Popular Dave Ramsey tips for building a secure financial future!
You must have definitely come across Dave Ramsey’s name whenever, you have researched about money management, budgeting, saving money.
His simple actionable money tips will help you take control of your finances and make you financially secure.
In this post, let’s learn about the best Dave Ramsey tips to build the best financial practices for life and start living your dream life.
Who is Dave Ramsey?
Dave Ramsey is one of the most famous and well-trusted financial advisors. Not only the people from the United States but from across the world follow him for his practical financial advice.
Why should you follow Dave Ramsey’s money advice?
At just the age of 26, he became a millionaire with $4 million in real estate and making a quarter of a million dollars in a year.
He started several businesses at such a young age to build that kind of wealth. But unfortunately, he filed for bankruptcy a few years later.
He didn’t give up and came back even stronger, building a bigger empire using his learning from his previous financial mistakes and biblical-based principles.
He is often seen quoting Proverbs from Bibles to teach people the best money-management practices.
He has been teaching millions of people about his best money tips to improve their financial situation through them.
What are the 7 baby steps of Dave Ramsey?
Davey Ramsey has laid down 7 actionable baby steps that can help you take control of your money easily.
The seven baby steps are self-explanatory. They can help you achieve financial freedom and build your dream life if followed religiously.
The Dave Ramey baby steps are:
- Step 1: Build a $1,000 emergency fund
- Step 2: Pay off all your debts using a debt snowball method (except mortgage)
- Step 3: Save 3 to 6 month of expenses in an emergency fund
- Step 4: Start putting away 15% of household income towards retirement investments
- Step 5: Save for your children’s college education
- Step 6: Put extra money towards mortgage to pay off your home early
- Step 7: Keep building wealth and giving generously
Best Dave Ramsey tips to build a dream life
Now that we know a bit about Dave Ramsey and his baby steps, let’s look at some of his best money-management tips.
Use a zero-based budgeting system:
Budgeting is the first and foremost step to your financial overhaul.
A budget provides you a plan on how you are going to spend your money during the month.
The first Dave Ramsey tip is to create a zero-based budget where every dollar you earn is assigned to an expense.
Here, an expense doesn’t necessarily mean spending but it also includes the money set aside for savings.
In a nutshell, with zero-based budgeting, you should have a zero dollar amount in your bank account after your expenses and savings at the end of the month.
And you start afresh after each month.
Use cash whenever possible:
Dave Ramsey recommends using cash whenever possible.
It is harder to spend hard cash than swiping your card. Also, unlike credit cards, when paying cash you spend only the money that’s available to you.
He recommend using a cash envelope system where you maintain different cash envelopes for each category of expense like groceries, fuel, dining out, etc.
This helps you to keep a better track of your expenses and avoid any kind of overspending.
Build an emergency fund:
Not having enough money in your bank account can get you exposed to the worst of financial vulnerability.
That’s why one of the most important Dave Ramsey tips is to build an emergency fund for such situations.
He recommends doing it in two steps. First, he insists on building a $1,000 emergency fund if you have a debt. This should be sufficient to cover your everyday expenses during the unexpected events of life.
Then, once you have paid off all your debts, you need to build a bigger emergency fund. This fund should have enough money to cover at least 6-months worth of your expenses in case of an emergency like job loss, medical condition, etc.
Also, he recommends parking your emergency fund money somewhere where they are easily accessible. It could be simply a checking account or a money market account.
Pay off your debt using the debt snowball method:
If you have a couple of loans or a mortgage, that takes away a considerable sum of money out of your monthly income and leaving very little for the savings.
Dave Ramsey recommends the debt snowball method to pay off your debt. He insists on paying off your debts in order of smallest to largest.
It helps you knock out one debt after another without getting overwhelmed. Once you pay off one, you move to the next smallest one until you are debt-free completely.
This eventually helps in freeing up your income that can be redirected towards your savings goal.
Automate your savings:
Pay yourself first before you pay for anything else. And you are paying yourself by saving for your future.
Set up an automatic transfer from your checking account to a savings account and other investment accounts.
Also, it would be best if you can set up to transfer 10% of your salary to a savings account on the first day itself.
If you plan to transfer manually at the end of the month, you might spend the money lying in your bank account for savings on something else.
Hence, automating your savings helps you build wealth without any challenges.
Live on the beans and rice
Dave Ramsey strongly suggests living below your means until you can get out of the debt and quickly save up at least $1000 for the emergency fund.
He not only suggests eating cheap meals while you are broke but also strongly suggests you on cutting down on all other unnecessary expenses.
This shall help you get out of debt quickly and slowly saving up for things you really in your life.
