Dave Ramsey’s Baby Steps: Step 7 – Give, Save, and Spend!

by Derek Clark

Creative Commons License photo credit: Eric Kilby
Congratulations, you made it. When you get to baby step 7 you get to have a party. This is where you get to Give, Save, and Spend lots of money. These are the three things that money is for. You want to give it away, spend it on fun stuff, and build more of it so that you can do more of those first two things!

Build Wealth

You’re already saving 15% for retirement, so that’s good news. However, if you have visions of retiring before age 60 like I do, you’re going to need some money that isn’t in a 401k or Roth IRA. This means investing in stocks, mutual funds, or index funds outside of your retirement accounts. It could also mean investing in real estate to generate some passive income. It doesn’t matter as much how you do it, it just matters that you do it. I personally have a goal of being retired around age 45 or so. That means I have to have enough passive income or enough savings to get through 15 years without any money from my retirement accounts. This is certainly something to think about if you want to retire early at all.

Other than the potential to retire early, building wealth is the key to the next two steps. Giving and spending. This is what we’ve really been working towards all along. You want to invest and grow your money so that you can spend and specifically so that you can give away as much as you can.


This is where the fun happens. If you have no debt, no mortgage, your kids are through college and your retirement is funded you are in really good shape. Lighten up and have some fun. If you’re a millionaire, maybe even go buy a brand new car. Take a few nice vacations and spoil the grandkids if you have them. Don’t go crazy and blow your life savings, but you should have some extra spending money at this point, go ahead and enjoy it.


This is the real pinnacle. Giving money to people in need is one of the best feelings in the world. Dave suggests tithing to your local church from the beginning and I completely agree, but this is where you get to go above and beyond. For some reason people think that all rich people are greedy terrible people. That is not the case in a lot of situations, and this is your chance to prove them wrong. There are a lot of people doing a lot of good things in this world, and just about all of them need money to accomplish their goals. You can help a lot of people now so get out there are do it.

The other thing that you can do is give of yourself. Once you have enough passive income to retire you can go ahead and quit your job if you want, but you don’t just plan on sitting on your couch every day from age 45 on. I certainly don’t. You can volunteer, go on mission trips, and coach your grandkid’s tee-ball team. This is how you become really successful. Look at Bill Gates, he has quit working at Microsoft and now he works full time giving his massive fortune away. You probably won’t ever have that much to give, but you can still help a lot of people and have a lot of fun along the way.

If you’re already at this point, congrats, I hope to join you soon. If you aren’t there yet, keep working at the baby step you are on. You can do it, and I’ll be here to encourage you along the way as I make my way through the steps as well. If you haven’t read them all yet, check the rest of the series below.

Step 1: $1000 Emergency Fund
Step 2: Get out of Debt
Step 3: 3-6 Months Emergency Fund
Step 4: Start Saving 15% for Retirement
Step 5: Save for Kid’s College
Step 6: Pay off the Mortgage as Fast as You Can
Step 7: Give, Save, Spend!


youngandthrifty March 25, 2010 at 11:55 pm

Yeah and here in Canada, the government rewards you for giving. You get a tax credit for your donations!

Derek Clark March 26, 2010 at 7:17 am

The US has a tax deduction for any charitable giving. It certainly helps.

Arthur @ Financialbondage.org March 29, 2010 at 7:08 pm

Most Christians have serious work to do in the area of giving. Only about 2.3% of Christians tithe. That number frankly is sad.

Derek Clark March 29, 2010 at 9:02 pm

This is a very sad statistic. About 2.3% of Christians tithe (give 10%) and as a whole Christians give about 2.6% of their incomes. It is unfortunately very pathetic. Even sadder, they actually give more than most people do. Even if I wasn’t a Christian, I find it hard to believe I wouldn’t still give money to those less fortunate than myself.

veterinary technician April 20, 2010 at 6:39 pm

Great site. A lot of useful information here. I’m sending it to some friends!

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