Smart Money Smart Kids: Raising the Next Generation to Win with Money

There are two things that will surely come to us all: death and taxes. At worst, you have to pay certain taxes even after death. And the fact that death has long since ceased to be free of charge, and that it is accompanied by a great deal of organisational and financial effort, cannot be denied.

Although it is a skill necessary for a lifetime, and one of the most important abilities a person can have, the correct handling of finances is something that is barely touched upon either in childhood or in adult life. If one is lucky, one is taught the right way to handle things by one’s parents, but if parents have no plan of proper housekeeping, then as a child one has to hope that school will fix this educational gap. German schools, however, have long been criticised for being hostile to economic topics and far too remote from real life. The discussion about the extent to which science should be accompanied by economics remains lively to this day. So after the age of 18, in the worst-case scenario, you are let out into the world without ever coming into contact in any way whatsoever with proper old-age provision or long-term asset accumulation – and thus are easy prey for representatives and brokers who offer the most dubious products in these areas. Not to forget that many people in Germany live close to the poverty line and the descent into debt can happen quickly. And this is where the old saying is true: the debtor always remains the slave of the creditor.

If parents are eager to break this cycle and seek financial fitness for themselves and their children, Dave Ramsey and his daughter Rachel Cruze claim that their book Smart Money Smart Kids: Raising the Next Generation to Win with Money can serve as a basic guide. Ramsey is a self-made multi-millionaire who, after many failures in life, has now set himself the premise of getting as many Americans out of the debt swamp as possible.

Probably the most important question that interests me as a parent and also as a teacher is how can I ensure that children lead a self-determined and at best debt free life, able to handle their financial resources responsibly themselves? The important link between work and money is a cornerstone for cautious and thoughtful spending. Ramsey and Cruze focus on dividing finances into three basic areas for a child: spending, saving, and giving. Each of these areas is managed independently by the child (under the supervision of the parents) and the parents are only responsible for the framework conditions. In the course of the book, the authors go into the individual development paths of a child and how to design the phases so that the child can develop a long-term and debt-free way of thinking. Sometimes they put forward a controversial thesis, which would probably trigger a shitstorm in Germany: you shouldn’t give the child everything for free anymore. Rather, the child should work to fund his or her desires from a certain age and parents should only contribute a small amount of the money.
All this and much more is addressed in the book, not so much from a scientific point of view (the book doesn’t claim to be scientific) as from a very practical perspective. Many of the points mentioned are just common sense and logical thinking, but sometimes it is good to have them in writing. Ramsey and Cruze provide anecdotes from their own lives and suggest generally clear guidelines for action which can be easily integrated into your own life. As you work your way through the chapters, the book  feels more like dialogue with them than a written guide.

As always with written guides like this, the following applies: switch on your brain, reflect on your own ideas about life and extract the things that are most important to you out of this book – or don’t. Is the book a world changer? No, absolutely not. Is the book a good overall starting point if you want to educate yourself on how to make your children financially fit? Yeah, absolutely.

Marcel Müller

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