Let go of all automatic subscriptions and memberships:
There is a huge possibility that you’ve multiple online subscriptions like Netflix, Amazon Prime, Hulu, and so on and you’re not even using them all.
Also, they might be on auto-renew and the money is being deducted from your account automatically.
So, now is the time to evaluate all your subscriptions and cancel all that you are not using currently or don’t use on a regular basis.
Also, remove them from auto-renew so that you can review them each month and see if you have room for them on your monthly budget or not.
Declutter and sell things you don’t use:
Have you ever decluttered your house and found so much stuff that you haven’t used in ages.
Clean out every corner of your house, then decide what you actually need and what you don’t.
Then, make some money out by selling whatever extra stuff you have on Craigslist, Facebook, or a garage sale.
It’s all about making money out of your junk and then using it to pay off your debt.
Unsubscribe from all promotional emails:
Email marketing is really powerful and can seriously lure you into buying stuff that you don’t actually need.
It’s the job of the email marketers is to tempt the subscribers through flash sales and high-value coupons to buy their products.
So, if you are someone who can’t avoid the shiny object syndrome, then you should unsubscribe from all the promotional emails from retailers.
Don’t shy away from FREE stuff:
Dave Ramsey tips stress on reducing expenses as much as possible.
That’s the reason you should not shy away from FREE stuff and take advantage of any opportunity where you can get something for free.
There is no shame in checking with family or friends for unwanted furniture or things they want to get rid of when you don’t have enough money to buy a new one.
Similarly, use coupons as much as possible to score good discounts on food and other essential items. Coupons are nothing but just the free money.
Stop eating outside:
You should avoid eating outside as much as possible.
Eating outside is expensive and we all are aware of it. It is not good for the budget but for your health as well.
Food is the biggest expenses in every household and if you can get that under control, you can definitely get your financial situation under control.
For this budget meal planning is the best thing to do.
If you can plan your food menu in advance, you will end up eating less frequently outside as well as you will have to make fewer trips to the grocery store.
This will reduce your food expenses exponentially.
If you aren’t sure how to get started with meal planning on a budget, you should try out $5 Meal Plan subscription and get weekly meal plans delivered to your inbox every week.
Stick to your current phone:
With the ever-changing technology, buying a new phone is the added expense that we all have added to our pocket.
Upgrading phones is EXPENSIVE and can cost a couple of thousands of dollars easily for a family. This can be avoided and this money can be saved.
Dave Ramsey recommends sticking to your old phone as long as you can make a call and send a text with it. Just hold on to your old phone as long as you can to save on phone expenses that can be avoided easily.
Increase your income:
Dave Ramsey strongly suggests increasing your income to improve your financial situation.
He recommends taking up a side hustle or a part-time job to increase take-home income. This helps in paying off the debt faster and eventually provides additional money to save.
If you are looking for more ways to make additional income, you must checkout my posts on:
where I talk about various ways to make additional money doing part-time gigs.
Save, save and save even more:
Dave Ramsey tips are all about “Spend Less and Save More”.
He recommends cutting down on all the unnecesary expenses, not buying the stuff you don’t actually need, live frugally and score the best deals to save money wherever you can.
This way you can save more money and put it towards your retirement saving to achieve financial freedom.
Don’t buy a new car:
There are many reasons why Dave Ramsey recommends buying a used car rather than a new one.
One of the major reasons is that the value of a new car depreciates by a considerable amount as soon as it is out of the showroom.
It doesn’t mean that you have to buy a really old outdated car.
But, he recommends buying a year or two-year-old car that comes with almost the same features as a new car.
Apart from value depreciation, you also save money on car insurance and registration fee with a used card.
Buy generic brands:
One of the ways you can save a good amount of money is to buy generic-brands than name-brands.
If you notice generic brands have the same ingredients as the name brands and they may have been manufactured at the same place.
If you don’t want to switch to generic entirely, you can start with a few items like milk, juices, spices, flour, sugar and produce.
This way you can test and decide what you like and what you don’t.
Just test it out for a month and you will definitely see noticeable savings on your grocery budget.
Build good credit vs bad credit:
Dave Ramsey stresses building good credit.
What does that mean?
He refers to “mortgage” as a good credit since you are putting the debt money to work and investing in an asset that will grow in the long run.
Apart from this, he considers everything else a bad debt since you will lose your money in the long run. For example, if you decide to take a car loan, you are investing in a depreciating asset.
Final thoughts on Dave Ramey tips
The above-mentioned Dave Ramsey money tips are practical and easy to follow. They help you get started and guide you in creating a financially secure future for you and your family.