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Raising Money-Smart Kids
A Money Book Summary

Raising Money-Smart Kids: How to Teach Your Children the Secrets of Earning, Saving, Investing, and Spending Wisely  by Ron and Judy Blue, (Thomas Nelson Publishers, Nashville) 203 pp. 

Ron Blue has written twelve books on personal finance, including Master Your Money, now in its 29th printing.  He also founded a successful financial planning firm. In this book, he and his wife Judy wish to help parents instill positive money habits and sound financial wisdom in their children.

They base their wisdom on the Bible, their extensive knowledge of personal finance, and their personal experiences raising their three daughters and two sons. The result is a very readable book of practical advice that covers such topics as how to help your children

  • make their own financial decisions
  • save money
  • recognize and avoid scams
  • resist peer pressure to spend unwisely
  • invest wisely
  • make wise purchases
  • serve God and others with their resources

My takeaways: 

1. "The Training System" (pp. 51-76)

For simple finances with small amounts of money, the cookie jar system is brilliant in its simplicity and effectiveness. Put your income in the jar. Take out money to pay for things. When there's no money left, you stop spending. Since cookie jars don't offer loans, children using them learn to live within their means.

The Blues expanded this system with their children by using multiple "cookie jars" - letter-sized envelopes labeled with categories. Families, businesses and governments must have both a plan for spending and a system of controls. The envelope system has both. It teaches delayed gratification through long-range planning and sound money management. Here's how it works.

When a child turns eight, she receives a recipe file box with five envelopes, labeled:

  • Tithe
  • Save (To go into a savings account at interest. Can be used to save for big-ticket items.)
  • Spend (To be spent any way they wish)
  • Gifts
  • Clothes (To be used for all their clothes)

Ron and Judy set the amounts annually, to be given to the children as a monthly allowance.  Yet, they are flexible, reviewing each child's amounts regularly. Circumstances do change over time. 

In the children's early years, they're required to put 10% in the "tithe" envelope and 10% in the "save" envelope. In later years, they choose how much to put in each category. 

Simple enough. But what happens when a child spends all her clothes money and then finds herself without enough to pay for a needed winter coat? There are several options. 

1) Don't make that child responsible for necessities. 
2) Let her go without (in the South, I assume!)
3) Wear last winter's coat. 
4) Let her earn money for the coat. 
5) Allow her to  borrow from any of the envelopes except "Tithe" or "Save."

In the teen years, they may add more envelopes, but Ron and Judy prefer that they not have more than six or seven prior to college. 


  • Don't withhold allowance for disciple.
  • Don't base it on the performance of chores.
  • Don't change it once you've agreed upon an amount for the year.

Chores are of two types. First, those that are expected for no pay because of living in a family. These may include cleaning their room, doing dishes and carrying out the trash. Second are those optional, paid chores, such as mowing the lawn or baby-sitting. 


"The most critical issue regarding the envelope system is that children must have goal ownership. In other words, it must be their system rather than your system imposed upon them. Help them set up the system and understand that they can learn it. Then allow them to have control of the money and freedom to work within the system." (p. 75) 

2. Other Great Ideas

a. "...effective communication is consistent and repetitive." (p. 118)

b. The balance of teaching kids the power of compounding interest: 

After Ron reinforced his lesson on the power of compound interest over time, his daughter Karen asked, "Daddy, how much is no fun compounded over forty years at 10 percent?" (p. 120)

They all had a great laugh, but got her point. The goal isn't to live a lifeless, Spartan life in order to accumulate a huge chunk of money to be paid out to a nursing home in your later days. Keep balanced!

c. "Delayed gratification is the key to financial maturity." (p. 121)

d. Take each child out for a meal once a year for his birthday. Review his financial goals from the past year and help him set goals for the next year. 

e. If you forget everything else:

"I believe that everything I know regarding financial success can be summed up this way: 'Spend less than you earn, and do it for a long time.'" (p. 120)

Coming from a man who's spent a lifetime reading, writing and advising about personal finances, I'd say that statement's worth copying and sticking to the refrigerator for the children. I think I'll do it now!

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