Smart Money Smart Kids: Raising the Next Generation to Win With Money

by Dave Ramsey

  The Source of Gratitude

  So where does gratitude come from? What makes a child truly grateful? I believe gratefulness starts with humility.

  When I talk about humility, I don’t mean humiliation. These are two different things. Humiliation is all about shame or feeling embarrassed about something you’ve done. Humility is different. It is the opposite of entitlement, and it is the key to gratitude. James Ryle says, “Humility is the God-given self-assurance that eliminates the need to prove to others the worth of who you are, and the rightness of what you do.” The bottom line is that humility struggles to exist in the discontented heart. And it is very hard for discontentment to take root in a heart filled with humility that gives way to gratitude.

  Humility through Giving

  RACHEL: C. S. Lewis once said that humility is not thinking less of yourself but thinking of yourself less. See the difference? Like Dad just said, thinking less of yourself is humiliation, not humility. It says you’ve done something wrong or you’re ashamed about who you are or what you’ve done. That’s false humility. True humility is more about thinking of yourself less, taking the focus off yourself—what you do or don’t have—and putting it on the needs of other people. The best way to nurture a spirit of humility and other-centeredness is to encourage a heart of giving in your child.

  I want you to see the trail that runs from giving to humility to gratitude to contentment. It’s a progression that leads your child out of the land of discontentment and toward an incredible life of joy and freedom. When your child is focused on meeting the real needs of others through giving, it becomes harder and harder for him to focus on his wants. As giving becomes a natural part of your child’s character, you’ll see his whole perspective change. Dad just said that it’s hard for discontentment to take root in a heart filled with humility. In the same way, it’s almost impossible for selfishness to flourish in the heart of a giver. With every act of giving, your child is taking a stand against discontentment. It’s like he’s saying, “I not only have enough for me, but I have enough to share with you.” That’s the fertile ground of contentment.

  And again, it’s not about age, it’s about maturity. Some kids will get this quickly and easily, and others will struggle with it for a while. You can help direct them, but you can’t force it. Give them guidance, but also give them grace.

  DAVE: Children deserve to be loved and to know they are loved. They deserve to be cherished and to know they are valuable. Unfortunately, our culture has embraced toxic views that undermine that noble end and foolishly prefers to give self-esteem classes to kids who can’t read rather than to simply teach them to read. Our noble valuing of children has in some cases convinced our wonderful little savages that the axis of the world runs through the tops of their heads. We have become so kid-centric that our children have been robbed of humility, which prevents them from being grateful and opens them to lives full of discontentment. It is our job as parents to love our children so much that they learn their value while remaining humble. Humility is a valuable virtue because it breeds gratitude, which is unbelievably attractive and bodes well for your child’s adult life. And, of course, gratitude is the best antidote to a lack of contentment. Have the courage as parents to fight this war for the heart of your child. Fight it daily, fight it fiercely, and keep fighting until you win!

  CHAPTER TEN

  Family

  Put the FUN in Dysfunctional

  RACHEL: We’ve been talking about how to help your kids win with money throughout this book, and by now, you may have caught on to the secret of personal finance: Money is never just about money. Sure, you and your kids have to do the details—things like budgeting and keeping your checking accounts balanced—but there’s so much more to consider. Winning with money also means getting comfortable doing some good, old-fashioned hard work. It means learning patience, delayed gratification, and contentment. It means developing the heart of a giver. Those are all key indicators of people who are on track to win with money long term. That’s why Dad and I always say that personal finance is only 20 percent head knowledge; the other 80 percent is behavior. Knowing what to do is the easy part. Actually doing it and understanding why you’re doing it is where it can go right or wrong.

