Skip to Content

Summary: Smart Money Smart Kids: Raising the Next Generation to Win with Money by Dave Ramsey and Rachel Cruze

Smart Money Smart Kids (2014) guides parents – or anyone helping raise children – in teaching those kids to become financially smart. Review basics like the relationship between work and money and find actionable advice for instructing toddlers through teens to gain confidence with money.

Introduction: Learn to raise financially savvy children.

Have you ever filed for personal bankruptcy? If you haven’t, good for you! If you have, you’re in good company. Dave Ramsey, the personal finance expert, once filed for bankruptcy with his wife. At the time, they were both twenty-eight and had two children – a toddler and a newborn.

But Ramsey and his wife knuckled down, put in some hard work, and managed to not only thrive, but to raise children who have also become independently wealthy themselves.

Who better to learn from how to raise money-smart kids than Dave Ramsey himself, and his daughter, Rachel Cruze?

Together, they cover both prevention and redemption in terms of getting out of debt. Their book, Smart Money Smart Kids, shows parents how to instill good money mindsets and habits in their children. Because you want the best for your kids, but you won’t be there their entire lives. And a key aspect of setting them up for a successful life is showing them how to cultivate a healthy relationship with money.

In this summary, we’ll cover the basics of how to teach kids about the concepts of work, spending, and saving. You’ll find tips for dealing with toddlers through teens. You’ll learn how and when to introduce budgeting to your kids, and you’ll gain some key insights into paying for college.

We all know kids grow up way too quickly, so let’s get to it!

Book Summary: Smart Money Smart Kids - Raising the Next Generation to Win with Money

The basics – work, spending, and saving

Did anyone ever teach you that working leads to earning money? Many of us just sort of picked up that knowledge along the way.

But this is one of the most basic concepts you need to teach your kids – the connection between work and making money. This is something you can start young, but you’ll need to adjust the lessons as your child grows up. Instead of giving them an allowance, Ramsey and Cruze suggest a commission format for this lesson. An allowance doesn’t directly teach the connection between hard work and earning money like the idea of a commission does. Ramsey used this very idea with his own kids, including Cruze.

When your kid is about three, you can start making the connection by giving them options to earn a few dollars for some key chores. From about age three to five, your kid will need some simple chores, things like putting toys away in their baskets, making their bed, or carrying in lighter items from grocery trips.

Pay them immediately upon completion of the chore to really build the connection between work and earning. Use a big, clear jar to store their money, and pay them in single dollar bills. This introduces a fun element for young learners. Plus, using single bills helps fill the jar quickly, making it look impressive. This helps get kids excited about the concept of work and earning!

As your child grows older, you can increase the difficulty of the chores and introduce the envelope system. Use one envelope for saving, one for spending, and one for giving or charity.

It’s important to teach your kids wise spending and saving habits both. For younger children, start with spending habits. This is the most fun for younger kids, and we don’t want to bore or overwhelm them right at the start of their smart money journey!

Smart spending habits include things like looking for deals or bargains, waiting at least overnight before deciding whether to purchase something, and the opportunity cost of spending.

Need a refresher on that last one? No worries! It’s the idea that when you spend money on a toy this week, you won’t have that money to spend on the new game you want that comes out next week. Obviously, this lesson is easier for slightly older kids as opposed to your three-year-old!

As your child grows older, start introducing wise saving habits as well. Explain things like saving for bigger purchases. If a younger child spends money on candy every week, they won’t be able to save up for buying something bigger, like a new doll. You know your child best, so use examples that apply to them! These early lessons will then apply as they get older and start saving for bigger purchases like a car or college or a house. Be sure to revisit every lesson as they get older, because these concepts need repetition and applicable examples to really stick.

As you teach your child saving and spending habits, keep in mind that most people are either natural savers or spenders. Neither is better than the other, but it’s smart to be aware of our own personal inclinations and to adhere to wise habits either way. Cruze admits she’s more of a natural spender, but that by being smart about her spending habits and implementing other smart money habits like budgeting – we’ll get to that later! – she’s been able to live debt-free and thrive anyway. Your child’s spender or saver inclination might be different from yours, and that’s okay!

