Dave Ramsey Says If You Want To Be a Millionaire, ‘You Can’t Earn Your Way Out of Stupidity’

©Dave Ramsey

If you want to become a millionaire, you might think you need to earn a lot of money. In reality, many high-income earners end up spending most of their money, leaving them without enough savings to reach a $1 million net worth.

A survey by Quicken, for example, found that 34% of credit card users earning $150,000 or more said they’ll have a harder time paying off their cards this year compared to 2022.

In a recent episode of “The Ramsey Show,” Dave Ramsey said that “you can’t earn your way out of stupidity,” meaning that it doesn’t really matter how much you earn if you make bad decisions with your money.

“You can’t make enough money to be stupid. It won’t work. You’ll lose it,” he said.

As it turns out, many millionaires build their net worth with relatively modest salaries. Ramsey Solutions conducted a study of millionaires in 2017 and 2018 and found that fewer than one-third of millionaires never earned more than $100,000 per year. And teacher was the third most common profession among net-worth millionaires in the study, while doctor did not crack the top five.

While there can be many variables at play here, the study seems to indicate that income is far from the only driver behind wealth creation. Following tried and true principles like living below your means and investing for the long term can put you on a path toward becoming a millionaire even if you don’t earn a lot of money.

Make Your Money Work Better for You

For example, if you invest $600 per month for 35 years and earn a 7% annual return, you can end up with over $1 million. Start just 10 years later and you’ll have to save $1,310 per month to reach the same amount. That’s because the more you save and let your money grow over time, the bigger the effect of compound returns.

So, making small changes, like choosing a place to live that’s a few hundred dollars less per month than you can afford, and choosing a car with a monthly payment that’s below your means, can often give you the funds to save and invest your way toward becoming a millionaire.

Teachers, for example, have “chosen work that is meaningful to them, and thus, they’ve decided that what they make is enough, and they’ve made the choices to live on less than they make, and choose a lifestyle that actually supports their work, not the other way around,” said Ken Coleman, host of “The Ken Coleman Show,” in the aforementioned episode of “The Ramsey Show.”

But if you’re not smart about how you use your money or seek a job only for its earning potential, it’s easy to fall into the trap of lifestyle inflation, where you earn more but end up spending more, so you’re not setting yourself up for future success. Instead, making sure you have savings each month that you can then invest for long-term growth could be your ticket to becoming a net-worth millionaire. Yet a recent GOBankingRates study found that nearly half of respondents don’t have any stock investments.

However, with a healthy nest egg, you can potentially retire sooner and have more money saved for goals like paying for your children’s education. Earning more can help you reach these goals faster, but you still need to make smart decisions along the way.

Make Your Money Work Better for You

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