This article is featured at Free Money Finance as a winner of the “Best of Money Blog Carnival”.
Please Note: I would like to thank my father, Tom Grossman, for allowing me to pick his brain, and all of the Amish in Lancaster County who have answered our questions. While this information is very accurate, it is meant to give a picture of what typical Amish finances look like. Some Amish families definitely sway from this, especially if they are struggling financially, or are in a more liberal-minded sect.
One foreign area still remains within the borders of the United States with a culture that is true to its heritage from hundreds of years ago—right down to its own language—and secluded yet thrives as a business partner with many Americans (or ‘Englishmen’ as they call us). It is the Pennsylvanian Dutch, or as you may know them best, the Amish.
I have had the distinct privilege of growing up in the heart of Amish Country. Many people, upon hearing that I am from Lancaster County, PA, immediately ask if I am Amish. My answer is, “then you must not know anything about the Amish.” While just like you and me in the sense that they make a living, pay taxes (a common misconception that they don’t, although they do not pay all of the taxes we do), have families, etc., they differ greatly from us Englishmen in many respects. Their religion is at the core and forefront of everything that they do, and defines their way of life. They choose to not use electricity—perhaps one of the reasons they have been able to keep their community intact—and instead work hard, read newspapers and books, play games, and go around ‘visiting’ their many relatives and friends.
One of the most striking differences between the Amish and us Englishmen seems to be their ability to save money. Riding through Lancaster County, one can’t help but admire the beautifully manicured Amish homes, farms and businesses. Many of them are very large, like the homes aligning River Oaks here in Houston, and though you could say it’s because they have to house so many children (upwards of 8, 10, and 12 in many families), you might start to wonder if the Amish know wise financial secrets that the Englishmen have yet to learn.
My father and our family have had the privilege to work one-on-one with the Amish and befriend several of them, all while making a decent income. Amish are only allowed to drive horse and buggies; however, they can hire a person to drive for them, and pay that person a rate per mile as well as a waiting time fee (for example, they hire my father to take them to a doctor’s office, and he has to wait two hours). It seems like a loophole in their system, but it’s one I am quite happy for because it has opened my family up to meeting some wonderful people, and to some great experiences over the last ten years or so (my father has driven families to Kentucky, Montana, Indiana, and I have personally taken a group of Amish on a fishing trip and on the metro in Washington D.C.).
As such, I can confidently write this article detailing some Amish finances, and hope that it may shed some light for us Englishmen.
Saving Starts Early, with the Help of Parents
Amish children typically attend schools until they are 15 years old. All Amish then become apprentices to the many trades and businesses in their communities. There are farmers, welders, woodworkers, construction men, candle-makers, window-makers, etc. to choose from. As a teenager, the worker hands over their paycheck to their parents, who keep all of it in a bank account and gives the child 10% for spending money. Once the worker turns 21 the bank account is handed over to him.
Can you imagine if your parents had saved 90% of each of your paychecks you slaved away for turning hamburgers, mucking horse stalls (that’s what I did), or waiting tables? Over several years, that money can really add up to a nice sum of change for college, starting out at your first apartment, or to pay for wedding costs.
Live at Home for Free
As mentioned previously, the money an Amish person makes as a teenager is handed over to them at the age of 21. If you are not married at this age, or any age, you are expected to continue living at home and are not required to pay rent and such. Very seldom do single Amish live outside of their parents’ home. This means that if you choose to not marry at the age of 21, you now have a large sum of cash, little expenses, and a social network at your fingertips to catch you if you fall (one that you are apart of, and will need to help catch others as well).
What a stark contrast to when I was 21, in my third year of college (meaning having racked up considerable student loan debt all ready) and living in a dorm room several hours away from home.
As a person who grew up on a farm, I can’t believe I am actually touting the benefits of this one (and yes, my Dad is reading this), but it is true that it is an advantage to have lots of children who are able to maintain and operate a farm, household, greenhouse, or even a small business at a fraction of the cost of paying other employees to do so.
It is a common misconception that Amish do not pay taxes. Infact, Amish pay all of the same taxes that Englishmen do except for Social Security and Medicare. This does not mean they are a leech on the system; Amish do not collect Social Security when they reach 65, and are not eligible for Medicare. In order to claim this exemption through the IRS they must be a card-carrying member of their church.
