Financial expert Dave Ramsey isn't one to sugarcoat his advice, especially when it comes to raising financially responsible kids. He believes that parents play a crucial role in shaping their children's money habits—sometimes without even realizing it.
“More is caught than taught,” Ramsey says, emphasizing that children learn more by watching their parents than by listening to lectures about money. If kids constantly see their parents swiping credit cards for every purchase, they'll grow up thinking that debt is just a normal part of life.
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Teaching Financial Responsibility Early
Ramsey argues that shielding kids from financial struggles does more harm than good. Parents who clear every obstacle and hand their children everything might think they're being supportive, but in reality, they're setting them up for failure.
“One day, your kids will leave your house and face the real world—a world that doesn't hand out participation trophies,” he says. Without discipline, responsibility, and a solid understanding of money, they will likely struggle to make ends meet.
That's why Ramsey encourages parents to lead by example. “Your kids are watching how you handle money. If they see you swipe a credit card every time you want something, they'll think debt is normal,” he explained on X.
“But if they watch you save, budget, and live below your means, they'll learn how to win with money before they ever make their first paycheck.”
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Buying Their Own First Car
One major financial milestone where parents often go wrong, according to Ramsey, is buying their kids a car. He warns that gifting a vehicle can create unrealistic expectations.
“When you buy new cars for teenagers, you're setting them up for a life of ridiculous expectations. Think about their future,” he says.
Ramsey suggests that teens should work for their own cars to learn valuable lessons about money. Parents can still support them, but in a way that reinforces responsibility—such as a matching plan where the child saves up a certain amount, and the parents contribute the same.
Letting Kids Experience Consequences
Ramsey thinks a lot of parents make the mistake of protecting their kids from the results of their actions. He remembers a chat with his four-year-old granddaughter, who told him her cousin was “experiencing consequences.”
Ramsey found her understanding both humorous and insightful. “Have you experienced consequences?” he asked. Her response: “Oh yes, Pappa Dave, and it's not fun, but I learned a lot.”
This moment made him even more sure that going through struggles helps people grow. When we take away consequences, we keep them from learning, he says. “And instead of soaring like eagles, they become turkeys.”
Breaking the Cycle of Financial Dependence
Ramsey warns that enabling children well into adulthood has led to a financial crisis among young people. A poll by Savings.com found that nearly half of parents are still covering their adult children's bills, with 25% of millennials relying on their parents for housing.
While temporary support in emergencies is understandable, long-term financial dependence creates bigger problems. Ramsey compares good parenting to an eagle's nest—eagles provide comfort for their young but eventually remove the soft padding, encouraging their eaglets to fly. Many parents today, however, are keeping their “nests” too comfortable, making it harder for kids to develop independence.
“The best thing you can do for your kids isn't to make their life easy,” Ramsey advises. “It's to teach them how to handle challenges, work hard, and make wise financial decisions. Because if you don't teach them, the world will—and the world is broke.”
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