A CNN report about college students at University of Illinois at Urbana Champaign showed that nearly all those who demonstrated good financial skills reported that they’d picked up the habits based on their parents’ guidance when they were younger. So get your kids in the habit of saving and spending wisely now. They’ll take these skills with them throughout life.


So, we’ve covered some basics: the work-money connection, and wise spender versus saver habits. Now it’s time to delve into another term you might hear bandied about every time personal finance comes up – the budget.

You’re probably quite familiar with the term, but just so we’re on the same page, let’s define it. A budget is a careful plan and accounting of all the money you handle during a given time period, often a month. That includes income, money spent, money saved, money gifted, taxes paid, and so on.

If you already do a monthly budget yourself, you’re on a great path! If you don’t, you’ll need to start if you’re going to truly teach your kids how to become financially savvy. We humans pick up on what others do, not just what they say, and this is especially true for children. If you want your kids to eventually use a budget successfully themselves – and you do! – you’ll need to walk the walk.

So start by doing your own budget every month. Sit down, write the income you expect to make that month at the top of a piece of paper – or a spreadsheet, that’s fine too – then account for every single dollar of that income by budgeting it to either some type of expense, saving, or donation. The goal is to have zero dollars left at the end of your budget. Ramsey and Cruze recommend budgeting a certain amount into your savings and donations first, then using the rest for any expenses. Often, if we don’t budget those items first, we end up not putting anything into them at all.

Even if you’re just starting your own budget, you can teach your kids how to do it. Just be kind to yourself and open with them as you make mistakes – those are teaching moments, times where you can demonstrate how to calmly learn and correct from financial slip-ups.

Again, as with spending and saving habits, you’ll need to adjust your teachings about budgeting to your child’s age. For those ages three to five, you might let them handle your checkbook, or let them play next to you as you budget. They don’t need to know the particulars of how budgeting works, but seeing you consistently make time to do your budget weekly or monthly will show them it’s an important part of life.

As they grow, you might allow your child to fill in checks for paying bills each month – Ramsey allowed his twelve-year-old daughter, Denise, to do exactly that! Another way to work budgeting into your child’s life is by saying things like, that’s not in the budget this month, even for something you yourself might want. Allowing your kids to see you sticking to your own budget will further imprint the importance of this tool.

With teens, you can give more in-depth explanations of a budget and expect more from them in terms of their having their own budget. Even if your child isn’t working a job, you can help them learn how to budget. Look at all the items you spend money on for them each month – consider clothing, school supplies, all the basics. Add up the numbers, then deposit that amount into a checking account for your teen. Be sure to walk them through budgeting and all the necessary knowledge for dealing with the bank. Suggest they build up a $500 emergency cushion – this will let them pay for any emergencies like a broken phone or a flat tire if they own a car. Then let them handle their expenses during the month.

Be careful in how you react to mistakes they make. If, for example, they dip into their emergency fund one month to buy expensive concert tickets, then crack their phone screen at the concert and can’t afford to pay for it, consider not bailing them out by paying for it yourself. This could be an important teaching moment where they have to deal with a cracked phone screen for a few months until they have the money to fix it. Gently reiterate the importance of an emergency fund and its purpose. Let them know you’ve made mistakes in the past too, and that it’s important to keep striving for good money habits.

On the other hand, being gracious is important too. If your child has put in a huge effort to save up hundreds or thousands of dollars for a big purchase but forgotten about tax, it’s perfectly fine to pay that extra bit for them – if you’re able!


Does the thought of trying to pay for your child’s college cause you to break out in a sweat? You’re not alone. Often, one of the biggest financial stresses for parents is how to pay for their kids’ college tuition.

Before we dive into some methods for covering that hefty bill, Ramsey and Cruze have a key message for parents – you aren’t responsible for paying for your children’s college.

