The Best Way to Respond When Money Mistakes Happen

As a mom, I get a feeling in my stomach when my kids are in the next room over and I hear something crash to the floor. This happens a lot at our house because our kids are young right now. When it happens, I literally feel it in my gut because I know in the next moment I’ll need to spring into action. I’ll rush into the next room to find a crying child who’s scared and needs to be comforted. There will probably be a mess to sweep up and hurt feelings to soothe.

In such moments, I know I need to extend grace out of love. Because whether you’re a kid or an adult, a mistake is painful, and we all need the acceptance and compassion of grace. But at the same time, I often need to make mistakes a teachable moment, like when I’m reminding my child not to climb on the counter as I’m reaching for an ice pack to place on a bruised knee. This can be a hard balance to strike.

There was a story a while back about a couple in their forties who were drowning in debt. They had a healthy income (over $150,000) but had no savings and hundreds of thousands of dollars of debt.¹⁶ What came in each month went right back out in monthly payments, and they hadn’t even started paying off her student loans. They shopped at thrift stores because it’s all they could afford unless they put it on one of their eleven credit cards, which is exactly what they did to get a tuxedo for their son’s prom night. And when their dog got sick, they didn’t have the cash to put her down, so that went on a credit card too. (Imagine getting that bill in the mail the next month. Heartbreaking!)

What’s interesting here is that the wife’s parents had actually bailed them out once already. Even though her parents were of modest means, they dipped into their retirement savings and gave the couple a huge amount of money to pay off creditors so they were debt-free except for their student loans. They showed their daughter and son-in-law a ton of acceptance and compassion. But what happened? There wasn’t any course correction mixed in with all that grace. The couple didn’t learn from their mistakes nor did they change their behavior. And so they promptly dug themselves right back into the same pit again—but this time it’s even worse. They’re so embarrassed by what’s happened they’ve kept it a secret from her parents. Just imagine what it’s like for them to attend family gatherings now, carrying the weight of that guilt and shame.

I’m sure her parents believed they were doing something really good for their daughter by paying off that debt. But the heartbreaking reality is that they did nothing more than flush part of their retirement down the drain. It did nothing to help this couple long term.

Grace and Truth

What’s interesting about the grace scale is that it points us to the two things that will keep us centered when we face money mistakes: Enabling points to grace and legalism points to truth. We need both of them to respond well to money mistakes.

When we’re in the heat of the moment facing a mistake, we often struggle to know exactly how much grace to offer and how much correction to give. A simple benchmark to remember is the Golden Rule. Now, before you go rolling your eyes, just try putting yourself in the other person’s shoes and think for a minute about how you would want to be treated.

A while back Winston and I saved up for and bought a new car—a minivan. I drove it home from the dealership that night, so excited about how much easier it would make transporting our family of five. The very next day I loaded up my oldest to take her to preschool. I got in my new car, so pumped to drive it, and as I was pulling out of the garage I heard a crunch. My stomach dropped. I braked immediately and may have said a choice word or two, praying my daughter didn’t hear me! I dreaded getting out of the car to see the damage.

Apparently the garage door wasn’t open all the way, and the top of the van hit the bottom of the door. You know those little fin-looking things on top of cars toward the back of the roof? Well, I learned those aren’t just for decoration—who knew they have a satellite, GPS technology, and radio antennas inside? Apparently, the bottom of the garage door sliced that little fin right off and took some of the roof of the van with it. And all those little computer chips were all over our garage floor. I mean it was not good, and we had only had this van for one day! I couldn’t believe it. Out of all the years of me pulling in and out of a garage, why now? Why this day?

Winston was at work, and I had to tell him. I was dreading it, because I was mad at myself. Plus, the car was only one day old! And let’s be honest, this would never have happened to Winston. He’s methodical and takes his time. I, on the other hand, am like a race car driver pulling out of the garage! I knew he was in a meeting, so I texted and said, “Um, I may have broken the van.”

He texted back and asked if anyone was hurt.

“No, thankfully,” I said, “if you don’t count the little fin on top of the van as a person—because that thing was demolished.”

He texted back: “It’s fine! We’ll just have to get it fixed.”

I asked him later that night why he wasn’t more frustrated by what I did and he said, “Well, we all make mistakes, and if it were me, that’s how I would want you to react.”

If you’re the husband who went to Chick-fil-A three times one week and forgot to tell your wife, how would you want to be treated? Like a criminal or with understanding? If you’re the adult son who’s still living at home with mom supporting you, what’s in your best interest? Remaining dependent on your mom as an adult? Or learning how to stand on your own two feet and manage your money and life? Thinking through how you would want to be treated is a really good litmus test to help you decide how to respond to money mistakes.

