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

by Dave Ramsey

  What Mom and Dad did get right, though, was providing a solid foundation of generosity for my sister, brother, and me. That doesn’t mean I never struggle with a selfish thought—I’m a fun-loving natural spender, remember? It just means that even when I get distracted by selfish things, I can always go back to the starting point for my family: giving. Unfortunately, it’s a counter-culture message that many young people just don’t get.

  Generation Me

  As I travel across the country speaking to teens, I meet a lot of sweet, responsible, hard-working kids. But I have encountered a lot of self-centered ones too. And because of the work I do, I’ve come across studies that examine the self-consumed nature of this generation sometimes called “Generation Me.” One recent study from Journal of Personality and Social Psychology found that “compared to Boomers, Millennials [those born between the early 1980s and the early 2000s] were less likely to have donated to charities, less likely to want a job worthwhile to society or that would help others, and less likely to agree they would eat differently if it meant more food for the starving. They were less likely to want to work in a social service organization or become a social worker, and were less likely to express empathy for outgroups.”1 That’s a tragedy! And the tragedy isn’t just that they aren’t likely to give to people in need or to worthy causes; it’s that they’ll never experience the power of giving in their own lives.

  Having a selfish mentality is a big obstacle for a lot of people. It’s definitely something your kids either already struggle with or will face one day. That’s because they are growing up in a culture that is obsessed with me, me, me. How do I look? How do I feel? What can I buy myself? What makes me happy? What makes me comfortable? What can I do to make life easier for myself? I’m not saying that every young person in America is selfish and greedy, but let’s face it: The act of giving isn’t always the first thing they think about. But when your kids grow up in a house where giving is a priority, they start to see themselves differently because they see other people differently. Other people become significant, and doing things for others becomes a priority. The antidote for selfishness isn’t a theory; it’s an action, and that action is giving.

  Selfish People Stink

  DAVE: Have you ever met someone and after being around him you felt like you needed a shower? That sliminess, that scent of scum, is the smell of a selfish person. Selfish people are transactional rather than relational. They are involved in every exchange only for what they can get out of it.

  Selfish people have a spiritual smell to them. There is a reason for that smell: They never give. People who never give are stopped-up—nothing flows through—and anything that is stopped-up eventually begins to stink. The Dead Sea is the largest body of water with no life. There is no life because water flows from the Jordan River into the Dead Sea and just stays there—there are no streams for water to flow out. Similarly, a pond with no outlet will grow scum on its surface. People’s spirits are the same way. A person who doesn’t give is really dead; there’s not much spiritual life flowing through him.

  TEACH GIVING BY EXAMPLE

  RACHEL: We have said several times that your children are watching you. That’s true in how you work, how you spend, and how you save, but it may never be truer than it is in how you give. If your children never see you give to someone or something else, then they’ll never learn how to do it themselves. Even worse, if you try to tell them to give without showing them what giving looks like, then the whole message about giving, spending, and saving will be lost because you’ll be doing one thing but saying another.

  More Is Caught Than Taught

  I truly believe more is caught than taught . . . that what your kids see you do is a lot more powerful than what they hear you say. Words can be strong, but actions are stronger. The strongest impact on children, though, is when they hear and see a consistent message from their parents. When the parents’ words and actions come together, it forms a powerful statement about that family’s value system.

  I’ve told you that church was important to my family, and my parents have tithed to the church my entire life. That wasn’t just something we talked about at home; it was something I got to see them do on a weekly basis. Every Sunday, I watched Mom and Dad put a folded check in the red velvet offering bag as people passed it down the pew. That image is burned in my mind even now as an adult. No matter how much we were struggling financially, no matter how big or small Dad’s paycheck was, Dad and Mom put a check in that bag every single week. Seeing that consistent act of giving made it so natural for Denise, Daniel, and me when our parents started talking to us about our own Give envelopes. Because we watched Mom and Dad give, we knew that one of our family values was to give a percentage of whatever money we made. So even as kids, that’s what we did.

  Many parents miss this opportunity not because they aren’t giving, but because they aren’t being intentional about letting their kids see them give. With online banking, it is so easy to do all your giving in two or three clicks while you’re doing the budget. I’ll be the first to admit that I love giving online. It’s quick and convenient. But if you’re a parent, online giving robs you of a chance to make a powerful visual statement to your kids. Even if you’re an online banker like me, I suggest digging out the old-fashioned checkbook once a week for your giving. Let your kids watch you write out the check, and use the opportunity to reinforce why you give. If you’re a Christian and you’re writing out a check for your tithe, remind them what the tithe is (10 percent of your income given to the local church) and why it’s important. If you’re writing a check to a charity or nonprofit, talk to your child about the organization and how your contribution will serve or support them. Help them make the mental and emotional connection between the money and the people it’s going to help.

