, doesn’t it?
- Giving makes us less selfish people. Giving makes us more Christ-like.
- We are designed in God’s image, and because of that we are happiest when we are serving and giving. Ever notice how fulfilling it is to serve others?
- Giving can be praise and worship in which we show our gratitude to God for everything he has given us.
Get Creative About Giving!
When you’re giving, you don’t always have to wait until your financially secure because giving doesn’t have to be related to money. There are a lot of ways you can give of yourself and your time that are just as valuable. Here are some ways that you can give, both with money, and without!
- Help a single mother buy groceries or pay a couple of bills.
- Volunteer time at your church serving others.
- Give an extra large tip to a waiter or waitress.
- Spend time with people at a local nursing home, talking and listening to them, playing music for them or just playing games with them.
- Pay for someone’s meal behind you in line at the fast food restaurant.
- Serve meals at a local food shelf, and eat with them when you’re done serving.
- Give to a local charity.
Those are just a few ways you can help. Your own giving is only limited by your creativity. So get started!
What are some creative ways that you’ve given to others around you. How does giving make you feel? Let us know in the comments!
Related Articles From Bible Money Matters- Setting Up A Good Financial Plan Can Help You To Weather Any Storm
- Breaking Free From Materialism
- Debt Free Story: How Frugality, Hard Work And Determination Can Lead To Debt Freedom.
- Overcoming Barriers To Giving
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Loved your reasons and creative ideas about giving. Of course we shouldn’t wait till we have everything else out of the way before we decide to give. I recommend giving all along the way.
I agree, we should always be giving, for example, as a Christian I’m always tithing 10% off the top. However, if you have your financial house in order and everything else set including retirement savings – it allows you to be a bit more extravagant in your giving, which could be extremely fun!
I’m bummed that this series has come to an end. I’ve really enjoyed it! Anyway, I agree that giving is an important part of personal finance planning. I’ve seen its benefits in my own life. God has promised that when we put Him first and help others, we will have what we need. And I’ve seen this at work in my own life.
Mirandas last blog post..Terrry Pratchett and the Art of Making Money
Stay tuned! I think I’m going to do one more wrap up post to tie it all together..
Great series Pete…
Now that you’ve been through the whole training process, is it worth it? Or can someone get the same benefit by just reading the book?
DebtFREEk!
Debt Free Adventures last blog post..What Is The Recession For?
You definitely can’t get the same experience just from the book. Attending the class means accountability and small group discussion as well, which adds a whole other layer to the experience. On top of that you also have the video series and workbooks that you get in the class, as well as an envelope spending system, etc. I would highly recommend actually taking the class to everyone!
Is the implication then that you can only give out of your excess wealth? It’s a shame that Dave puts off the giving aspect until step seven after all our own needs are taken care of. We should be giving all along the way. If everyone waited until they achieve all the other steps to start giving, there wouldn’t be much giving going on. I know this isn’t really what Dave would advocate, but it seems giving should be given more attention earlier in the process rather than putting it at the end, almost as an afterthought. Steps 1-6 are all about me. Not until step 7 do we start thinking about others.
It’s not exactly true that giving is put off til step seven. From the very beginning of the plan you’re giving 10% right off the top. I may not have covered that as much as I should have in this baby steps series, but in my series on Financial Peace University I touch on that a bit more.
The giving you are doing in baby step 7 is in addition to the 10% you’re giving off the top beginning in baby step 1. Since the giving comes from a Christian viewpoint, the 10% is a tithe. For non-Christians he suggests giving 10% to local charities, etc. He stresses giving quite a bit because giving makes us better people!
So yes, I agree – giving is very important, and should be done throughout the baby steps. Baby step seven lets you step it up a notch and give EVEN MORE!