by Dave Ramsey
Children under the age of eighteen are to be cared for, loved, and guided by the big people. All the children are to be loved by all the adults.
If your children think they are more important to you than your spouse, they will use that to destroy any chance of you leading them well. They will immediately begin a campaign that says the stepparent is evil.
The bottom line is that you have to love and care for all the children under your roof and, while doing that, put your marriage first, or you will quickly create a toxic household. If there are two classes of children in the house, they will realize it and take advantage. Yours, mine, and ours must be treated the same. They all learn to work, they all learn to save and give, and they all learn the money-smart kid principles we have been talking about. If you are unwilling to finance your future spouse’s minor children’s lives at the same level you are financing your own, you should not marry.
Once the children realize they are all treated the same and that you can’t be played against your former spouse, you will have a loving household where you can apply teaching for their future. If you are receiving child support, you are likely spending more than that amount to take care of your child. If that is the case, then there is no need to separate the child support and bank it separately. It is for the care and feeding of the child; it is not the child’s money. Since the care and feeding are happening, then there is no moral, ethical, and certainly no legal reason to keep those funds separate from the family budget. One big pile of income and one big pile of family expenses keep all the children on equal footing. If, however, an ex-spouse were to pass away and an estate is left to those children, that money should be kept separate and held for when they become adults.
Adult children should always be told and taught that they are responsible for taking care of themselves and they have no moral rights to your estate. If you have minor children, they and your spouse are the main concern of your estate. After your current household is taken care of, the grown children might be included if you have more money. But your spouse and minor children are your first priorities. Again, fair does not always mean equal.
Adoption
Adoption is a beautiful thing—whether you are adopting to start your family, complete your family, or give a child a much-needed home. Adoption is not for everyone, but those people who respond to that tug at their hearts are greatly rewarded. But the desire to adopt can cause people to financially lose their minds. I have coached families who bankrupted themselves with adoption fees and costs because their huge hearts blurred all logic and common sense. It will be difficult to raise money-smart kids who you adopted while you were money-crazy. Adoption can be done without debt if you follow some simple guidelines. Plan, plan, plan, and save, save, save. Once you have done that, then really study adoption and look closely into at least five to ten agencies. Truthfully, a lot of adoptions cost twice what they should. You really need to know for yourself what you are getting into so you don’t pay way too much.
If you are planning to go this route, I recommend Julie Gumm’s great book, Adopt Without Debt. Adopting is so emotional that you want to be very careful not to lose your mind and your money while trying to grow your family.
Raising Special Needs Children
Raising and caring for a special needs child is a wonderful but exhausting experience. Parents often ask how to teach a special needs child to be a money-smart kid and how to ensure her care. Obviously the level at which your child is functioning will dictate how and to what extent you can teach these principles. But I really encourage you to meet your child where she is and include money-smart teaching in everything you do. We have a good friend whose twenty-year-old has Down syndrome. He is fairly high-functioning, and his parents have taught him money skills his whole life. This has boosted his confidence, and his wonderful smile is often seen around a money transaction.
The only extra care you’ll need in your estate plan is a Special Needs Trust. This trust is similar to leaving money in a trust at your death to care for your other minor children. The only difference is this trust will last for the child’s entire life. You simply make this trust a part of your will and leave enough term life insurance to the trust so the child can live off the trust income the rest of his or her life. Once you have personally built wealth and are debt-free, you can let the insurance drop and leave enough of your wealth to the trust to create an income for this child.
What about Grandparents?
Hopefully your money-smart kid has money-smart grandparents. However, you should remember that even normally smart and well-balanced people have the potential to lose their minds at the sight of a grandbaby. If the grandparents are undermining your money-smart kid lessons and principles, take them to lunch or coffee and ask for their help. They really do love their grandchildren, and they really aren’t trying to undermine your authority. They just see spoiling your child as their God-given right. It is a time-honored tradition for grandparents to allow their grandchildren to do things and eat things they never would have let their own children do. However, if this is an over-the-top pattern, not just an occasional blip, then a loving, smiling, firm discussion is necessary. A grandparent can be a great advocate in growing great kids when the grandparent is made a partner and not viewed as a problem. However, if, after some firm discussions, a grandparent continues to cross your financial boundaries, you may have to limit the grandparent’s access to your child until the lesson is learned.
Now, what if you are a grandparent who has had to completely take over the parenting role? This is becoming more and more common in our culture. If you are a grandparent raising your grandchild, then you are simply taking on the role of parent. All the money-smart kid principles in this book apply.
THE GIFT OF DIGNITY
RACHEL: I told you at the start of this chapter that it would cover a wide variety of family situations. In everything we’ve examined here, I hope you’ve noticed one key theme that runs through all the relationships in your child’s life. That theme is the importance of boundaries. One of the most significant things my parents ever did for me was to simply be my parents. That meant they weren’t my friends. They weren’t my employees. They weren’t my dictators. They were my parents.
