Dave Ramsey: Teach Your Kids Financial Responsibility

Becky from Arizona is calling into the Dave Ramsey Show with the most parental question ever. Should she buy her daughter and son-in-law a new house? They have a daughter and stable careers as teachers, but the income is not what it should be to buy a house. Becky knows Dave’s advice on this, but she wants to provide a stable home for her family; however, she feels it will hurt them.

Dave says the first thing is if you do something that hurts them regardless if you try to help is still hurting them. Dave recalls her saying that they can’t afford the payments on their own, which scares Dave because it could put them in a world of debt. So Dave tells Becky it’s better if she coaches them along in their careers so they can afford it on their own. Dave says if they manage on their own and follow the Baby Steps, they will be fine.

The big takeaway is to make sure they are responsible for their money first. Because if you are giving money to those who are just blowing it away is a negative investment, and they will never be anything but.

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Dave Ramsey is America’s trusted voice on money. 23 million get guidance from Dave’s radio show on Money Talk 1010, his podcasts, and videos. He’s a national best-selling author and has changed over 6 million lives with his guided money plan.

 

Dave Ramsey’s 7 Babysteps For Success

 

• Baby Step #1 Save 1000

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  In this first step, your goal is to save $1,000 as fast as you can. Your emergency fund will cover those unexpected life events you can't plan for. And there are plenty of them. You don’t want to dig a deeper hole while you’re trying to work your way out of debt!

• Baby Step #2 Pay Off All Debt (Except the House) Using the Debt Snowball

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  Next, it’s time to pay off the cars, the credit cards and the student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one. Attack that one with a vengeance. Once it's gone, take that payment and put it toward the second-smallest debt, making minimum payments on the rest. That's what's called the debt snowball method, and you’ll use it to knock out your debts one by one.

• Baby Step #3 Save 3–6 Months of Expenses in a Fully Funded Emergency Fund

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  You’ve paid off your debt! Don’t slow down now. Take that money you were throwing at your debt and build a fully funded emergency fund that covers 3–6 months of your expenses. This will protect you against life’s bigger surprises, like the loss of a job or your car breaking down, without slipping back into debt.
• Baby Step #4 Invest

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  It's time to get serious about retirement—no matter your age. Take 15% of your gross household income and start investing it into your retirement. Start with your company’s 401(k) plan and invest up to the full employer match. Then invest the rest into Roth IRAs—one for you and one for your spouse (if you’re married).

• Teach Your Kids Financial Responsibility

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• Baby Step #6 Pay Off Your Home

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  Now, bring it all home. Baby Step 6 is the big dog! Your mortgage is the only thing between you and complete freedom from debt. Can you imagine your life with no house payment? Any extra money you can put toward your mortgage could save you tens (or even hundreds) of thousands of dollars in interest.
• Baby Step #7 Build Wealth and Give

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  You know what people with no debt can do? Anything they want! The last step is the most fun. You can live and give like no one else. Keep building wealth and become outrageously generous, all while leaving an inheritance for your kids and their kids. Now that's what we call leaving a legacy!

 
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