Smart Money, Smart Kids, with Rachel Cruze – Episode 39 of The Action Catalyst Podcast

Author, podcast/radio host, and Certified Financial Coach Rachel Cruze talks about putting 4-year-olds to work, teaching your kids about giving, paying for college without debt, and what contentment REALLY means.

About Rachel:

Growing up as Dave Ramsey’s daughter, it’s safe to say Rachel Cruze learned how to handle money at a young age—how to give generously, save, and steer clear of debt. She learned a lot from her parents as they recovered from bankruptcy and started her dad’s business, Ramsey Solutions, from the ground up. Dave always made sure the kids knew the importance of working hard to earn money, and as Rachel got older, she found out she was actually a free spirit (as opposed to a budget-loving nerd) with a pretty strong tendency toward spending.

But once she got the hang of budgeting and telling her money where to go, she saw firsthand that a budget didn’t limit her freedom. It actually GAVE her freedom, and she became super passionate about helping others experience that same freedom.

She received a Bachelor of Arts in communication from the University of Tennessee, married her husband, Winston, and from there joined the team at Ramsey Solutions. Now, as a Ramsey personality and certified financial coach, Rachel travels all over the country speaking and sharing practical guidance on getting out of debt, building wealth and more. She’s a big believer in exposing the toxic culture’s lies that people believe when it comes to their finances and giving people a clear plan they can put into action—because money doesn’t have to be stressful or confusing.

A big part of this mission also includes writing books, hosting The Rachel Cruze Show on YouTube and podcast, co-hosting Smart Money Happy Hour with her friend George Kamel, and co-hosting The Ramsey Show (often with her dad!).

Learn more at RachelCruze.com.

The Action Catalyst is presented by the Southwestern Family of Companies. With each episode, the podcast features some of the nation’s top thought leaders and experts, sharing meaningful tips and advice. Learn more at TheActionCatalyst.com, subscribe below or wherever you listen to podcasts, and be sure to leave a rating and review!

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(Transcribed using A.I. / May include errors):

Host
So blessed and lucky to be bringing to you Rachel Cruze. She is a great communicator. Rachel’s in the media, and she’s just quickly becoming a celebrity and a superstar that’s making a big difference in the world. Rachel, welcome to the show. Thank you for being here.

Rachel Cruze
Oh, thank you so much for having me. I’ve been so excited about this. Thank you.

Host
So tell us. I mean, just, what is it like growing up, Ramsey, like, what is it like growing up in a house with Dave, and what are some of the things that are really different about you from him, in terms of the way that you grew up, and just kind of talk to us a little bit about that.

Rachel Cruze
Sure. Well, yeah, everyone’s always curious about growing up in Dave Ramsey’s house for sure. And I think some people have the misconception that we had, like mutual fund parties and budget retreats on the weekends and that kind of thing. And thank goodness that was not the case. Mom and Dad were obviously intentional with teaching us about money. But it was, it was sort of cool style parenting in the sense that they just saw teachable moments, you know, throughout the day, throughout the week, so they would talk to us about money. And I think some people, you know, think that we were like little money robots or something, and we were all obsessed with money, and that was not the case. And really the great thing mom and dad did that helped us now as Ramsey kids, there’s three of us in the family, so now we can kind of stand on this solid financial ground and win, and thankfully win not because we’re Dave Ramsey’s kid, but because we are top these principals. So now we get to apply that to our own lives.

Host
So the book Smart Money, Smart Kids. Why is it that more parents don’t teach their kids about money in the first place?

Rachel Cruze
Yeah, I really don’t think parents are I think money is a very shameful topic. I think it’s a very intimidating topic. And so some parents look back on their own mistakes and they think, you know, there’s no way I can teach my kids about money. We handle money horribly. You know, parents though, so we don’t have the right we don’t have the knowledge to teach our kids. So I think there’s some of that. And honestly, I think there is a portion of America, and a large portion that is stressed out about money, you know, in their own sense. So they’re living paycheck to paycheck, they have debt, they’ve like they’re not able to invest for retirement, you know, all these stresses. So they don’t even think about it. I don’t think they don’t have the time to sit down and talk to their kids. And so I think it’s kind of a mixture of all of that, but I am finding kind of this lack of knowledge, if you will, on this subject, and so it’s not taught in schools. And sadly, a lot of parents aren’t talking to their kids about it. And if you know mom and dad’s story at all, they actually filed for bankruptcy when I was six months old. And so and they can bounce back and teach us to avoid those mistakes. Any parent can do that. And so with this book, you know, I really, I look at dad’s message as kind of the emergency surgeon, and I’m the preventative medicine. You know, your kids are your do over. They’re your clean slate, and so don’t feel like your mistakes have to haunt you into your parenting by any means.