  With that in mind, there’s a key indicator of most successful people that is often overlooked: quality relationships. It’s hard to win with money and teach your kids how to handle money if dysfunction is pulling your family apart. You may think dysfunction is a strong word, or maybe you don’t think it’s strong enough for your situation, but let’s be honest: All families are dysfunctional, at least a little. By “dysfunctional,” I simply mean no family functions perfectly all the time. That’s because there are no perfect families—and that includes the Ramseys. You know why there are no perfect families? Because there are no perfect people, and families are full of imperfect people. So the question isn’t whether or not you’ve got a little dysfunction; the question is how you’re going to address it.

  Dealing with the different family systems and stresses is key for your child to win with money. The degree to which you address the dysfunction head-on is the degree to which your child will succeed with money. Every relationship in your child’s life has enormous potential to bless her more than you can imagine. As the parent, you have the responsibility to manage who is coming in and out of your child’s life and what they’re bringing into it. That means you have to be intentional about who sets the table for your child’s future.

  Because we will cover a variety of family situations here, this chapter will look a little different than the others. We’re going to discuss “conventional” families (with a mom, a dad, and 2.3 kids), single-parent families, families of divorce, and blended families. We’re also going to talk about how adoption may fit into your family and finances, and we’ll look at the unique budgeting concerns of families with special-needs children. We’ll even cover the roles of grandparents—from grandparents who may excessively spoil a grandchild to grandparents who are actually raising a grandchild. Like I said, we’re going to cover a lot in this chapter, so hang on!

  GETTING THEM GROWN AND GONE

  Before we dive in to look at each of the different types of families, we need to talk about why this even matters. What exactly are you trying to prevent or accomplish? Well, allow me to be extremely bold and direct here: You’re trying not to raise spoiled, entitled, unmotivated kids who grow up to become spoiled, entitled, unmotivated adults who end up living at home with you. I think I speak for the rest of the world when I say we have enough of those young adults roaming around. We’d rather have more happy, successful, and productive members of society, so we’re all rooting for you to raise money-smart kids! With that said, let’s take a few minutes to identify exactly what happens when messed-up relationships and bad influences take over your child’s life.

  Dethroning the Princess Mentality

  DAVE: When it comes to dethroning a “princess,” my best advice is not to have a throne or a princess in the first place. When I was growing up, if someone accused a child of being spoiled, it was a huge insult. Now, when people say a child is spoiled, it is often meant as a cute description of the child’s “unique” personality.

  The word “spoiled,” when applied to anything else, means something has gone bad. If you bought food at the store and got home and realized it was spoiled, you would be upset with the store. If you ate spoiled food, you would get food poisoning and have a few miserable days. Spoiled things smell. They are rotting and decaying. They attract flies and other insects. Spoiled things turn dark and moldy. Have you ever opened some old milk that stayed in the refrigerator too long? Just thinking about it gives me a gag reflex. Spoiled is nasty. And spoiled children can give you that same reaction. No one wants to be in close proximity with anything that is spoiled—including your children.

  Please don’t misunderstand us. Neither Rachel nor I want anyone to create over-disciplined little robots who
have their very spirits squeezed out of them. Children can be full of personality, poise, and confidence, and they can be a joy to interact with when they are simply given loving boundaries.

  Spoiled Kids and Wimpy Parents

  So what creates a spoiled child? We can all imagine what a brat looks, acts, and sounds like. He gets everything he wants, never hearing the word no, and he becomes entitled, ungrateful, and belligerent. His parents are weak-willed—wimpy—and the inmate begins to run the asylum. To avoid this insanity, we as parents simply must say no sometimes—and stick to it. We need to assert our control and command over our households. Don’t think for a second that your children aren’t smart enough to manipulate you. They are. And they will as long as you let them. As always, we need to look for teachable moments to communicate and model proper, respectful behavior to our kids.

  When I was about ten years old, I was enamored with becoming a friend of the new kid at my school. He was confident and cool and wore a lime-green shirt that I still remember to this day. We soon became friends, and I was invited to his home to play one day after school. I was horrified as I listened to him yell at his mother, throw a fit, and boss her around like she was his servant. I had never witnessed anything like that. I just knew at any moment his mom was going to turn on him and kill him right there in front of me, which is what would have happened at my house. That level of disrespect, arrogance, and yelling at an adult would have resulted in instant death in my home—at least in my mind.