No, they were not perfect. They made mistakes and messed up plenty of times. But they were intentional with putting boundaries in place, and they enforced consequences when those boundaries weren’t respected. They were generous with their money, but they never allowed me to feel any ownership over it. They helped me when and how they could, but they weren’t compelled to rescue me every time I messed up. They gave me an amazing life, but they made sure everything they provided would be a blessing, not a curse. As a result, they gave me an incredible gift. They gave me the dignity of becoming a responsible, self-supporting adult. Whether I’m working alongside my dad or doing something on my own, I know that I have what it takes to win. That’s not coming from a place of arrogance; it’s coming from a place of confidence. And that wealth of confidence is there because my parents put it there, slowly investing in me every time they enforced boundaries and made me struggle through something on my own. And I accepted those lessons as I got older and my maturity grew. Again, I don’t want you to go crazy with this; like I said, I want you to bless your children as much as possible and to be reasonable! But with each of these opportunities, you should ask yourself, Is this helping my child become the self-supporting, healthy, mature adult I want him to be? That’s a powerful question, and it may change a lot of your daily decisions as you encourage your children to be money-smart kids.
CHAPTER ELEVEN
Generational Handoff
Blessings or Curses
RACHEL: I’ve noticed two distinct extremes when it comes to parenting. First, there are the straight-laced, locked-down, rule-setting, control-freak parents who try to force their kids into a tight little box where they have no opportunities to make any decisions on their own. Some of these kids grow up, run
off to college, and drown in a puddle of beer. That’s because they’ve never been given an ounce of freedom, so the first time they’re away from Mom and Dad, they go completely crazy. They simply don’t know how to make good decisions because they never had the chance to make any decisions.
Then there are the parents who seem to drift through life with no clear plan or boundaries—no rules, no guidelines. Discipline? That’s a thing of the past. It’s as though the parents are saying, “Fly, little eight-year-old, fly! Go freely. I’m sure you’ll be just fine.” Those are the kids you see at restaurants screaming and throwing silverware across the table while the parents sit there, seemingly clueless, as they enjoy what they think is a nice, quiet dinner. Those kids can’t make good decisions because they’ve never been made to behave. Lucky for the next generation, these are not the only two options. There is a fantastic middle ground where your kids will be ready to accept the responsibility of adulthood someday.
LIVING BY THE ROPE
By now, I hope you’ve seen that my parents always tried to keep a balance between enforcing strict rule-following and allowing personal responsibility. They worked hard to give us the freedom to make our own decisions while still keeping us within the boundaries they set for us. They didn’t do it perfectly every time, but I know the guidance they provided has been invaluable to my siblings and me.
Managing the Slack
One way Mom and Dad continually maintained a balance between grace and legalism was through the analogy of the rope. The Ramsey kids heard about the rope all the time. Our parents described it this way: “Picture an imaginary rope tied around your waist. I am holding the other end of the rope. The length of the rope is entirely up to me. A longer rope means you have more freedom to explore and make decisions, and a shorter rope means I have to rein you in a bit due to trust or behavioral issues.”
For example, think about dropping your twelve-year-old daughter off at the movie theater. You tell her to stay inside the theater and that you’ll be back in two hours to pick her up at that exact spot. When you come back to pick her up two hours later, she is nowhere to be found. You call her and find out she’s across the street at the ice cream shop because she and her friends decided not to see a movie. So what happens? She loses some rope. You have to pull her back in a bit because she made a bad choice and didn’t call to ask permission. Now, imagine your teenager is at a high school party where adult beverages are flowing. If he calls you, tells you what’s going on, and asks you to come pick him up, then guess what? He just earned more rope because he showed the ability to make good decisions.
Kids want to be treated like adults. I used to say that to my parents all the time, and Dad always answered, “If you want to be treated like an adult, then act like an adult. Show me I can trust you, and I will.” And Mom and Dad always followed through with that, giving me more freedom when I showed them I was worthy of their trust. Sure, there were times when they had to pull the rope back in because I made bad choices—there will always be a little back and forth—but you want the goal to be a nice, long rope by the time your kids leave home.
Letting Go
My sister, Denise, was the first Ramsey child to head off to college. Her last night in the house, Mom cooked a delicious family dinner and we all sat around the dining room table, laughing, crying, and telling stories about Denise. If you were just listening in, you would have thought we were at a funeral—but no, she was only moving a few hours away. As the night was winding down, Dad left the room and came back carrying a big gift bag. He sat down, reached in the bag, and pulled out a beautiful loop of thick, white rope. There were smaller ribbons woven into the rope, each one a different color.
He said, “Denise, your mom and I are so proud of you and the woman you’ve become. But starting tonight, things will be a little different.” Then he explained what the different colored ribbons meant. There was a red ribbon signifying her academics, purple for her spiritual walk, white for her purity, green for her ability to handle money, orange for the University of Tennessee, and yellow as a reminder that she could always come home. When he was finished, Dad said, “Denise, we trust you. You make great decisions. You’re going to be 250 miles away, and that means we can’t hold the other end of the rope anymore.” He paused, put the rope in Denise’s hands, and said, “Honey, tonight we’re giving you the rope.” It was sweet and, sure, a little cheesy, but it was a powerful moment for all of us.