Host
So if I’m a parent, I’m listening to the show. What are some jobs that parents can do with their kids at all the different ages, right? You know, like, at what point can they start helping around the house? And what are some things as parents that we can do to put our kids to work early, to sort of teach them about money and create these teachable moments, as you call them?

Rachel Cruze
Yes, well, giving them the value of work is tremendous. I mean, a job well done, feeling like you completed something, you’ve accomplished something, there’s dignity attached to that. I think some parents are fearful that they don’t want their kid to feel the hard shifts in times of life, and they don’t want them to have to make hard choices at their time and all of that. But doing those things and making your kids work, it really is a guess, and you can start that we pay as early as four years old. I mean, a four year old can pick up a few toys and, quote, unquote, clean their room. But we all know four year old does it clean the entire room up to four and so they pick up seven or eight boys and and I say at that young pay them instantly. So if you’re financially able, whatever it is, you know, a quarter or $1 bill, whatever it is, pay them instantly and show them that money come from work. Making that connection for them early is so key. So it’s a four year old. So you’re not, you know, setting up a boot camp for small children a bit those four year old can maybe have two or three responsibilities. You have made matching socks in the laundry, or helping feed the dog, or just little things they can do. And again, you know, maybe 2, 3, 4, things and pay for, and as they get older, their responsibility should increase. And so, you know, doing things like cleaning their room, their entire room, making their bed, helping with the kitchen, helping with the laundry, taking out the garbage. I mean, there are plenty of things kids can do around the house. And again. I would encourage parents to pay your kids on those chores. And there will be some chores your kids will do because they’re part of the family. And so for us, growing up, of room to kid, the kitchen was always a place. We never got paid. We always were expected to set the table, to help clean up, to help mom do the dishes. The older we got, because that was just, you know, to show my mom that we love her and we appreciate her. So there is some act that you’re going to do around the house just because you’re part of the family. You’re not just trying to raid good kids. You’re trying to raid good adults. And so that’s what you’re doing, is you’re giving your kids a tool set. So when they leave the home at 18, whether they’re going to college or just out to the real world, they know how to handle themselves. They know how to take care of themselves.

Host
So there’s this concept, which I just think is hilarious. Can you explain what the 401 Dave plan is and and why that’s important, and how that worked?

Rachel Cruze
Yes. Well, growing up, mom and dad always told us that they were not going to pay for our cars we turned 16, that we had to pay for them, but what they were going to do is actually match the amount of money we saved. And so Dad coined the phrase 401 Dave. That’s what he called it, the 401, Dave. So the matching plan, if you will. And so, yeah, this was great. I mean, it made us, you know, depending on that How nice of a car we wanted, depending upon how hard we wanted to work and how much we wanted to save. And so going through that process was incredible. And writing that check at 16 years old, I actually say that $8,000 so, yeah, I had, I got $16,000 to pay for my first car. Well, I always tell parents, you know, maybe it’s not the amount, necessarily, or even the match. I mean, if you’re not financially able to match your kids, then, then that’s fine. But just the process of saving up and paying for something. It’s just tremendous. I mean, this is such a culture, such a generation of instant gratification, that we cannot anything we want when we want it, and so making your kids stop delay that gratification, have the patience to say, to reach a goal, to have something out, you know, in the future that you’re that you’re working towards. I mean, it’s incredible. The saving money, I don’t think, is just to put money away in a bank account and just watch it grow. I mean, you’re teaching your kids a lot of life principles through this process of saving money.

Host
Another thing you talk in this book about the power of giving and how and when and why, you can teach your kids to give. So can you just give us some ideas on how and why and when we should be teaching our kids to give?

