Dave Ramsey Taught His Kids 6 Financial Lessons to Remember

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  • Money habits are formed by the time a child is 7 years old.
  • The most powerful lessons a child learns about money will come from watching you.

As if parenting isn't hard enough, we're also responsible for making sure our kids learn sound financial lessons.

As someone who once had to file for bankruptcy, Dave Ramsey knows how easy it is to get into financial trouble. By the time Ramsey's children were born, he had more than a few money lessons to share.

Here's some of what the Ramsey kids learned about money.

1. If you want money, you need to work

Ramsey doesn't believe in giving kids money "for breathing." Just as they'll be required to do when they're adults, kids should earn their income. That may mean paying them for chores like taking out the trash, mowing the lawn, or picking up their toys. By teaching children that nothing in life will be handed to them, you're preparing them for the day when they must make it on their own.

2. Spend with wisdom

Kids are naturally impulsive, and their spending habits can be too. Let's say a 10-year-old has $10 and sees a small toy they want to buy. That's your chance to remind them that it's okay if they buy that toy, but doing so may prevent them from purchasing a soccer net or video game they've been saving for. They may not understand the meaning of "opportunity cost," but they will learn to recognize that everything is a trade-off. If they want something today, saving up for something they've been dreaming of may take longer.

3. Patience pays off

Delayed gratification is difficult for many adults and even more so for children. Teaching a child to spend with wisdom shows them that patience pays off. When a child is small, it's easy to illustrate how patience pays off by allowing them to save up for something they really want, then taking them to the store to purchase it with their own money. As they grow into teenagers and you help them open a savings account, they will learn how compound interest can help their money grow if they leave it alone. As they move on to learning how to invest, they'll make a clear connection between patience and the power of compound interest.

4. Be generous

While it may sound counterintuitive, researchers have shown that "givers" are happier than "takers." In fact, the brain activity associated with happiness increases simply by making a commitment to be generous to others. As humans, we feel better about life when we're helping someone else. Whether that means helping you shop for food to donate to a local pantry, collecting school supplies for other children, or giving money to a charitable foundation, kids have the opportunity to learn how good it feels to be generous.

5. Debt is not your friend

After his own experience with bankruptcy, Ramsey took the opportunity to instill the importance of staying out of debt. If something is worth having or doing, it's worth saving for.

6. Remember to be grateful

Gratitude is a tough skill to teach, particularly in a world full of consumerism. During childhood, kids are bombarded with thousands of images telling them they need a new gaming system, pair of tennis shoes, or whatever the advertisement of the moment may be. Life becomes an endless race to possess "stuff." And that loop never ends unless you teach them how to stop and take a moment to be grateful for what they have. Longing for more does nothing but rob them of the joy they could be experiencing.

And here's the tricky part of Ramsey's lessons: You have to model them yourself. A University of Cambridge study revealed that money habits are formed in children by the time they're 7 years old. They learn by watching you. Everything you do, from going to work every day to earn money to being generous with others, sticks with them. It becomes their blueprint for making financial decisions.

If raising kids who can manage money is important to you, you're in the perfect position to teach them how.

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