  At that point my new friend no longer seemed cool to me. I lost all respect for him and for his wimpy mother. Some people might think this was simply a behavior issue, but the problem was this boy had never been told no. He was given everything he wanted every time he asked. He was a nightmare, and unfortunately he became a dark and depressed teenager because his parents refused to give him boundaries when he was a kid.

  As a parent, let your yes be yes and your no be no. No is a complete sentence. It doesn’t need an explanation. Have integrity. Stick to your answer. And enforce consequences for fits or negative outbursts that result from the healthy, loving boundary you set. Saying no and sticking to it takes tremendous energy in the moment. However, over the scope of your life, it takes less energy because nothing is more draining than an eight-year-old brat or a self-centered teen. Few things in life are more disheartening than watching your adult child fail in his relationships, finances, career, and every other area of life because you never set boundaries for him as a child. Saying no takes energy at the time, but it saves your life and your child’s life in the long run.

  From the time your children are small until they are completely on their own, your job is not to be their friend. Your job is to parent them. Trying to be BFFs with a fifteen-year-old is pitiful on your part and embarrassing for your child. Be a loving, kind, forgiving, firm, friendly parent, but don’t be his or her friend. If you will parent well, your accomplished, dignified, grown children will become some of your best friends when the time is right.

  Spoiled or Blessed?

  RACHEL: I said before that you must carefully manage how the relationships in your child’s life impact him. That includes listening closely to any offhanded comments your own friends make to your kids. Soon after getting home from a family vacation one year, I had a conversation with one of Mom and Dad’s friends about our trip. She said to me, “Oh, Rachel. You’re so spoiled!” She didn’t mean it to be rude or demeaning. I think it was just her way of telling me how fortunate I was to have the chance to go on a nice vacation with my family. But that word—spoiled—got stuck in my head for a while. I developed a habit of saying, “I’m spoiled,” whenever I got to do something special or I received a nice gift.

  Eventually, I said it to my parents during a dinner conversation. Dad cut me off mid-sentence and said, “Rachel, stop saying you’re spoiled. You’re not. Spoiled means something has gone bad. You kids are not spoiled because you have not gone bad. You’re not spoiled; you’re blessed.”

  That’s a conversation I will carry with me the rest of my life because it did two things. First, it showed that Mom and Dad were paying attention to the influence their own friends were having in my life, and they were correcting any wrong ideas other adults were giving me. Second, it taught me the difference between being spoiled and being blessed.

  Even today, as I interact with thousands of teens every year, I can pick out the ones who are spoiled and the ones who are blessed. It’s amazing that the same gift or opportunity can spoil one kid but bless another. It’s all about the child’s attitude. It’s 80 percent behavior, remember? If they feel entitled to new clothes or a beach vacation, your kids can spoil quickly. But if they recognize everything they have represents the love and care of their parents, then you know they have the right spirit of gratitude and appreciation. They’re blessed.

  Entitlement and Ownership

  As Dad’s business became more successful, my parents became much more intentional about preventing any kind of entitlement mentality from creeping into their kids’ hearts. One way they did that was to consistently remind us that we didn’t own much of anything. They kept God’s ownership in perspective, teaching us over time that we were stewards of God’s resources, but they also emphasized that they were the ones who provided our home, clothes, food, and most of our possessions. For example, we weren’t allowed to say to them, “Stay out of my room.” It may sound silly, but Mom and Dad would reply, “Excuse me? You don’t have a room. This is our house, and we’re kind enough to let you borrow a little piece of it.” It was never mean-spirited in any way; they just wanted us to remember that we weren’t entitled to everything we wanted simply because we were their kids. Having individual bedrooms all to ourselves was a blessing, and it was one they didn’t want any of us to take lightly.