Of course, if you’re financially able, it’s perfectly alright to pay that bill for them. But you are not morally obligated to do so. And, if you aren’t financially able to pay for it, that’s perfectly okay! There are many ways your kids can get through college, and – are you ready for this? – they can do it without going into debt.

That might seem too good to be true, but let’s explore why it’s definitely an achievable goal.

One of the most important aspects of getting through college debt-free is to start planning early. As soon as you’re able, sit your teen down and discuss how much you’ll be able to financially support them through college. If it’s not at all, that’s okay. Let them know if there are other ways you can support them – things like letting them live at home, cooking meals for them once a week, or anything else.

If you can help them financially or otherwise, be clear on what your expectations are – if they’re going to live at home, maybe they’ll need to abide by a curfew, or refrain from throwing parties at the house, or keep their grades up. These are all perfectly acceptable expectations if you’re going to be involved in supporting them in this endeavor.

One of the biggest ways to make college affordable is to stick to in-state, public college choices. In 2022, in-state, public tuition was 74% cheaper than private colleges, according to a U.S. News & World Report. That’s an incredible amount of savings just from choosing an in-state, public college!

Encourage – or even require – your teen to apply to as many scholarships as they can find during the last few years of high school. One of the moms Ramsey knows even made it her teen’s job during senior year – her daughter had to apply to at least three scholarships per day! And at the end of everything, she’d earned enough to cover her first three years of college.

Even small awards like $200 or $500 can make a difference. And they add up quickly. And there are all kinds of scholarships and awards out there. Your teen can earn money from things as simple as wearing a milk mustache in public to writing complex essays. There’s an option out there for everyone.

Another part of planning ahead is in earning and saving money. Even if your teen is unable to work through high school semesters, they can make substantial money on breaks during the school year, either in high school or college or both.

Let’s do some quick math – if your child works forty hours a week for the three months over summer at $15 an hour, that’s $7,200 a summer. Add in the usual four weeks of winter break, and that brings the total to $9,600. That’s almost the entire $10,423 an average in-state, public college cost for the 2022-2023 school year. Throw in a few small scholarships or awards, and your teen could be paying their college tuition entirely on their own!

Not every family situation is the same, so only take any of the advice here that would work for your situation. Just remember – start planning early and be clear with your child about how much you can help them. Guide them to make wise choices such as applying to many scholarships and choosing an in-state, public university. Your teen can get through college without going into debt.


Money is an important part of everyone’s lives – it’s neither good nor bad, but rather depends on the person using it. Teaching your child to be smart about money isn’t an easy endeavor. Heck, raising a child at all isn’t easy! But with the tips you’ve learned in this summary, you’re well on your way to helping your kid become financially savvy.

You’ve now got a solid foundation for starting and adapting the conversation about money with your kids. Remember, these are big, important topics. Be patient and persistent. Walk the walk. Start the lessons simply and adapt to your child’s age.

Lastly, let your children make mistakes – better they make them now with your gentle guidance than later in life without your safety net!


“Smart Money Smart Kids” is a practical guidebook written by financial experts Dave Ramsey and Rachel Cruze, aimed at teaching children (ages 4-18) essential financial literacy skills. The book provides a solid foundation for young readers to make smart money choices and avoid financial mistakes commonly made by adults. I have thoroughly reviewed this book to help you understand its content, value, and potential impact on your child’s financial future.

The book is divided into three parts:

  • Part One: The Foundation discusses the importance of teaching kids about money from a young age. Ramsey and Cruze argue that kids are more likely to adopt healthy financial habits if they are taught about money early on.
  • Part Two: The Tools provides practical tips on how to teach kids about money. Ramsey and Cruze offer advice on setting up a budget, saving for college, and investing for the future.
  • Part Three: The Stories shares the stories of kids who have learned about money from their parents. Ramsey and Cruze highlight the importance of setting a good example and providing kids with the tools they need to succeed financially.

