Shomer Shekalim

baby steps

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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

If you’ve been following this blog for a while, you’re aware that I am a huge Dave Ramsey fan.  Dave’s plan is simple to understand, easy to follow and inspiring.  Part of my goal in this blog is to take some of his idea and teachings, acculturate them for Israel and spread the information to help others.

At the core of Dave’s plan is what he calls the baby steps.  These steps represent the seven financial milestones for a sound financial plan.

The baby steps are:

Baby Step 1 – Set up an emergency fund of $1000

Baby Step 2 – The debt snowball.  Pay off all your debts from smallest to largest

Baby Step 3 – Bring your emergency fund up to 3-6 months worth of expenses

Baby Step 4 – Invest 15% of your income

Baby Step 5 – Make a college fund for your kids

Baby Step 6 – Pay off your house early

Baby Step 7 – Build wealth and give

In a previous post, I discussed about how I viewed these steps in Israel and where I would make some adjustments.  Now I would like to revisit the topic and introduce a few more ideas and comments.

One thing that always struckme about the baby steps is that in Israel, baby step 4 is unnecessary.  We have a law that all salaried worked receive pensions and this money comes straight out of our paychecks.  Unlike America, a keren pensia is not a goal, but just part of working.  Keeping track of a keren pensia is no different than buying insurance or giving tzedakah – it is part of a sound financial plan, not a financial milestone for which to save.

On the other hand, we in Israel have one important financial milestone that is not as necessary in the US, saving for the down payment of a mortgage.  Unlike in the US, Israeli banks usually want a third of the cost of a house as a down payment.  In order for an Israeli to even get to the point having a mortgage, there has to be a significant amount of saving beforehand.

Keeping this in mind, as well as the issues I mentioned in the previous post, the following are my Israeli baby steps:

Baby Step 1 – Set up an emergency fund of ₪ 4000

Baby Step 2 – The debt snowball.  Pay off all your debts from smallest to largest

Baby Step 3 – Bring your emergency fund up to 3-6 months worth of expenses

Baby Step 4 – Save money for a down payment on a home

Baby Step 5 – Emancipation costs for the kids (weddings, college)

Baby Step 6 – Pay off your mortgage early

Baby Step 7 – Build wealth and give

What have been some of the financial adjustments you’ve had to make as an Israeli?


  1. Jonathan, great post. After reading your prior post and this one, I had a thought about tzedakah. I know that we Jews should give at least 10% of our revenue to charity, but I wonder whether a different option would be better — both for people working and the people in need.

    Say that I make NIS 3,000 a week. I would give NIS 300 to charity. However, say I invest that NIS 300 for many years to spend my middle-age building wealth and my old-age giving back (a LOT more than 10%).

    That NIS 300 per week will have grown to NIS 3,000 or even NIS 30,000 per week. Now, what would be more helpful to people at the time of giving — NIS 300 per week in 2010 or NIS 3,000 per week in 2050? The value of the latter, even after adjusting for inflation, would be larger.

    If people pursued this strategy, perhaps we would have more for our families in middle-age AND more to give away in our retirement.


  2. Avi Noam says:

    Hi, this is bogus, sorry.
    Firstly, if you gave 300 NIS to charity and all of those people gave 10% as well to others in need (as is required of even the poor), then the money multiplier kicks into effect and your 300 is really 3000 (see your geometric series economics). Secondly, I highly doubt that after a long life of not actually doing the mitzvah of charity in small amounts, and one sees what a mass he has gained with his 10% savings, it will be almost impossible to give it over. Thirdly, you have no idea what your investment will actually bring out, and fourth, the value of your investment vis-a-vis inflation or other world factors should all be taken into account for your loss of tzedaka today for the potential giving of it tomorrow.
    So as not to completely lose the idea of investing your tzedaka now for the future, you could take your 300 NIS and give it in trust to a charitable organization (or buy a bond for them in their name, for example) so that your 300 today ends up being 310, say, next year for the organization, or give them the 10 residually for life as the 300 sits in capital for the charity.

    Finally, I strongly advise giving MORE than 10%. As I’ve posted before and will post again here, the Torah promises 10 times back what we give. This is also the only commandment where G-d specifically says to test us that he will provide for you and that you won’t go broke by giving charity. If one gives 10% and gets back 10 times, he is even at the end of the day ($10 of $100 and next year he gets back $100 and so on, forever, never growing his annual income). However, if one gives 11%, the first year he gives $11 and next year he has $110 to give, and 11% of $110 is $12.10 so next year he’ll have $121. In just two years he gains 20% on his yearly income…they say invest in gold? No way, invest with G-d 🙂
    A noteworthy rabbi has pointed out to me that on RH the amount of money coming to us for the year is determined so what if someone changes from 10 to 20% midyear, will it go against what was determined for him at the start of the year? So this, and other questions like it, we add that one might not see his bank account grow monetarily in getting back his 10 times from the Almighty. Could be your fridge was meant to break down, and it didn’t. Could be your car was meant to break down, but it doesn’t, and so on.