Several weeks later, on Parent Weekend at UT, we all visited Denise in her dorm room. Dad was shocked to see the rope hanging on her doorknob. When he asked about it, Denise said, “Oh, Dad, the rope is a legend. Girls come from all over the dorm to hear the story of the rope. They love it!”
As we were driving back to Nashville, Mom and Dad were talking about how shocked they were that the rope had made such a strong impact on Denise. I chimed in from the backseat and said, “It’s not just Denise. That meant a lot to Daniel and me too.”
Mastering the Rope
Growing up, I didn’t really understand the significance every time Mom and Dad mentioned the rope. Looking back, however, I realize that my childhood was a twenty-year lesson in responsibility. They were preparing us all along to be wise, trustworthy adults. They knew we would be heading into an enormous responsibility some day. And no, I’m not talking about what they may or may not leave us when they’re gone. I’m talking about the responsibility every child will face someday: adulthood. Every child will one day be an adult, making his or her own decisions and taking responsibility for his or her own life. Whether they win or lose, whether they’re broke or wealthy, whether they’re successful or miserable, it’s up to them. As a parent, you’re preparing your children to make the decisions that will determine the kind of life they’ll have as adults.
One of the greatest gifts you’ll ever give your child is preparing her to thrive as an adult. That happens through a lot of conversations, teachable moments, trial and error, and modeling wise behavior with money. And if you do the things we’ve been talking about throughout this book, your child will be wealthy one day. It’s not a matter of income, remember? If your child grows up knowing how and why to work, spend, save, and give; if she knows how to budget; if she avoids debt of any kind throughout her lifetime; if she learns contentment from an early age; if she does all these things, and if you do all these things with your own money as well, then you should expect your child to become wealthy later in life. It’s the natural byproduct of handling money God’s ways.
So assuming your child will be responsible for managing a lot of money later in life, let’s look at some key things you can do today to prepare her to truly manage that wealth with confidence and integrity. The first thing we need to deal with, though, is a massive cultural misunderstanding about money in general: the idea that building wealth is somehow immoral or wrong.
IS WEALTH EVIL?
DAVE: There are numerous toxic money messages in our culture today that you must address yourself and insulate your children from. One pervasive message is that wealth is evil and wealthy people are all crooks who take advantage of others. This lie is causing an entire generation to wonder if they should go into the marketplace and attempt to win. Sadly, because winning usually has financial rewards, some people feel as if they have done something wrong when they win with money.
The Root of the Problem
The Bible does not say money is the root of all evil; it says the love of money is the root of all kinds of evil. Money is amoral; it does not have morals. Money is not good, and money is not bad. Money is like a brick: A brick can be used by good people to build hospitals, or it can be used by bad people to smash windows. The brick is not bad or good; the person holding it is.
The lie that says wealth and wealthy people are evil causes people to make bad decisions. If you believe the lie that money is evil and hurts people, why would you teach your children to win with money? And if you believe that lie, you certainly wouldn’t leave your chi
ldren money in your estate because you believe it would harm them. Even some wealthy people have believed this lie. They are afraid that if they leave wealth to their children, they will bring them great harm. That is sad because these parents miss the opportunity to train money-smart kids who could use the money to be world-changers.
The truth is, many wonderful families build wealth and leave it to money-smart kids, but you rarely hear about those families. They will never have their own reality show because it would be boring. Instead, we see trust-fund babies acting like idiots, and as we watch, we begin to fear that leaving our kids an estate will bring them great harm. Please understand, leaving adult children a great value system but little money is still a great legacy. But leaving adult children a great value system and wealth to impact and help others is a stellar legacy! Don’t believe the toxic messages of our culture that say money is evil and wealthy people are all crooks. Those are gross generalizations. They are lies, and those lies could destroy your legacy.
SAFEGUARDING YOUR CHILDREN
Money is not evil, but it is very powerful, and, when handled by someone with a weak value system, it can be dangerous. There are some specific ways to safeguard your children against being harmed by the power of money. Obviously you will teach, guide, and provide a living example of the principles we have been exploring in this book. Doing that over twenty years usually creates an adult who can handle the weight of wealth.
The Ownership Principle
Teaching our children the principle of ownership is one of the strongest safeguards against money harming or destroying them. We must continuously remind our children that we don’t own anything; we are just managers. We have mentioned this concept throughout this book, but consider carefully how this simple idea safeguards your child’s heart. Owners have rights; managers have responsibilities. Owners think of themselves; managers can’t. It isn’t their money, so they must think of others. Owners worry over their money; managers don’t need to worry because the money isn’t theirs to begin with. Owners hold with a tight fist; managers hold with an open hand.