Grace and Truth Lead to Good Boundaries

We’ve talked about the differences between enabling and legalism, but interestingly, they have one striking similarity: They’re both evidence of a lack of boundaries. On one of his visits to The Dave Ramsey Show, Dr. Henry Cloud said boundaries are like property lines around your home, telling you where you end and someone else begins.¹⁷ They tell you what you do and don’t control. Violating boundaries—invading someone else’s territory—only leads to hurting others. Do you want someone else invading your territory? But that’s exactly what both enabling and legalistic behaviors do.

Even the most amateur gardener knows that what you plant is what will grow. Your actions today directly affect your future. If you plant peanuts, you’ll get peanuts. If you plant poor choices, you’ll reap poor consequences. But if you keep going into someone else’s garden and digging up their poor consequences (enabling), they never get the opportunity to learn from their mistakes. Or if, because of your controlling nature, you tell them where to put the garden, what to plant, when to plant it, and how to prune each and every stem (legalism), they never learn how to make decisions for themselves. Either way, you’re stopping the other person from developing into a mature adult by eliminating their ability to learn from their mistakes.

We too often label mistakes as bad when, really, mistakes are our teacher. Mistakes offer us accurate feedback in real time. They teach us how to think critically and how to solve problems. They make us better. We have to get comfortable with failure, our own and others’, because it’s how we learn a better way. Our challenge when a money mistake happens is not to beat ourselves—or someone else—up but to be curious about the mistake. What is it teaching you? What led you to making that choice? What conversations do you need to have? Is there anything you need to stop doing? Is there anything you need to start doing? When you respond to money mistakes with both grace and truth, you understand how valuable mistakes are for everyone.

What Healthy Boundaries Look Like

Grace and truth lead to healthy boundaries, and healthy boundaries lead to healthy relationships and a rich life. So what does this look like in real time? A person who does grace and truth well is willing to help but isn’t controlled by the outcome. Other people’s mistakes don’t turn their world upside down. They recognize and are good with the fact that they can only control themselves, their thoughts, and actions. It’s not their job to fix anyone else or bail them out. They also tend to be people with a lot of humility, a lot of peace, and a lot of wisdom.

Here’s an example of what grace and truth look like using a situation I get asked about a lot: when someone you love is asking you for money. Keep in mind the principles in this example will remain the same no matter who the other person is. Here’s the scenario: You’re married and in your thirties. You and your spouse both work, and you have two young children. Your mom recently confided in you that she and your dad—both in their late fifties—are facing significant financial distress. Your mom has been a teacher for many years and is close to retirement, but your dad was laid off eighteen months ago. He’s been looking for work all this time but hasn’t found anything. Because they have so much debt, they’ve now run out of savings and are behind on several key bills, including their mortgage. She’s tearful as she tells you what’s going on, and you’re absolutely crushed by her words. You knew it had been tough but assumed all along they were in decent financial shape. Now she’s asking for help so they don’t lose the house. What do you do?

First, take a deep breath. Realizing your parents are underwater financially can rock your world because you’ve believed something different up until this point. Then, like we’ve talked about, make sure you know that their money mistakes are not your issue to fix. This can be unbelievably hard to accept, but it’s the truth. I know you love your parents and desperately want to help, but you are not responsible for bailing them out. Truly owning this perspective will help you make better choices.

Second, if you are on Baby Steps 1–3, recognize that you’re not in a position to help anyone out financially. Just like on an airplane, you have to put the oxygen mask on yourself before you can help others. Build a solid financial foundation for your family, then you can think about if and how you can help others. During Baby Steps 1–3, I encourage you to talk about your situation with your parents. Tell them you’re getting your money in order too, so you’re not able to help them financially. Instead, ask them to go on the Baby Steps journey with you. Recommend they go to the library to check out one of the books we offer. Show them how to download podcasts from the Ramsey Network. All of this is free! The truth is, it’s never too late for them to learn something new and rebuild their finances. I met a couple in their eighties who had just paid off all of their debt and completely turned their financial lives around. Your parents can do this, and you can be their biggest encourager and cheerleader even without giving them money.