    I propose this question, why else would there be a maximum on us to give 20%?

    The secret to wealth is simple, give zedaka more than 10%.

  3. jonnydegani says:

    I am kind of in between both of you on these issues. While, I’ll admit it is a good idea, I am not usually willing to invest money for charity for a later date; I prefer to give it now. I think that seeing the result of giving tzedakah in the short run invokes a better feeling of satisfaction, which could encourage more giving, both by yourself, as well as by others.

    The intention of the seventh baby step is not to begin giving tzedakah, it is when you reach a point when you have what you need and you build wealth with that purpose alone. Tzedakah is part of my monthly budget, no different than groceries and rent.

    Also, I do not think that it is always possible to give 10%. I know a lot of people who say you should save X% and give Y% and only spend Z% – but it is not always possible. It is much harder for a single income household making very little to give 10% than a household with a few incomes. In this case, I still think tzedakah should be given, but it has to be reduced to less than 10%.

  4. Avi Noam says:

    reducing tzedaka less than 10% dooms you for decreased revenue. giving 10% means you will stay the same, more than 10% means your revenue will increase. poorer families can’t afford not to be giving more than 10%, lest they risk forever being trapped in their economic situation. give sound torah economical advice please, jonny 🙂

    • jonnydegani says:

      I wish I could agree with you on this, but I can’t. A while ago, I met a family bringing home ₪ 5500, spending ₪ 3000 on rent and utilities and needing the rest for food, transportation, medicine, stuff for a baby and everything else life has to offer. At this point, I felt it would be a bit too much for them to give 10% to tzedakah. I still advised giving a bit, maybe a hundred or two, but certainly not 550, as ma’aser would require. I think in a situation like the one I outlined, volunteering time would be a good substitute for giving the full 10%.

  5. Avi Noam says:

    Again I must disagree. Perhaps they could only afford to give 200 of their 550 (551, let’s not remember strictly MORE than 10%) this month, but they still owe this “bill” and must keep track of their tzedaka “debt” and pay it off when they can. Jonny, I don’t understand. On the one hand you say tzedaka is a bill like any other, but do you only pay half the electricity? Of course not, otherwise they turn off the power. Well, if you don’t pay all your tzedaka bill…G-d shuts off the revenue. Thank G-d we have a fantastic creditor who doesn’t charge interest on delayed payments, but do not think that it goes unaccounted for. G-d always pays 10x in full, guaranteed.
    As far as volunteering time as a substitute to the monetary value of your 10%…while it is surely a very praiseworthy act to donate one’s time to charity, I do not believe hallachically it counts towards one’s obligatory 10% from his monetary revenues.
    Again I can’t say it enough times, the poor family cannot afford not to give their 10% (minimum and not including).

  6. Baila says:

    I don’t believe it’s a good idea to push off giving your maaser until your retired–we never know how long we’re going to be around and I’d rather have the good deed under my belt.

    As far as the ten percent goes, this is something I struggle with. I can’t afford the ten percent. I hear what you’re saying, Avi Noam, but what about those people that do struggle and give their ten percent and are still poor as mice…..Are you talking about olam habaah? Not sure I’m buying….

  7. Avi Noam says:

    The whole point is you can’t afford not to give more than 10%. Not doing so ensures you will remain “poor as mice.” It comes back to you in olam hazeh, not olam habah. G-d says to test him, it’s the only mitzvah…guaranteed you will not starve or be poor because of you’re giving tzedaka, in fact, only the opposite is true.

  8. Natasha says:

    One thing that you can test God with is maaser. I can say that from personal experience, no matter what, if you pay maaser (and follow the baby steps and cut down spending by being creative), you will be fine. Plus, halachicly, the money isn’t even yours to begin with.

    One thing that must be corrected in Israel today is how loans are given. This is also halacha and the downfall of many. The Torah forbids us from taking interest from a fellow Jew and yet this is how we give and take out loans. I recently read about how to change the banking system in Israel to allow interest-free loans and mortgages. This is help Jews get on their feet in addition to creating a feeling of achva. Feel free to read and respond.

  9. jlajr says:


    This post assumes that buying a property, presumably to live in, with a mortgage is a financially smart decision. I’m not convinced that’s true for most places in Israel.

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