Book Review: Smart Money, Smart Kids

This book is long overdue. Millions of American families have used Dave Ramsey’s #1 bestseller, The Total Money Makeover, to get out of debt and plan for the future. But what if you could help the next generation before they go into debt?

That’s exactly the mission of Ramsey’s daughter, Rachel Cruze, and it’s one of the main points behind Smart Money, Smart Kids. Not only to help kids avoid debt, but proactively teach them how to be smart with money as they prepare for their life.

Most of Cruze and Ramsey’s points are simple:

  • Give children “commissions” from chores instead of an allowance to teach them the connection between money and work – in other words, how to earn.
  • Show them how to budget their money into three categories – Give, Save and Spend.
  • Increase responsibility for their own purchases as the child grows older.
  • Show them how to avoid debt – especially with college.
  • Communicate that emergency funds are for emergencies, not credit cards.

Simple, but like most of Ramsey’s teachings, amazingly effective. The book is filled with personal testimonies from Cruze, Ramsey’s middle child, along with sections on how to model contentment for your kids and how to leave a generational legacy.

Contrast the wisdom in this book with teenagers of today’s generation:

  • They see their peers (other kids) being handed things – an unlimited supply of iPhones, iPads, clothing, video games and even cars.
  • They are subjected to a steady stream of advertisements (more, more, more) by the time they can sit in front of television as 2-3 year olds.
  • Gone are the “Leave it to Beaver” episodes where Junior has to work to save up for a football. Today’s kids turn on the television to see reality stars and YouTube sensations getting rewarded and their lifestyles funded for doing nothing.
  • This parental generation is raising divas who go off to college living lavish lifestyles and expecting mom and dad to foot the bill.
  • These graduates leave college and immediately have $20,000+ in student loans and/or wedding debt.

As a result, they grow up with a feeling of entitlement, and when their income doesn’t fund their entitlement as adults, they put it on a credit card.

Growing up a “Ramsey kid” didn’t mean a sense of entitlement, Rachel relates, as all three Ramsey kids were responsible for paying for part of their own cars.

Dave and Rachel’s point isn’t that it’s evil to give your child an iPad or a new outfit – it’s that you’ve got to start somewhere in teaching them the correlation between work and money. And the younger, the better.

One of the reasons I’m a fan of this book is that it teaches kids two main concepts:

  • Money doesn’t grow on trees – you have to earn the things you want.
  • You’re not too good to work for the things you want/need.

In a generation that doesn’t really know how to work or earn very well, this book just may kill two birds with one stone.



“Smart Money, Smart Kids” by Dave Ramsey and Rachel Cruze is available from Lampo Publishing, 2014.