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Raising Money-Smart Kids: Q-and-A with Dave Ramsey & Daughter Rachel Cruze

In a world of consumerism and instant gratification, it can be hard for parents to live debt-free, much less teach children to be fiscally responsible. In their new book Smart Money Smart Kids father and daughter Dave Ramsey and Rachel Cruze advocate being open about family finances is the best way to teach children financial literacy.


In our culture of easy credit, impulse shopping, and instant gratification, it’s simple for even the most discerning of parents to lose their grip on the family’s finances. But when you splurge on new shoes because you’re feeling stressed, buy the latest tech gadget on credit, or complain out loud that your mortgage is killing you, know that your kids are watching you—and learning from your financial habits. In Smart Money Smart Kids (Lampo Press) Rachel Cruze and her father, best-selling author and personal finance guru Dave Ramsey, prove that even imperfect parents can teach their kids how to live a debt-free lifestyle and alter the family legacy forever.


Why do you believe that parents should be the ones to teach kids about financial literacy? Shouldn’t schools educate students about basic money handling skills as part of a national curriculum?

Cruze: Some states have begun to mandate that students complete a financial literacy class before being allowed to graduate—which is a great start. But first and foremost it is the parents’ responsibility to give their children the power to control their own finances.


Why is it that we typically avoid discussing money with our children?

Cruze: With 70 percent of parents living paycheck to paycheck, many simply believe they don’t “have the right” to talk to their kids about finances. It’s a guilt complex: They feel that they have made too many mistakes themselves and don’t want to seem hypocritical. But my parents went bankrupt when I was 6 months old! Your kids are your do-over, your chance to set things straight, your fresh start. I’m living proof of that. After my parents hit rock bottom financially, they used that as a teachable moment—and any other parents can do the same.


You quote that 1 in 4 Americans does not have a single penny put away for a rainy day. Why do you think American families have not made saving a priority?

Smart Money Smart Kids

Cruze: Well, first of all, there’s not a lot of patience around today! People don’t have the willpower to say no, to avoid the trap of consumerism. Thanks to the avenue of debt, you can walk into any car dealership and pretty much buy a brand-new car right there and then. People don’t feel the need to save. But spending needs to be intentional. Secondly, [when I travel the country to give my financial seminars] I meet so many young people who tell me they have trouble saving because they have never had to do it and never saw their parents do it.



You suggest that kids as young as 4 can earn money for completing chores, and then put some of this money aside. Why would (and should) a 4-year-old need to save?

Ramsey: There’s nothing wrong with giving your kids things, but when you give them everything you’re missing out on the opportunity to teach them valuable lessons about money. Your kids still need to make the connection between work and money and the importance of delayed gratification. Kids have a certain sense of pride when they save up and pay for something themselves.  


Cruze: You’re not actually teaching your preschooler about ‘saving.’ You’re teaching him patience and goal-setting. You’re giving him an incredible foundation for his future. By making the connection between work and money, your kids are learning discipline. When you have discipline in your life, you are a healthier person.


Dave, how did your parents’ generation deal with money, and what impact did that have on you?

Ramsey: My parents were hard workers. They were both in the real estate business, so I grew up learning the importance of hard work. I learned the connection between work and money from a young age. I grew up in a neighborhood where everyone worked hard, and pitched in to help with projects neighbors had going. We didn’t expect to get paid. We were just helping our neighbors. The lessons I learned helping neighbors played a huge role in making me the man I am today.


In the book, you recommend asking Grandma to take a step back and not overindulge the grandkids with toys, treats, and clothes. Does that ever work?

Cruze: Grandparents can still be grandparents! But they also need to co-parent—to respect the parents’ own way of bringing up their own kids. ‘Grandparenting’ doesn’t need to be excessive. That said, my sister just had a baby, which means my parents have become grandparents for the first time—and I can see that it is definitely human nature to want to indulge!


What are your top three tips that parents can start implementing today to start their kids on the path to better money management?

Cruze: Number one would definitely be to get your kids to work. Don’t just give them an allowance. Kids need to learn that money comes from work, not from mom and dad’s back pocket. The money-and-work connection gives a child a sense of dignity. Second, show them that it’s important to give. Giving is the antidote to selfishness; it combats entitlement. Third, lead by example. We always say, “More is caught than taught.” But money is never just about money. It’s about strong parenting, setting boundaries, and giving your kids the dignity to become responsible, self-supporting adults.


Dave Ramsey is a personal money management expert and popular national radio personality with four New York Times bestsellers under his belt. Ramsey’s daughter, Rachel Cruze, travels the country as a presenter to educate students and young adults about the dangers of debt, budgeting their money, and saving for the future.

Lucy Bayly is a New York-based writer, editor, and mother of two young boys. She lives amongst a rapidly expanding pile of rainbow bracelets and Lego police vehicles.


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