What Dave Ramsey Says You Should Teach Your Kids about Money

Dave Ramsey is an American financial author, radio host, television personality, and motivational speaker focused on encouraging good money management skills for all ages. But, he didn’t start out this way.

Dave made plenty of money when he was young, but poor money management decisions resulted in significant debt. As a result, he lost everything he saved and was embarrassed to ask for help. Dave was determined to figure out how money works and to better manage his situation. He read every book available, interviewed older wealthy individuals, and more. Ultimately, he realized that the world wasn’t out to get him. As it turns out, it was his own decisions that ruined him financially.

After moving back into real estate and bailing himself out of financial distress, Dave realized he wanted to help others with all the knowledge he had gained. He began Ramsey Solutions in 1992 to “counsel folks hurting from the results of financial stress.” Dave wrote several books on the subject and eventually started a radio call-in show that airs nationally.

As you can imagine, Dave has several tips for your kids to learn early. Check out just a few of these below!

See “9 Ways to Teach Your Kids About Money” here

Elementary School Age

  1. Use a clear jar for saving. There are a lot of piggy banks that are pretty cool looking! Try to find one that is also clear so your child can see their money growing. This should be a fun thing for you and your child to sit down and discuss. Watching three quarters turn into 8 quarters is a big deal! This will also encourage saving.
  1. Show them that stuff costs money. It’s one thing to have money and another to understand what it actually means. The next time you take your child to the store, have them bring some physical money with them from their piggy bank. When they find something they want to purchase, have them hand their money to the cashier. This will be far more meaningful than a simple lecture about money because they will visually witness the result.

Tweens

  1. Teach them opportunity cost. Your kids need to learn that when they decide to purchase something, it generally means they can’t purchase something else. So, if they want to purchase a video game, show them that they won’t have enough money to pay for the new pair of shoes they want as well. Tradeoffs are critical, and can easily be taught in this manner.
  1. The importance of giving. Once your kids start making or saving money, take time to discuss the importance of giving to others in need. If they are passionate about animals for example, help them pick a shelter they can either give money or time to help out. Your kids will see that giving helps others, but that they will also feel good about it as well.

Teenagers

  1. Work for money. Your children will have a lot of free time during breaks, summers, and more. Helping them find a summer job at their local ice cream shop for example is a great way to show how working will provide them the additional money they seek.
  1. Teach them the danger of credit cards. As soon as your teen turns 18, they are going to want a credit card and will receive mail from banks trying to provide it to them with “attractive” promotions. Teach them why debt is dangerous and how to protect themselves.

These are just a few of the tips you can use to teach your kids how to manage their money. Its best to start as early as possible promoting positive money management skills because it will be a critical asset for your kids as they grow up.

See “Money-Smart Kids: The Top Tips Every Parent Should Know” here

How To Talk Money Management With Your Kids

The money talk — not as scary as the birds and bees, but still a lot to think about. We get it and so do other parents. In fact, 49% of parents say they’re not sure how to explain money to their child.[1] Enter: Spring Break. It’s the perfect time to open the conversation, starting with budgeting. 

EXPLAIN WHY BUDGETING IS IMPORTANT

If you’re like 67%[2] of Americans, you keep a budget — nice! Time to get your kids on board. But how? You could start off by explaining why a budget matters, because chances are they’ll ask.

Conversation Starter: “When you make a budget, you know just what you’re spending, and how much you need to save for things you want, like those AirPods.”

EXPLAIN COMMON BUDGETING TERMS

Fixed Expenses and Variable Expenses — ring a bell? Maybe, maybe not. Either way, they’re important words to teach your kids about budgeting. Break it down into Spring Break terms, and they’ll get it.

Conversation Starter: “A Fixed Expense is one that doesn’t change. Like, our plane ticket. A variable Expense is one that does change. Like, meals. It can go up or down, depending on where we eat.”

EXPLAIN WHY SAVING MONEY IS IMPORTANT

Budgeting for Spring Break is one thing — saving for it is another. Instead of simply handing them money (and hoping they stash it away), show them the importance of earning and saving.

