Rules to Follow this Holiday Shopping Season

Dear Dave,

Do employer contributions count toward the 15% you recommend putting into retirement?

-Brian

Dear Brian,

Employer contributions do not count toward the 15% I recommend setting aside for retirement. It’s nice if you work for a company that offers perks like that, but I want you putting 15% of your money into retirement.

Baby Step 4 of my plan says to put 15% of your income into retirement accounts. The first thing you should put money into is a matching retirement account. If you’ve got a 401(k), a Roth 401(k) or a 403(b) and your employer offers a match, you should do that up to the match before anything else.

Let’s say your employer will match three percent. Since the goal is 15%, you’ve still got some work to do. You’ve got three percent of your own money already tied up for retirement, so then you could look at a Roth IRA. If the Roth plus what you invested previously to get the match doesn’t equal 15%, you could then look at a 403(b) or go back to your 401(k) to hit the 15% mark.

Whatever your company matches, whatever its pension may be or even military retirement does not enter into the equation. I want your money in your name. If your company goes broke and you have a company pension, you get nothing. But if you have a 401(k) and your company dies, it’s in your name and you don’t lose it. You put it there, you own it. And that includes the match.

Are you getting the picture, Brian? I want you to control your destiny!

—Dave

Tips for Surviving Christmas Financially

It’s not an emergency. Christmas is not an emergency, it happens every year. Don’t use this as an excuse to overspend and buy things you can’t afford.

Make a Holiday Budget. Make a list of everyone you are buying a gift for, and put a dollar amount by every name. Total it at the bottom. This is your Christmas budget. You can also check out www.mychristmasbudget.com, a free online budgeting tool to help you easily keep the holidays from wrecking your finances.

Pay cash. Put the total from your budget in an envelope, and when the cash is gone stop spending. This will help keep you on budget because if you overspend on Aunt Sue, Uncle Harry won’t get a gift!

Avoid debt. If you’re running a little short on cash, talk to your family about spending expectations. Draw names, set price limits or get creative. Whatever you do, don’t go into debt. It’s not worth it!

Dear Dave,

What are some good ways to teach a 13-year-old kid about giving versus getting during the holiday season?

-Phillip

Dear Phillip,

One of the best things you can do is simply talk about it—a lot. Kids are bombarded with messages about how important they are, and how they should always have what they want. It’s okay to have some stuff, but advertising and other marketing messages in today’s culture can make them think it’s all about them. It can lead kids to believe the axis of the world runs through the tops of their little heads.

Think about this. In 1971, the average person saw 564 advertising impressions a day. Now, that number is about 4,000. The purpose of advertising is to disturb and influence you to the point that you’ll buy something. Advertisers want you to believe that you’re not complete without their product, or that you’ll be a happier, cooler, better person with their product. And in most cases, advertising and marketing people are more aggressive in their teaching than parents are in theirs.

My suggestion is to find some giving exercises in which you can all participate. You could adopt a single mom at your church. Make it a family outing, and go buy groceries, gifts for her kids or even a Christmas tree. Make sure your kids are involved physically, mentally and emotionally in the entire giving process. Let them experience the grateful, and sometimes ungrateful, responses that go along with giving. And make sure you do some things that don’t involve money. You could take the entire family to help cook and serve dinner at a homeless shelter.

One of the best things we ever did as parents with our teenagers was to send them on mission trips. It truly changed their lives. When you see real poverty close up, when you live and walk and sleep in it day after day—I’m talking about death-and-disease poverty, not the American version—it changes your heart. And when you’re 13, it will change your life forever.

-Dave

* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.