  You may not want your child to see the dollar amount that you’re giving, especially if you’re giving 10 percent of your income. That’s fine. I never knew the amount on the checks my parents placed in the offering bag, but I never doubted that it was 10 percent of whatever Dad made that week. Seeing them put the check in the bag was the weekly exclamation point on the ongoing discussion our family had about giving. The amount really wasn’t important to me as a child. The real value was in seeing how Mom and Dad’s actions lined up with their words. All this may seem like a hassle, but providing your child the chance to see you give will make a huge impact. All these years later, the image of my parents dropping that check in the red velvet bag still goes through my mind every time I give my own tithe.

  401DAVE on Steroids

  If you do these things when your kids are younger, you may be shocked to see what happens as they grow and mature. The lessons you’re teaching them about saving and giving may seem “cute” when they’re six years old, but remember, you’re laying a foundation here. You never know what they will build on that foundation as their opportunities (and income) grow over time. I can’t imagine a better example of this than what I saw my brother, Daniel, do when he was only sixteen.

  I’ve told you about Dad’s 401DAVE plan for how Denise, Daniel, and I saved for and bought our cars. Basically, Mom and Dad matched our car savings dollar for dollar. All three of us got that message at the same time, and Daniel was the youngest. He was ten years old when he saw our parents match Denise’s car savings, which meant he had six years to save up for his car. He did all sorts of odd jobs, worked at Dad’s office building during the summers, and even painted two five-story stairwells one year. Over those six years, my brother earned and saved an impressive $12,000 for a car—and that was before the match!

  Dad sat him down one night before Daniel turned sixteen and said, “Listen, buddy, I am so proud of you. You have done an amazing job saving, and we’re going to match your savings just like we promised. But as a dad, I can’t let my sixteen-year-old kid buy a $24,000 car. There’s no way.” It worked out all right, because Daniel had his eye on a great $14,000 Jeep anyway. But that meant Da
niel had another $10,000 left over just sitting in the bank.

  Later that year, Daniel took a mission trip to Peru and developed a huge heart both for missions and for the area where he served. When he got home from that trip, he talked about how much that experience had impacted his life. Not long after that, there was a massive earthquake in Peru near the town where Daniel had served. When he heard about it, Daniel felt a heavy burden to do something. He told Dad that he wanted to give the rest of his car money to the disaster recovery efforts in Peru. Did you catch that? A sixteen-year-old kid wanted to give $10,000 of his own hard-earned money to a community in another part of the world! Who does that?

  That really caught Dad off guard. He said, “Daniel, are you sure you want to do that? I mean, you’ll be heading to college soon, and you’ll want to do all sorts of things over the next few years.”

  Daniel’s response took even my dad by surprise: “Yeah, but Dad, it’s not my money, right? It’s God’s money. Isn’t that what you taught us?” So Daniel, at sixteen years old, wrote a $10,000 check to help a community of people he’d never met. And he did it because that’s the model our parents had set for him throughout his entire life. The crazy thing is, it wasn’t difficult for Daniel to give that money. He saw a need and he had the money to help, so he gave it. The beauty of that story is that Daniel learned the value of giving as a little boy, so when he turned sixteen and had real money in the bank, his opportunity—and his desire—to give was magnified. That can happen when a child grows up in a family that values giving.

  DAVE: Insert extremely proud father right here. Watching Daniel make that decision at only sixteen was unbelievably satisfying as a parent, but I think God was smiling even more, because He started working on a selfish young guy named Dave at about the same age. Grace could be God changing me enough that it then changed my family tree. If I could go from extreme self-centeredness to watching one of my children give that much, that freely, then anyone can. And anyone includes you.

  GIVING TIME AND TALENTS

  RACHEL: I think people often get confused about what giving really is. Like Dad said earlier, giving is rooted in stewardship. We’re supposed to be good managers of everything that God has given us, and that includes more than our money. It’s so easy for families to fall into the trap of giving a percentage of their money without ever stepping outside their comfort zone and really giving of themselves in the world. That’s why I teach families the “Time, Talents, and Treasure” idea of giving. In addition to giving our treasure (money), we should freely give from all of our resources, especially our time and talents.

  Popping the Bubble

  The many comforts and conveniences in our culture make it easy for kids to grow up today in a kind of bubble. Having a warm, dry bed and three good meals a day seems like a given. Walking through the house and throwing your iPod, cell phone, and laptop into your backpack on the way out the door becomes routine. And hopping into one of the two or three cars parked in the garage to drive to school feels more like an annoyance than a blessing. If we’re not careful, all of these wonderful things can pile up around us and keep us from seeing the world outside the safety of our comfort zones.

  Mom and Dad popped that bubble every chance they had. As Dad’s business grew and became more successful, they got even more intentional about making sure we always kept our blessings in perspective. They knew the danger of raising kids in a wealthy home totally removed from the heartache and hard life that so many people experience on a daily basis. My parents were committed to not raising three spoiled brats who knew how to handle money but never looked for ways to bless other people. And so they forced us out of the safety of our home and into “the real world” fairly often, always giving us creative intentional opportunities to give of our time and talents.