Conversation Starter: “Saving money lets you buy things that you might not have enough money for right now. When you add a little bit of money to savings over time, it helps make future purchases possible.” Tip: Name something you’re saving for, and how you plan on reaching your goal.

GIVE THEM THE GREENLIGHT

After you have the money talk with your kids (you’ve got this!), think about getting them a debit card — like Greenlight. Unlike a credit card, they can only spend what’s on it. (More on the differences between credit and debit here.) The best part: debit cards like Greenlight empower your kids to make smart money decisions, long after Spring Break ends.

With the Greenlight debit card and app, your kids can:

  • Set Savings Goals. Even staycations cost money. Teach them to save for it.
  • Learn to Make Trade-offs. Keychain or shark-tooth necklace? It’s their call.
  • Earn Allowance Through Chores. Greenlight kids who earn allowance save 26% more.

As they start learning about money management, you’ll be right there with them. The Greenlight app lets you:

  • Control Access to ATM’s. Are they taking too much out? Set limits.
  • Choose Stores. You decide where they can and can’t spend.
  • Get Real-Time Notifications and Monitor Their Spend Levels. Perfect if they’re vacationing without you.

GET SET FOR SPRING BREAK

Join Greenlight today and help your kids get a head start on budgeting for the break — and for life! Sign Up Now

[1] Investopedia.com [2] Debt.com

Why kids should understand the difference between debit and credit cards

Today, it’s not surprising that Americans have shifted from the traditional use of cash to more modern methods of payment like debit and credit cards. According to Fundera, 70% of consumers prefer using cards as a form of payment and 54% prefer using debit cards. 

Debit and credit cards provide convenience, more security than cash and are accepted nearly everywhere. It’s safe to say that while cash may not be going away, teaching children the basics of what credit and debit cards are now will prepare them to use cards responsibly in the future. 

Prepare them for the reality of credit cards

A credit card is a form of payment issued by a bank or business that allows the holder to purchase things on credit. When making purchases with a credit card, you promise to pay back the money you owe (plus any interest!) at a later date. 

When you carry a balance over month-to-month, the lender charges you interest on top of the amount you owe. Carried balances and interest can add up quickly and many families find themselves in a position where it’s tough to pay credit cards off.

In fact, 41% of America’s households have credit card debt. It’s important to introduce your kids to the concept of credit cards while they’re still in the nest – that way, they are prepared to carry one later in life. 

When it comes to teaching your kids, we recommend starting their money management adventures with a debit card. This protects them from overspending because they can spend only the money they have, and allows them to build healthy habits early before they enter the world of credit.

Teach them to manage money with a debit card

Debit cards provide more security than cash and fewer worries about debt than a credit card. A debit card is a form of payment that deducts money directly from a bank account to pay for a purchase. With debit cards, owners can have easy access to their available funds and can often also put money aside for something special using a savings account. 

Kids need to learn how to manage a debit card just like they need to learn how to drive. Whether your child runs their own lemonade stand during the summer, starts their first job or gets an allowance, a debit card can help kids learn to manage balances, save money, and more!

How Greenlight helps

Greenlight helps kids learn how to manage money and form strong healthy habits that will serve them as adults. According to Greenlight CEO Tim Sheehan, the reason Greenlight is a debit card is to “help kids learn to effectively manage the money they’ve earned, as opposed to spending money they may not have.”

Parents are the primary account holders and have the controls to choose where their children can use the card, manage chores and allowances, set parent-paid interest rates on savings, and more. Kids are able to monitor their balances, create saving goals, and learn how to make financially-smart decisions in a safe environment with their parents’ guidance. 

How parents send money using the Greenlight debit card.

Mistakes are just mistakes

With Greenlight, there is no chance for a child to overdraft or overspend since we decline any purchases greater than the child’s available balance. Mistakes are just mistakes! Parents get alerts when kids try to spend more than they have to spark conversations about budgeting and wise spending. 

Parents are able to allocate funds to their child’s “Spend Anywhere” account or choose specific stores where kids can spend and how much they can spend. They can even help their child create a savings goal and contribute money to meet that special goal. 

Ready to teach your child how to manage money responsibly?

Join Greenlight today to start adventures in personal finance with your kids!