50 Brilliant Money Tips From Dave Ramsey

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Personal finance expert, author and educator Dave Ramsey has doled out countless nuggets of financial wisdom over the years. GOBankingRates searched Ramsey’s own blog posts and those from other Ramsey Solutions personalities that represent Ramsey’s views.

Keep reading to find 50 of Ramsey’s most brilliant money tips.

General Advice for Managing Your Finances

• Write down your “why” for wanting to get your finances in order.
• If you’re married, combine your accounts with your spouse’s, and work together on your finances. Teamwork makes the dream work.
• It’s OK to provide a financial safety net for your grown kids, but don’t make it so comfortable that they never become self-sufficient.
• Be “outrageously generous” with your money — tithe, tip and donate.

Budgeting

• Create a “zero-based budget” that accounts for every dollar you bring in and every dollar that goes out.
• Work inflation and smaller unexpected expenses into your monthly budget to give yourself some wiggle room.
• Set up autopay for bills you know won’t overdraw your account.
• Avoid online impulse buying.
• Find more money in your budget by saving on expenses you can’t cut. For example, shop around for less expensive insurance and mobile service, use money-saving apps to get gas discounts and conserve water and energy in your home.
• Take advantage of tools like the EveryDollar app to make budgeting easier.

Credit Card Debt

• Stop using credit cards.
• Put as much cash as you can into paying off credit cards — minimum payments will keep you in debt forever.
• Use the snowball method to eliminate credit card debt. Pay off your smallest balance while making minimum payments on your other cards, then work your way up to the card with the highest balance.
• If you do use cards, know the difference between your credit card statement balance, which is the balance for the current billing cycle, and the account balance, which is the total amount you owe. Pay at least the statement balance by the due date to avoid interest charges.
• Credit card balance transfers look like a good idea, but you’ll pay a transfer fee and will still have the debt.
• Avoid debt settlement and forgiveness plans. They’re often unsuccessful, and you could be left with a big bill.

Major Purchases

• Pay cash for your cars.
• If you already have a car loan, pay it off in the next two years or trade down to a less expensive car that won’t require a loan.
• Don’t buy a house until you’re debt-free, have a fully funded emergency fund and at least a 20% down payment.
• Buy only as much house as you can afford with a 15-year mortgage loan.

Savings Advice

• Build an emergency fund with $1,000 to start, then increase it to cover several months of expenses.
• Use a high-yield savings account or money market account for savings goals of less than five years, but don’t overfund it — you’ll get better returns by investing the money.
• Make saving fun by creating games and challenges. For example, declare a “no spend” month, or create a “sinking fund” — set a financial goal and a monthly payment plan to meet it, and reward yourself every month you’re successful.

Saving for Retirement

• Get clear on what you want to do in retirement and how you want to enjoy your retirement.
• Prioritize retirement savings over shorter-term goals.
• Start investing with your employer-sponsored 401(k) to get your employer’s full match, then work on fully funding a Roth individual retirement account.
• Set a retirement investment budget, preferably 15% of your gross monthly income, and stick with it regardless of market fluctuations.
• Stay healthy in the years leading up to retirement. Not only might it save you money on medical expenses, it could also extend your life.
• Never borrow or withdraw money from your retirement accounts to pay off debt except to prevent bankruptcy or foreclosure.

Paying for College

• Start building education savings once you’re hitting your retirement savings goals. Coverdell ESA and 529 savings plans are two ways to do that.
• Encourage your kids to enroll in Advanced Placement classes to earn college credit while still in high school.
• Fill out the Free Application for Federal Student Aid each school year. Otherwise, you’ll be ineligible for federal grants and scholarships.
• Make affordability your No. 1 criteria for selecting a college or university.
• Consider whether a trade school or community college makes more sense than starting at a four-year school.
• Research scholarship opportunities offered by your or your parents’ employers and local civic groups, community organizations, businesses, places of worship and charitable organizations.
• Also research national scholarship and grant opportunities.
• Understand the hidden costs of student loan debt, such as delayed repayment of other debt as well as delayed marriage, retirement savings, home purchase, travel and pregnancy.

Building Wealth by Investing

• Define your investing goals so you can create a strategy to achieve them.
• Start investing as soon as your emergency fund is fully funded.
• Consider index funds for investing goals of five years or more, such as a home purchase.
• For long-term investing, focus on mutual funds and exchange traded funds that invest in growth stocks.
• Diversify your portfolio with large-cap growth and income funds and mid-cap growth, small-cap growth and international funds.

Protecting Your Finances

• Purchase insurance to protect against financially ruinous events, like a serious illness or loss of your home in a fire. Insurance for smaller expenses such as eyecare is usually unnecessary.
• Buy term life insurance — never whole life —  for you and your spouse, even if one of you is a stay-home parent or caregiver.
• Discontinue life insurance after you’ve saved and invested enough to protect your family if you or your spouse dies. At that point, you’re self-insured.
• Other insurance coverages Ramsey deems necessary include health, homeowners/renters with umbrella coverage to increase policy limits, auto, long-term disability and long-term care.

Taxes

• If you typically get a tax refund, adjust your withholding to stop overpaying. Otherwise, you’re letting the government hang onto money you could be saving or investing.
• If you’re at least five years from retirement, have no debt and have the cash available to do it, consider converting your standard 401(k), 403(b) and/or IRA to Roth accounts. The conversion costs more now but saves you from having to pay taxes on distributions in retirement.
• File your taxes on time, even if you owe money you can’t pay. Pay what you can, and make arrangements with the IRS for the rest.

A Final Word of Advice

The final tip is this: Successful people learn from their mistakes and failures.

“It turns out the gleaming mountain of success is just a pile of failure that you are standing on instead of laying under,” Ramsey wrote in a 2022 blog post sure to withstand the test of time.

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