  The funniest reminder of ownership came when my brother was in fourth grade. Mom and Dad were several years out of bankruptcy at that point, and Dad’s business had started to grow. The bankruptcy had really taken an emotional toll on my parents, though, and even at that point—when the financial crash was behind them and their income was picking up—you could still see some of the scars. Probably the most visible reminders were Dad’s old cars. Ever since bankruptcy, he had driven old, cheap-but-reliable cars that were high on quality but low on luxury. Finally, one of the VPs at his company convinced him it was time to buy a nicer car. The fact that they had this discussion while broken down on the side of the road may have had something to do with it!

  Dad was finally emotionally ready to buy himself a nice car again, and, of course, it was used and he paid cash. When he drove it home, the whole family piled in the car, and Dad took us for a drive around the neighborhood. It was the nicest car we’d had my entire life, which at that point meant there wasn’t a hole in the overhead lining and the brakes didn’t screech at every stop. When we got home and parked in the driveway, my brother, Daniel, reclined back as far as he could and stretched his arms out across the top of the backseats. With his chest puffed out, he said, “Man, Dad, we are doing pretty good.”

  Dad turned around from the driver’s seat, laughed, and said, “We’re doing pretty good? No, son. I’m doing pretty good. You guys got nothin’!” We love that story because it’s a perfect example of the kinds of conversations that were common in our house. Our parents made it clear to us from an early age that we had no rights to their success. We weren’t entitled to have more or do more simply because they were making more money. That meant when they did splurge on something, we saw it as a huge blessing. It changed our whole attitude about those special times, and we were able to enjoy the gift or vacation without feeling like it should have been bigger or better.

  Enabling Disaster

  Another problem parents run into is enabling. I know there are different definitions of enabling, so for our purposes I’m talking about parents doing everything for their kids and not giving their children opportunities to work, succeed, or fail on their own. In s
ome families, a parent might enable a lazy student by doing his homework for him. In others, enabling may be stepping in and rescuing the child every time his bad decisions lead to painful consequences. Kids need these opportunities to grow, and yes, they need to feel some pain associated with their mistakes. It’s how they avoid making the same mistakes in the future.

  Probably the most common form of enabling that parents fall into is failing to say the word no. It may seem easier to quiet a screaming child by giving her whatever she wants, but over time, that establishes a pattern of rewarding bad behavior. Hearing and accepting the word no does something wonderful for your child: It teaches her boundaries. I heard Mom and Dad say no a lot—to me, to my brother and sister, and to themselves. That’s a powerful thing to witness. Now, as an adult, I’m able to say no to myself when I want something I either can’t afford or simply isn’t a good idea. It’s not always easy, and I’m certainly not always happy about it, but I know it’s good for me so I do it anyway. Hearing the word no is an incredible gift my parents gave me from a young age.

  Let’s look at the opposite. If a parent gives a child free rein in the home her whole life, protects her from all pain, and rescues her from all the consequences of her bad decisions, the child will grow into a completely frustrated and confused adult. As a young woman, she won’t understand the connection between work and money, and even worse, she won’t understand the connection between bad judgment and bitter consequences. She’ll spend years wondering why the world isn’t bending over backward to give her what she wants.

  As I’ve worked with teens and young adults, I’ve seen this many times, and it’s always frustrating and heartbreaking. Bad behavior stemming from parental enabling has almost become a stereotype. I’ll meet a guy in his mid- to late twenties. He has a college degree and can talk for hours about all the fun times he had in school, but he’s currently unemployed and living with his parents. As I dig into his story, I’ll discover his parents always did everything for him as he was growing up. He never had to work, he never heard the word no, and he basically never had to put much effort into accomplishing anything. His parents were always there to pick up his slack. And now, while most of his friends are already a few years into their careers, starting families, and generally being adults, this guy can’t hold a job, lives with his parents, and is always complaining about how he can’t catch a break. I’m sorry if that sounds harsh, but this is real life. I’ve met a lot of young adults in this exact situation, and it’s not what I want for your child. Trust me, it’s not what you want either.