Dave Ramsey Shares His Best Money Tips for Moms and Their Kids

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Let's face it: We all want to be responsible with our money. But being a parent means being under even more pressure to keep your finances in shape. After all, not only do we want to provide for our children, but we also want to lead by example so our kids grow up to be financially responsible and confident adults.

That's just one of the many reasons financial experts Dave Ramsey and Rachel Cruze wrote Smart Money, Smart Kids, a guide to raising financially savvy children.

The well-known host of The Dave Ramsey Show and his daughter recently spoke with us about how moms can create an even rosier financial future for themselves, their family, and the next generation. Here are their top tips.


Smart money smart kids book cover1. Reduce stress by creating a zero-based budget. Money stress often stems from question marks about what you have in the bank and what you have to spend. But by drawing up a zero-based budget ("your income minus your expenses equals zero," explains Cruze), you'll eliminate those unknowns.

Start out by writing down your monthly income, then list everything you spend money on, Cruze explains. Then every dollar of your income is assigned to a category -- utilities, groceries, recreation, etc.

Take heart that this will take a bit of time to get used to. "You're gonna be adjusting categories every month, but by the fourth month, your budget will start working," says Cruze. "In fact, a lot of people feel like they got a raise!"

2. Partner with your spouse for success. As Cruze points out, money is the #1 cause of divorce. That doesn't mean that disagreements about finances are doomed to destroy your marriage, but you'll inevitably have your differences. In many cases, one spouse is more of a spender, and the other is a saver.

For that reason, she and Ramsey recommend functioning as a team with distinct roles. One of you might be the "nerd" (the one who enjoys creating spreadsheets and analysis of details), while the other is the "free-spirit." 

"Let the nerd do the budget, because they enjoy it, but then come together," Cruze advises. "There has to be input from both spouses, some back and forth." Finally, at the end of the meeting, you agree not to waiver from what you've decided as a team.

By shaking on this, you're on the same page about a lot more than just money. As Cruze says, "You're agreeing on your goals in life. Your dreams, your fears." And in turn, you'll have a great shot at keeping financial disagreements at bay.

3. Pay down debt with a "snowball" strategy. Ramsey and Cruze advocate shrinking credit card debt with a strategy called the "debt snowball." You list your debts smallest to largest, pay the minimum payments on all of them, but focus on paying the smallest down first. 

"Doing this gives you momentum and encouragement," explains Cruze.

Plus, research proves it works: A study done at Northwestern University’s Kellogg School of Management in 2012 found consumers who used Ramsey and Cruze's “snowball” method were more likely to actually eliminate credit card debt than people who first paid off cards with the highest interest rates.

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4. Own your mistakes. "Everyone has made mistakes with money," says Ramsey. "The important thing is to learn from your mistakes and not make them again." That said, you may still struggle with talking about your financial setbacks with your kids.

But it's actually to their benefit that you do: "Using age-appropriate language, just explain to your kids about your money mistakes," advises Ramsey. "It’s a good money lesson for them too, and might help you get them on board with your financial plan."  

5. Save for retirement, your child's education, and other big-ticket items in the right order. Worrying about stashing away cash on all of those major expenses can definitely up anxiety. But that's why Cruze recommends taking on one at a time.

"You save for retirement first, and then kids' college," she explains. "Because retirement is going to happen whether you like it or not. Kids' college may or may not happen, and if it does, there are 100 different ways they can pay for it."

The general rule of thumb: 15 percent of your income should go into retirement.

But before saving for either of those family milestones, it's best to pay off debt and make sure you have an emergency fund -- ideally one that's three to six months of expenses in the bank, as hard as that may sound to achieve.

As for other big ticket items, like a vacation or a downpayment for a house? Say you need $1,200 for an anniversary trip in 12 months; making a line item in your monthly budget for $100 gets you there.

6. Act deliberately. Sure, it may be easier said than done, but it definitely helps to be purposeful with every financial move. "Be intentional about where your money goes, and only buy what you can afford," explains Ramsey. "You should also be intentional when it comes to giving. Giving is the most fun you will ever have with money."

While tackling all this may initially feel daunting, acknowledging and constantly working with all the moving parts of your financial picture is actually liberating for most people. As Cruze explains, "Being on a plan and being specific is going to give you such peace of mind." Not to mention how implementing these "commandments" can help parents feel more in charge of their financial fate.

Which of these commandments do you already follow? How does it work for you?


Images via ©iStock.com/SquaredPixels, Lampo Press & ©iStock.com/MichelleGibson

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