5 Generational Wealth Myths You Probably Believe, According to Rachel Cruze
Written by
J. Arky
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Amen Oyiboke
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Rachel Cruze is a lot of things — author, speaker, and personal finance expert — as well as the daughter of Dave Ramsey, so generational wealth is pretty much in her DNA. In her recent YouTube video “What Everybody Gets Wrong About Generational Wealth,” Cruze aims to “break the cycle of bad money habits.”
She acknowledged upfront that being one of Ramsey’s children might be off-putting to those who believe she hasn’t struggled with the challenges of passing wealth along a family tree. However, Cruze assures viewers that there are lessons for everyone in changing poor money management practices to elevate the next generation and beyond.
Cruze’s central idea is that by improving your financial practices today, future generations can start further down the road than you did, giving them a significant advantage.
Here are five generational wealth myths you might believe–and how to turn them into positive practices.
It’s Okay To Want Better For Your Kids
Cruze suggests that you do not wait to start teaching your kids good financial principles and discuss where you are in your financial journey. “Deciding what you are going to show and tell your kids is up to you,” said Cruze, who noted this can work with teenagers, college-aged kids, or even adult kids in your home. “Bring them into the conversation … we are starting to look at money differently.”
Regardless of where you came from and your parents’ relationship with money, having the ability to see the groundwork laid ahead and pass on that knowledge to your kids is already a step up, in Cruze’s opinion.
Lean Into Financial Generosity
“If you’ve given or benefited from financial generosity, own that and continue doing that work with dignity,” Cruze highlighted. The notion is to not be ashamed of where you come from, but if you have a leg up like Cruze did with her family, she urged viewers to propel that energy forward.
“Be someone that continues the change. Be someone that lives out these principles,” Cruze said. “It’s that balance of ‘hey, I’m going to start you off on the right foot and clear the pathway … I’m going to walk so you can run’… but they still need to earn a paycheck and go to work because that’s good for them as human beings.”
Get Debt Out Of Your Life For Good
Cruze knows this can be easier said than done. Her philosophy is that the only debt you need to be in is a mortgage. However, debt, she stated, causes pain within a family and causes the unit to go backward financially.
“When you have autonomy over your life and money, that’s a beautiful thing,” offered Cruze. “And your kids will be able to start off with that mindset – it’s amazing.”
Invest Consistently
Once the groundwork has been laid-savings added up, emergency fund established, and bills consistently paid on time-Cruze pointed out that this is the time to start investing.
“15% of your income can go into retirement and you are going to start letting your money work for you,” Cruze explained.
Plan For The Future
Cruze emphasized the importance of setting aside cash for future purchases–what she called “sinking funds”–to cover inevitable expenses like replacing broken items, as well as other expenditures and financial cushioning.
Saving for kids’ college funds is also important, but if it’s not feasible for your family, that’s fine too. “Plan for the future as much as you can for the next generation,” Cruze said.
“Millions of people have broken the cycle of their family tree,” she concluded, adding that Dave Ramsey isn’t their dad–so you can do it too.
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