I picked up Smart Money Smart Kids to get some ideas for ways to teach money management to my kids.
Growing up, I didn’t have anyone to teach me about finances. I had to learn personal finance on my own, and I made some huge mistakes. I don’t want my own kids to struggle in this area, so it’s important to me to pass on to my kids the money lessons I’ve learned. My kids won’t start at the bottom of the knowledge totem as young adults the way I had to. This has become so important to me that I’ve recently decided to also blog about some adult finance 101 topics for teens.
These are the thoughts that motivated me to pick up Smart Money Smart Kids. Dave Ramsey and his daughter Rachel Cruze authored this one, which was a selling point for me. I’m a fan of the Ramsey method of debt crushing, though I admit I modified a bit for myself. As we all should.
Parents Often Forget to Teach their Kids What They’ve Learned
I think that a lot of parents make the mistake of not teaching their kids how finances work. This puts so many young adults at a severe disadvantage early in life. They can end up years behind in figuring out how to get started generating income and managing that income wisely.
Some parents still don’t have this figured out for themselves. They have no real knowledge to pass on. Other parents do, and some of those think their kids will just absorb this information on their own. The most I learned from my parents about finances was learning to value shop at the grocery store with my mom. That’s a very valuable tool, but it’s not enough in the grand scheme of personal finance.
You have to understand going into this book that Dave Ramsey is Dave Ramsey. So even with the addition of his daughter Rachel, this book teaches the same principles you’d be taught if you consumed any other Dave Ramsey content. I picked up this book hoping to learn some insightful new ways to teach my children about money. Here’s what I found.
Smart Money Smart Kids: What’s in The Book?
Smart Money Smart Kids spends a lot of its focus on the philosophy of saving money and the foundational thought processes that go into it. Dave and Rachel explain how any method used attaches to a thought or belief about finances.
This book is also largely set on a religious foundation. I’m not religious myself, but I read a lot of content that works off a religious foundation. So I’ve grown accustomed to this and found it easy to tune out or apply it in a secular way. While I don’t ascribe to Christianity, I do find that Christians hold some great wisdom that can we can apply, so long as we don’t take offense to the religious format used to present that wisdom.
The Importance of Work
Smart Money Smart Kids spends a lot of time talking about the importance of work. The premise is that work sets up the foundation for learning to spend, save, and give. The first method they teach is to pay a commission for typical chores done around the house. They then closely tie that method into the concept of associating money with work performed. Ramsey and Cruz take turns talking about specific anecdotes that led to money lessons for Cruz when she was growing up.
As you can guess, the Ramseys do not believe in allowances for children. Rather, they believe parents should teach their children to earn money through work. They also make it clear that parents should reinforce all values they are teaching their kids by living out those values and by saying them out loud. They suggest using phrases like, “Ramseys don’t go into debt.” You would use your own value and family name, of course.
This wouldn’t work well for our family since our last name is ridiculously long. Plus my kids use their dad’s last name. But I think the idea that you start working your values into their personal value system early in is solid. It’s a good rule of thumb.
Spending, Saving, and Giving
The authors divide up methodologies among different age groups. The book breaks down ages into younger children, tweens, and teens (teens for this purpose are 14+). Then it provides methods for teaching working, spending, saving, and giving based on those ages categories.
They also touch on the two different types of people—spenders and savers. I thought this was a great thing to cover since you will probably need to tweak your teaching methodologies based on your child’s personal psychology. If you’ve been reading me for a while, you know that I’m a big believer in understanding your personal psychology. That way you can work with it instead of trying to force yourself to be a perfect financial guru.
In fact, I have a whole list of psychological Jedi mind tricks that keep me on track. And you should too!
The authors touch on each of the concepts of spending, saving, and giving, one by one, by breaking down the learning concepts into age-appropriate methods of teaching.
The meat of this book focuses on teaching your children to spend appropriately. It focuses heavily on budgeting, saving appropriately, spending judiciously, and giving regularly.
I would say that one of the biggest themes of Smart Money Smart Kids is the teachable moment. It focuses heavily on finding those moments and taking advantage of those that come up naturally. Moreso, in my opinion, than it does on setting up a schedule of lessons.
This may not work with your parenting psychology very well. If you’re not good at noticing teachable moments as they appear, you may prefer a more organized approach. This is likely not as effective as the teachable moment method, but you gotta work with your parenting style.
A large part of the book focuses on the big purchases looming in teens’ futures—a car and college. It places emphasis on requiring teens to save for these purchases. It also encourages parents to match or pay for these as they are able.
One of the things I loved listening to was Dave explaining that kids should attend in-state, state colleges. He says if they want to go to a more expensive college, they should expect to pay for it on their own. They can do so by saving in high school or working through college, or some combination of the two.
Dave and Rachel also place a heavy emphasis on searching for scholarships throughout senior year. Teens can do this for at least a couple of hours per day after school. That helps to pay for college outside of what you are prepared to help with as the parent.
This was all common sense advice to me. And speaking from the perspective of an HR professional, I can promise you that unless your child is graduating from Harvard, Yale, or a similar college, nobody cares if your child spent an extra $100,000 on private school tuition. In most cases it won’t open any extra doors.
I also love Ramsey’s take that college is an investment in your future earning potential. It’s not an “experience.” My confirmation bias was really happy to hear Dave Ramsey say that!
Why This Book Doesn’t Work for Me–and Why it May Not Work for You
I bought this book with the hope that I’d learn some technical tips and methodologies for teaching my kids about money. And with the hope I’d learn a bit about child psychology. Which in turn might help me understand how to better teach my kids.
Unfortunately, with this mindset, I ended up with a two-star experience. For me, three stars is an average book. I start with three stars and go up or down rather than starting at five stars and taking stars away from there.
This book was strongly oriented toward the philosophies and principles behind saving money. It focused less on the actual steps the reader should be taking. The steps included tended to be things I already knew about. Things like helping your kid with budgets, having them save a little, and paying money for completing chores.
The book had some useful bits of information here and there, but I didn’t find many new concepts that I hadn’t learned outside of general parenting blogs and Dave Ramsey’s other content. Part of the issue, though, was what I hoped to get out of the book going in. And I just didn’t get it.
Should You Read Smart Money Smart Kids?
If you are new to Dave Ramsey’s money philosophies and teachings, this book may be a better experience for you. Your experience may be closer to four or five stars.
Or if you’re a new parent and have never considered how you’d like to teach money management to your children, this book will probably provide some great guidelines. Christians will likely enjoy the religious foundation Ramsey and Cruz base their teachings in. If you’re not a Christian, and you’re turned off by Christian-based teaching, this book will turn you off.
For a more seasoned personal finance parent, you may not take much from this book. For those who are not religious and not turned off by religious authorship, this may be a neutral experience for you, as it was for me.
Two out of five stars. To see what else I’m reading, follow me on Goodreads.