One of the gripes from many people living in PA is that Amish buggies tear up the back roads of Pennsylvania, and that the Amish do not pay a road tax. I looked into this, and found out that it is actually true, but not because the Amish are somehow exempt from this tax. Rather, PA gets its funds for fixing roads from selling gasoline, and from collecting tolls on major highways, and we all know that Amish do not need to purchase gasoline, nor do they normally travel major highways. Thus they do not currently contribute to the PA road system, which everyone knows is one of the worst in the country.
Furthermore, my father had an interesting insight when speaking of federal income tax. The Amish do pay this tax; however, I know of very few Amish families with less than 4 children (and 10 is more common than not), and so this most likely drastically cuts their overall federal tax bill because of the child tax credit.
Community Health Insurance
Amish do not have health insurance, at least in the sense that we know it. Instead, they trust God, their savings, and the hearts of their fellow churchmen to provide for any medical bills. At each church there is a board of directors made up of fellow churchmen who collect premiums each month from the congregation according to the age and number of family members in their households (very similar to a group health insurance plan). Just like you and I, Amish have tragedies and become very ill, and they use many of the same hospitals and doctors that we do. If they need help with a medical bill, say a $20,000 surgery bill, they must speak with their Deacon (head of church) and tell him. An Amish man is only supposed to get help if he can’t pay the bill himself, and this is a decision between him and God. The money for the surgery comes out of this pot of money divvied up by the board of directors, and any leftover sum that cannot be covered is provided by fellow churchmen.
This is probably a great system to encourage the Amish to save as much money as possible. Think about how embarrassing it would be to reveal to the head of your church that you have no money stashed away for emergencies. Not only is this an admission of guilt to a man you hold highly, but it is an admission to the people at the core of your life: your family, friends, co-workers, social network, not to mention God.
Every Amish person has some sort of skill, trade, or hobby, and they are more than enthusiastic about selling it. If you drive down Route 340—the heartline of Amish country in PA—you will see numerous signs detailing all of these varied skills, and arrows pointing to where you can purchase these goods from. Even driving through back roads, where no more than five cars must drive on per day, there are still signs all around selling products (see pictures below). For the Amish who have a normal day job aside from their craft, they use an honesty box, which allows them to stay open for business all day long (except for Sundays, when all roadside stands are closed). They basically take a lock box with a slot on it, and ask that you pay for the products that you purchase in this box. Case closed. And it must be working, or otherwise they would stop using it. Some of the goods include canned vegetables, jams, jellies, birdhouses, pies, homemade root beer, puppies/kittens, cage-free eggs, pygmy goats, etc. You would be hard-pressed to find such entrepreneurial spirit elsewhere in our country.
At the core of their lives and finances is the idea that one must live a humble life. From childhood, the Amish are taught to be grateful for the hand that God has given them, to not waste, and to be charitable to others. It is difficult for anyone to point out many of the Amish who might be considered “rich” in their community because they shun flashiness, are not purchasing the latest gadgets, shop at the same stores as everyone else, and are often seen wearing worn-out shoes, using decades-old tools, and driving hand-me-down buggies.
My father ends our interview with his dry sense of humor, stating “there are two different kinds of Amish: ones with money, and ones without”. You could say the same about Englishmen. Even though there are stark differences between the handling of finances between the Amish and the Englishmen, there are still Amish out there right now who have had their homes foreclosed on, who purchase things that cost too much for their budget, or who always walk around with the newest and greatest tools and products on the market. The difference is, when someone in the Amish community loses their house or farm to mistakes of their own making, their fellow churchmen and community members will not step in and save them. As a culture of humble people who perhaps make statements best by their non-actions, the Amish feel that by allowing their community member to lose something like their house or farm, they can learn from their mistakes and learn the value of better financial management in the future.
But this is not as harsh as it may sound. One keen observation is that you will never find a homeless Amish person. They just don’t exist. So even if they find themselves having made the wrong choices, their family, friends, and fellow churchmen will still catch them from completely crashing to the ground, and then help them as they raise themselves up again. We should all be so lucky for this lesson.