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Dave Ramsey, Daughter Team on "Smart Money, Smart Kids"

Co-author Rachel Cruze on how parents can teach their children common-sense money principles.

| BY Donald Liebenson


Smart Money Smart Kids, the bestselling book by Dave Ramsey, author of the get-out-of-debt bible, Total Money Makeover, and his daughter, Rachel Cruze, was created to empower parents to take on the responsibility of teaching their children about money.


Financial literacy (or lack of it) and attitudes toward money and personal finance will be a pivotal factor in whether or not they will have the necessary knowledge and tools to succeed and thrive as independent adults.


The book, the first collaboration between Ramsey and his daughter, acknowledges the key role parents play in instilling in their children an awareness of the basic concepts of responsible money management. But talking to kids about money can be intimidating for those who were never given “the money talk” themselves. Where to begin? When to begin? Is it too late to prepare college grads for the economic challenges ahead?


It’s on (the parents),” Cruze told Millionaire Corner in a phone interview. “Tactically and emotionally, money is such a difficult topic for a lot of people. But even if they themselves have made (financial) mistakes and may not be in great financial shape themselves, they can still teach their kids about money. Their kids are their do-over, and if they empower them early on in life, it’s an amazing gift to give.”


Affluent households place a high premium on their financial knowledge, according to research conducted by Spectrem’s Millionaire Corner. Nearly nine-in-ten of Millionaires (88 percent) consider financial knowledge to be “extremely important” or “important” to them. Among ultra-wealthy households with a net worth of at least $25 million (not including primary residence), nearly eight-in-ten said their primary concern is raising their children to be financially responsible and not allowing their wealth to be detrimental to their children’s work ethic or educational or career plans (70 percent).


Smart Money Smart Kids endeavors to teach parents what they need to know to give their

children the knowledge, resources and tools to help get their finances in order and head off possibly devastating money management mistakes. At the heart of the book, Cruze said, is a question Dave Ramsey has been hearing for some two decades: “Why don’t we teach our children common-sense money principles?” When Rachel joined Team Ramsey as a speaker bringing her father’s financial literacy message to her peers, the pieces fell in to place for collaboration in which father and daughter would share their experiences.


Because just as the children of doctors get sick, so is the daughter of the author of “The Money Answer Book” and “The Financial Peace Planner” not immune to counter-productive money habits. “I’m a natural spender,” she said. “It’s a challenge. But I’ve been able to avoid the major money mistakes through the knowledge gained by my parents.”


Among the key lessons learned in the Ramsey home, she said, was “Work ethic. That’s number one. They taught us very early on to very hard. We were never given an allowance. We were always on commission. We learned that money comes from work and not from mom and dad’s back pocket.”


This mindset is shared by a significant majority of Affluent households, according to Millionaire Corner wealth level studies. Nine-in-ten Millionaire households with a net worth up to $4.9 million attribute their wealth creation to hard work.

Another Ramsey credo was “When you make money, you give, you save and then you spend. That’s the foundational principal that I still stand on as an adult,” Cruze said.


What are the biggest money mistakes plaguing Millennials? Certainly among the most devastating, Cruze said, is student loan debt, which now tops $1 trillion in America. “Which is insane,” she said. “We dedicate a chapter in the book to this myth that you can’t be a (college) student without a student loan. It’s not true. But it takes a lot of hard work.”

Cruze acknowledges sensing a culture of entitlement among Millennials exacerbated by reality television and social media. “It’s very hard to teach patience and delayed gratification,” she said.


"Their expectations about how life could and should be for them are huge. (I tell them) you don’t have to have the latest gadgets to be cool or happy. Having nice stuff is okay, but don’t let your nice stuff have you (in debt).”


Smart Money Smart Kids is all about getting children in a place where they graduate college debt free so they can start looking in earnest toward the future. “Perhaps the primary key to achieving this is creating a budget and sticking to it,” she said.” Be intentional (with your money). It is so easy for paychecks to come in and go right back out without any clue as to where your money has gone.”


Other debt do’s and don’ts: Don’t take on new debt and do start paying off old debt accumulated in college, she said.


But more important, Cruze said, is that Millennials “don’t sit around the basement and expect your first job to come to you. Your first job may not be your dream job or even in your field of study, but go get a job start and collecting that paycheck. It gives you the dignity of standing on your own and paying your own bills.”


Above all, Smart Money Smart Kids underscores that it is never too late for financial education. Parents (and their children) should not be discouraged or intimidated if they have put off “the money talk. “Obviously the earlier the better," Cruze said, “but don’t be discouraged.  If you are still breathing you can change your ways and learn."

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.