Rachel Cruze
Sure, well, I suggest parents, you know, once they do their chores and they get paid some money, yes, to teach them, the very first thing they need to do is give. And this can be giving to, you know, maybe a church or a non profit or a charity organization or the homeless shelter, find something that maybe you’re you’re child passionate about, and see if there’s an opportunity to match their passion with a giving opportunity. We don’t have a bunch of selfish world. And so I think you know, when you give, you’re saying no to yourself, and I think that’s an important quality to have. Sometimes. I think giving is the antidote to selfishness and selfishness, I think, in arrogance and entitlement, it’s all kind of wrapped in together, almost. So this idea that it’s mine, you have a close fit, and I deserve this, you know? And it’s all these kind of emotions. And people who win this money are givers. They give of their time, they serve people. They’re surrogate leaders. They give of their money as well. They’re giving spirit. So when you live with an open hands, it’s not a prosperity gospel kind of thing, but I do believe you’re blessed, and not in a financial sense, but for your heart. I mean, it’s amazing when your heart changes as you’re able to help people. And honestly, I think giving is probably the most fun you can have with money. I mean, you can buy some fun things, some fun toy, the fun car. I mean, there’s some things you can buy with money. That’s fine, and it’s enjoyable. It’s a joy of giving. There’s nothing like it. And so to be able to experience that as young as 5, 6, 7, years old, all the way up through being a teenager, giving your kids the ability to give and let them experience that, it’s almost contagious, and when you think of a child, he’s grateful and he’s willing to help, who’s learned to hold a door. I mean, these little attributes magnified when they’re able to give financially at things. I think giving can start anywhere in your life, but when you’re able to hand over your your own money that you worked for, that that sense of gratitude and and thankfulness, I think, just flows out of you.

Host
So one of the things that’s a big expense for people in life is paying for college, right? What are some things that both parents and students can do to help them pay for college without getting into debt?

Rachel Cruze
Sure, well, there’s lots of options, which is wonderful. So if you are a parent, first and foremost, I would say, do not feel the pressure. Don’t feel shame. Don’t feel like you’re a horrible parent if you’re not able to help out your kid college. College is not an entitlement, it is a blessing, and that you as the parent are not responsible for that if you are able to help that the gift at the blessing your child should be very thankful. But it is not an entitlement. It’s not a right for them to go to college and you pay court. Sure. So, you know, open up a 529 plan or an EFA, look into saving for your kick college. But if you had a teenager in the house and you out there, headed up the school in the next year or two, and you don’t have money saved, there’s still ways to go to college debt free. Number one, choose an affordable school. So for a lot of students, that’s going to mean staying in states, taking in thick tuition, or even going to a community college for the first year, or maybe even the first two years, and then transferring. But do that, I mean stepping over a state line to go to the public schools of the state next. You can call up at the three times the amount, and you’re basically getting the same education. So don’t do that. Private, fancy schools, and do they have great education? Sure, absolutely. But that you don’t have to have a degree from where those schools to go out and win in the marketplace. So don’t believe that lie either. Now if you have the money to send your kids anywhere, and that’s fine, but going into debt for an out of state school or a private university is just not wise. So going to that affordable school number two, scholarships and grants apply for as many as possible. I was talking to a girl in Texas, as she said, her mom was a single mom made her apply for two scholarships a day to doing that. And then lastly, research has shown that that the average college student can work, or will work 20 hours a week. They can pay their way through an in state school. So you can literally work your way through. And so by doing those kind of thing, talking to your financial aid office, then we’ll even break up a semester into a cash payment plan, where you pay a little bit at the beginning and then some in the middle, you know, maybe they can work with you with that. So if you have your child that’s a junior even, you know, starting a junior of high school next fall, there’s still time. And just doing those three things, I promise you can go to full debt free.

Host
The one word that appears in this book Smart Money, Smart Kids over and over, and I really love this word, is just contentment.

Rachel Cruze
Yeah. I think contentment is a key principle when it comes to teaching our kids about money. If you do not have content kid, they will forever be trying to fulfill themselves with stuff and spending money and figuring out what’s going to make them happy. And so being content is not being, you know, apathetic or thumping lazy, but it’s really having peace with this where you are in life, and just being content. And I think contentment comes from a heart that’s grateful, and that grateful heart, again, kind of wraps back around to when your kids are giving.

Host
I love it. Well, Rachel, you are a joy. It’s a joy to see you. It’s a joy to interact with you. It’s a great book.

Rachel Cruze
Thanks for having me on.