  My Time and Talents, Their Money

  When I was fourteen, my friends and I spent a lot of time at the mall. Pretty much every Saturday, Mom dropped two or three of my friends and me at the entrance to the mall, and we’d spend hours and hours walking around. We didn’t really have money to spend every week, so I’m honestly not sure what we even did all day. But it was still one of my favorite things to do—wandering around all the stores with my friends, talking, laughing, and getting a ninety-nine-cent taco at the food court.

  One Saturday morning, while I was probably already planning a trip to the mall, my mom approached Denise and me with an idea. Around that time, Mom and Dad had gotten involved with a local ministry organization that focused on young women who had come out of abusive situations or struggled with depression, addictions, or eating disorders. The focus of the ministry was to give these girls a safe place to heal. That Saturday morning, Mom said, “Today I want you two to go pick up a couple of young ladies at the ministry and take them shopping. I’m going to call ahead and ask the director there to choose two girls around your age who need some clothes. You can pick them up, and you all can go to the mall for the day.”

  Now, I’d like to say that I immediately thought this was a fantastic idea, but that wasn’t what I thought at all. I actually felt really weird about it. I mean, these girls were going through some stuff that I couldn’t even imagine. I didn’t know what I’d say to them or what we’d talk about all day. I’m sure Denise and I made up some excuses as to why we couldn’t do it, but Mom saw through it. After we whined a bit, Mom cut off the discussion. We were going, end of story. Mom gave us an envelope full of cash for the girls’ clothes, and that was that. All I knew was that my Saturday was heading in a very different direction than I had planned.

  A couple of hours later, Denise and I pulled up at the ministry and picked up the two girls. It was a little awkward at first, but by the time we got to the mall, we were all laughing and chatting like old friends. Denise and I realized pretty quickly that, despite the problems they were working to overcome, the girls were just like us. I remember walking through the mall, having a blast with our new friends. They were so nice, and they were so excited to go shopping! For Denise and me, going to the mall wasn’t a big deal, but one of the girls told me that she hadn’t been shopping—let alone to a mall—in two years. Two years! My little fourteen-year-old mind was blown.

  The girls had so much fun trying on clothes and basically getting a wardrobe makeover. They hung out in the dressing rooms, and I would run around the store grabbing armfuls of clothes for them to try on. We had a nice lunch in the food court, and then it was time to go. We headed back to the car with what felt like a dozen shopping bags and two new friends.

  When we got home, Mom greeted us at the door and asked us how it went. I was so excited that I couldn’t stop talking. I went on and on about how much fun we had, how sweet and appreciative the girls were, and how cool it was to be able to share one of my favorite things (shopping) with two girls who never got to do it. Then Mom asked me a question that has stuck with me ever since. She said, “Rachel, did you have more fun last weekend with your friends or today shopping with these two girls?”

  Without hesitation, I said, “Oh, Mom! Today, no question! We had so much fun!”

  Mom smiled and said, “Yeah, it’s fun to give, isn’t it?”

  It was . . . and still is. That afternoon made a big impact on me as a young girl. It was such a powerful example of a wise mother taking advantage of an opportunity to pair something she knew her daughters loved with a big need in the lives of two other girls. And we can’t forget that the whole thing was possible because Mom and Dad had an envelope full of cash specifically marked for giving. Even though I was a teenager and didn’t have a lot of my own money to give, my parents gave me the chance to use their money along with my time and talents. The result was an afternoon that blessed two young girls in need and changed my life—and my view of giving—forever. That’s what happens when your kids learn how to give and why to give. They go from living in a world where everything is about them to realizing that there are other people in the world who need their help.

&n
bsp; Creating Opportunities to Give

  DAVE: Sharon and I have always looked for opportunities that were part of everyday life to teach our children hands-on lessons about money. Sometimes, if the teachable moment did not occur naturally, we would manufacture a moment or an event. For instance, there were a couple of years we modeled giving by choosing an angel from the “Angel Tree,” a program that provides Christmas presents for kids who have a parent in prison. As Sharon and I took our kids to find the perfect gift for our angel, sometimes the only results were three whiny kids who argued to buy something for themselves and two frustrated parents who worried about facing jail time if they killed one of their selfish offspring. Not exactly the intended spirit.

  One year we volunteered to deliver the gifts bought by other families for the Angel Tree program. Taking the Ramsey kids on that ride and letting them see firsthand the children who, without this program and the generosity of others, would have had a very bleak and meager Christmas was mind-blowing for my kids. We called those “bubble-bursting moments”—when the “everyone-lives-as-good-as-you” bubble bursts. We regularly looked for bubble-bursting moments because they helped create gratefulness in our children.