Third, if you’re in a position to help—meaning you’re on Baby Steps 4–7—you and your spouse need to be in agreement about how you’re going to help. This is a really important step. If you and your spouse can’t agree on a plan, don’t just decide to do something on your own and go do it. You don’t want to put your own marriage at risk to help someone else fix their mistake. Either find a way to do this together or work to understand your spouse’s point of view. Whatever the decision, it should bring the two of you closer, not drive a wedge between you. If you aren’t married, you obviously don’t need to be in agreement with your spouse. But do consider running your thoughts past an objective third party who can help you think through the options clearly.

Fourth, make a clear plan and overcommunicate it to your parents. Sometimes you can just give money to a parent without it doing long-term harm. Sometimes, though, you need to offer your help with some strings attached. For example, maybe you and your spouse decide to cover your parents’ mortgage for three months and match their savings for an emergency fund if they go through Financial Peace University and work the plan. The point is to truly help them long term and not enable harmful, ongoing behavior that continues to sink them. They need to learn how to budget. They need to learn the best way to pay off debt. They need to know how to take control of their money.

Once you determine the plan in dollar amount, time, and expectations, communicate it clearly and kindly—and probably more than once. Write it all down in black and white. Do whatever it takes so everyone is on the same page. I know this all may sound crazy, but overcommunicating in this scenario is necessary and wise! Clear, communicated boundaries are the biggest blessing for relationships.

Fifth, check on their progress. Are they doing what they said they would do? If so, awesome! Keep encouraging and cheerleading their progress! If not, you’ll need to talk to them about what you’re seeing and put into motion those consequences. I know this will be painful, and it sounds like you’re being the parent in the situation, but you’re helping them have better information and make better decisions with their money.

Imagine what would have happened to the couple in their forties who were deep in debt if her parents had required them to learn new money habits instead of just bailing them out. Imagine if they had learned to budget and stay away from debt. They wouldn’t be in the same situation they are today—for the second time! Requiring someone’s participation isn’t punishment. It leads to real growth. Healthy boundaries aren’t mean. They protect you and ensure that the person you want to help is truly helped in the long run.

Grace and Truth in My Life

There are some really hilarious rumors out there about my dad and our family—how we teach people to pay with cash but still use credit cards or have declared bankruptcy recently. It cracks me up because these rumors get started by people who clearly don’t know us.

One of my favorites was when a friend of my dad’s, a local police officer, called him up laughing one day and said, “Dave, someone just told me your Viper got repossessed.”

“Cool!” my dad said.

His friend said, “Wait. Cool? What do you mean?”

And my dad replied, “I didn’t know I owned a Viper!”

You guys, if you knew me or my family personally, you would know we are totally sold on the Baby Steps. I believe in the money principles I teach to the core of who I am. I believe with all my heart they are the best way for all of us to handle our money. In fact, I believe this so deeply I’ve made it my life’s mission to help other people discover these principles and encourage those who are living them! But I can tell you, even though I believe in our teaching 1,000 percent, I do not let it affect the relationships in my life.

Winston and I are on the same page with money. But otherwise I’ve learned not to take offense when others don’t follow the Baby Steps. If a friend pulls out her credit card at dinner to pay the bill, I don’t judge her or freak out or start lecturing her. In fact, it happens more frequently than you might guess!

And believe it or not, most members of the extended Ramsey family don’t follow the Baby Steps. There are even times when they look at us like we’ve grown four heads. And you know how much it turns my world upside down or changes the way I feel about them? Not a bit. I love them dearly and want the world for them, but I’m only responsible for me. So we get together for holidays and celebrations and have a marvelous time without any judgment. That’s what I want for you too! Living according to grace and truth, having healthy boundaries—this, my friend, is what freedom looks like.

As we wrap up part 1 of this book, I want you to think through ways to improve your response to money mistakes. Being too hard on yourself and others won’t help, and neither will going too easy. For the best outcome, you’re going to need to find a way to bring together grace and truth. Look for ways to do that before the next money mistake happens (because it’s coming!). If you’ll do that now, when money mistakes do happen, you’ll be prepared to face them in a way that heals and restores both your money and your relationships.

Now It’s Your Turn

1. When money mistakes happen, is your first instinct to give too much grace or not enough?

2. What’s the most recent money mistake you’ve made? On a scale of one to ten, how would you rate the amount of grace you extended yourself, if one is ignoring the problem (enabling) and ten is offering no grace (legalistic)?

3. Think of a time when your spouse, loved one, or close friend made a money mistake that affected you. How would you rate the grace you extended to them on the same one-to-ten scale?

4. Think about your relationships with your parents, siblings, children, and close friends. Do you feel resentment toward them? If you do, where can you put better boundaries in place? If so, do it! Creating healthy boundaries is one of the best things you can do for yourself and your family.