The book is divided into five sections, each focusing on a critical aspect of financial literacy:

  1. “Money 101” – Introduces the basics of money management, including earning, saving, and spending.
  2. “The Power of Savings” – Explores the importance of saving and investing, with a focus on creating a savings habit.
  3. “Making Money” – Covers the different ways to earn money, such as entrepreneurship, freelancing, and investing.
  4. “Budgeting and Banking” – Discusses budgeting, debt, and banking, including how to create a budget, manage debt, and choose the right bank for your child’s needs.
  5. “Real-Life Applications” – Provides practical examples of how to apply financial literacy skills in real-life situations, such as buying a car, owning a home, and planning for retirement.

Key Takeaways:

  • Financial literacy is essential for children to make informed decisions about money and avoid common financial pitfalls.
  • The book provides a comprehensive framework for teaching children about money management, including saving, investing, and budgeting.
  • The authors emphasize the importance of starting early and consistently teaching financial literacy to ensure lifelong financial success.
  • The book’s interactive format, with quizzes, games, and real-life examples, makes learning fun and engaging for young readers.
  • The authors offer practical advice on how to navigate common financial challenges, such as overspending and debt.


  • Clear and concise writing style makes the book accessible to young readers.
  • Practical examples and exercises help readers apply financial literacy skills in real-life situations.
  • The book’s focus on the importance of starting early and consistently teaching financial literacy is a significant strength.
  • The authors’ use of relatable examples and anecdotes makes the content more engaging and memorable.


  • The book’s scope is limited to basic financial literacy, and it does not delve into more advanced topics, such as investing or retirement planning.
  • Some of the content, while relevant, may be too simplistic or oversimplified for older readers.
  • The book’s design could be improved with more visual aids, such as charts, graphs, or infographics, to enhance the learning experience.


  • “Smart Money Smart Kids” is an excellent resource for parents, educators, or anyone looking to teach children basic financial literacy skills.
  • The book is suitable for children aged 4-18, but it may be more engaging for older children who can apply the concepts to their own lives.
  • Consider supplementing the book with additional resources, such as online courses or financial literacy games, to reinforce the learning experience.
  • For older readers or those seeking more advanced financial literacy knowledge, consider complementing this book with other resources.

If you want to raise financially savvy kids, I recommend reading Smart Money Smart Kids. It is a well-written and informative book that will provide you with the tools you need to succeed.

Here are some additional thoughts on the book:

  • I appreciate that Ramsey and Cruze use real-life stories to illustrate their points. This makes the book more relatable and engaging.
  • I also appreciate that Ramsey and Cruze offer practical tips that parents can implement immediately. This makes the book more actionable.
  • Overall, I thought Smart Money Smart Kids was an excellent book. It is a must-read for any parent who wants to raise financially savvy kids.


Overall, Smart Money Smart Kids provides a wealth of ideas and best practices for raising financially-responsible children. The book’s light and approachable tone makes the advice accessible to parents of all backgrounds and walks of life. The numerous stories and anecdotes from Ramsey and Cruze’s own family lives bring the strategies to life and give readers a better sense of how to apply the lessons in real-world scenarios. Any parent who wants to raise kids with sensible money habits will find Smart Money Smart Kids a helpful guide for starting conversations and setting kids up for financial success in the future.

Alex Lim is a certified book reviewer and editor with over 10 years of experience in the publishing industry. He has reviewed hundreds of books for reputable magazines and websites, such as The New York Times, The Guardian, and Goodreads. Alex has a master’s degree in comparative literature from Harvard University and a PhD in literary criticism from Oxford University. He is also the author of several acclaimed books on literary theory and analysis, such as The Art of Reading and How to Write a Book Review. Alex lives in London, England with his wife and two children. You can contact him at [email protected] or follow him on Website | Twitter | Facebook

    Ads Blocker Image Powered by Code Help Pro

    Your Support Matters...

    We run an independent site that is committed to delivering valuable content, but it comes with its challenges. Many of our readers use ad blockers, causing our advertising revenue to decline. Unlike some websites, we have not implemented paywalls to restrict access. Your support can make a significant difference. If you find this website useful and choose to support us, it would greatly secure our future. We appreciate your help. If you are currently using an ad blocker, please consider disabling it for our site. Thank you for your understanding and support.