Family money management expert, mother, and wife Rachel Cruze co-authored the #1 New York Times best-selling book Smart Money Smart Kids in 2014 with her dad: debt-destroying guru, author, and radio host Dave Ramsey. Cruzeís new book, Love Your Life, Not Theirs, comes out next month, and she and Ramsey will be in Lowell on Sept. 29 with their Smart Money event, in which they walk attendees through topics like budgeting, paying off debt, and saving for retirement (tickets and info can be found at daveramsey.com).
1. What is the No. 1 money problem families are facing today?
Comparisons are killing us financially! We see our neighbor with a new car in the driveway or our friendís photos of her newly renovated kitchen on Instagram, and suddenly our stuff isnít good enough. Weíve always been trying to keep up with the Joneses, only now they donít have to live across the street, they live in our smartphones. We lose sight of the fact that weíre often comparing our lives to people who struggle with that car payment every month or took out a loan to cover the cost of the updated kitchen. Itís not reality. Comparison not only steals our joy Öit also steals our paycheck.
2. †Can average-income families really get out of debt in todayís world? Whatís the first step?
Anyone can get out of debt! It isnít always easy, but it can be done. The most important thing you can do when trying to pay off debt is having a plan, and that starts with a budget.

By creating a budget for your money each month, youíll be able to plan for each monthís expenses so that you can avoid debt and start saving for emergencies. To do this, figure out how much income you have to work with each month and list every expense you have. Assign every income dollar an outgo name. This is called a zero-based budget. I use the app EveryDollar to help make my budget and keep it balanced. To pay off debt, I recommend using the Debt Snowball. List each debt smallest to largest payoff balance, regardless of interest rate. Put as much money as you can toward the smallest debt while paying the minimum on the others. Once the smallest one is paid off, take all of the money you put toward it each month and add that to the minimum payment on the next smallest debt. Keep at this until you work your way through all of your debts. The Debt Snowball allows you to get a couple of quick wins and gain momentum as you begin to pay off debt.
3. How can parents best set their children up for solid money management habits?
The number one piece of advice I give parents is to be intentional. More is caught than taught, so remember that your kids are watching you. You have to teach your kids how to win with money or someone else, like the credit card companies, will teach them for you. There are four main areas I tell parents to address: working, giving, saving, and spending.

WORK: Kids need to make the connection between work and money. Work is how money is made. Pay your kids a commission for certain chores they do around the house so they can make this connection from an early age.

GIVE: This is the most important money lesson your kids need. Let your child pick a charity to support and let them use their own money to give to that cause. Thatís when theyíll really feel the impact of giving.

SAVE: Saving money not only teaches kids patience, it also helps them set goals by saving up for large purchases. Start teaching them early. When theyíre young, use a clear jar so they can see their money add up. When they are old enough, open a basic savings account for them.

SPEND: Spending some of their hard-earned money along way is just as important as saving. Kids need to have a little fun with the money they earn. Just make sure to guide them in making wise buying decisions.
4. What is one area where you see parents go overboard with their children and money, and what would you recommend for reversing that?
Holidays and birthdays are definitely times where parents are tempted to overspend. Birthday parties are becoming a lot more about the parents than the kids. Remember, your toddler doesnít care if they have a theme party with food trucks and ponies. They just want birthday cake. During the holidays, itís important to remember that your kids may have a wish list a mile long, but you arenít obligated to get them everything on that list, especially if you canít afford it. Five years from now, they probably wonít remember the toy you got them, but they will remember piling into the car with their family to go search for Christmas lights.

The best way to deal with it is to plan ahead and budget your money. Thereís nothing wrong with buying them stuff for Christmas or having nice birthday parties, but donít go into debt for these expenses or spend money you know should be allocated to something else.
5. For parents who think their children may feel too entitled when it comes to their lifestyle, how can they give their kids a monetary reality check?
The best thing you can do to avoid raising entitled kids is to teach them the value of work. There are many adults who donít understand this lesson. My parents made sure I knew that money comes from work, and if you want it, you have to earn it. Of course, Iím talking about age-appropriate work; nevertheless, the value of work is needed and necessary. When your kids learn hard work from a young age, the habit will stick with them for life.
6. What are your thoughts on allowances? Should children be paid for doing work around the house and, if so, do you recommend a specific system/plan?
I donít believe in giving your kids an ďallowance.Ē Instead, I suggest giving them a commission. If they work, they get paid. If they donít work, they donít get paid. Some parents give $1 per chore, while other parents may give $5 per chore. Either of these amounts is fine, and itís okay to increase the amount as the child grows and the work becomes more difficult. Just make sure the amount is appropriate for your family and your budget.

I donít suggest paying your child for every chore. Some things they need to do just because they are part of the family. For our family, those chores were clearing the table after dinner and helping mom keep the kitchen clean.
7. What is your advice for teaching children how to avoid lifestyle comparisons to their peers?
If your kids see you constantly comparing your life to other peopleís lives, they will pick that up in their own behavior. More is caught than taught, and many parents donít realize their kids are watching them. When it comes to the new bicycle they want to ride, what car they drive when they get their license, or what gown they wear to prom, they will want to measure up to their peers. Teach them early that going into debt to keep up with other people is a bad idea. Content people donít always have the best of everything, but they do make the best of everything. If they see that in you, when they are old enough, it will come naturally to them. The best way to show that is through your own actions and lifestyle.
8. What was/is the hardest part of money management to learn as you grew up?
Iím a natural spender, so saving money and sticking to a budget has always been a challenge. Even from a young age, this was apparent. I spent all my money at the store and even bounced a check one time Ė yes, Dave Ramseyís kid bounced a check. But learning these lessons as a kid and under my parentsí roof allowed me to learn the importance of forming the habits of budgeting and saving up to pay cash.