Dave Ramsey: 3 Basic Money Skills You Must Have
Are you struggling to get your finances in order? According to Dave Ramsey, getting back on track comes down to three basic money skills. According to him, if you can master these skills, you can set the stage for financial success and a more fulfilling life. Here’s what Ramsey had to say about establishing a solid financial foundation.
1. Saving and Investing
We live in a world of instant gratification. Many face the temptation to spend every dollar they earn or borrow to buy things they don’t need. Ramsey teaches the opposite. Before considering any major purchases, he believes in the power of saving first.
But why save? For Ramsey, an emergency fund is the bedrock of financial peace. Starting with a $1,000 starter emergency fund and eventually saving 3 to 6 months’ worth of expenses can safeguard against life’s unpredictable challenges, from car repairs to medical emergencies.
“You have to learn to save money for emergencies, college, retirement, to change your family tree, to build wealth,” said Ramsey during an episode of The Ramsey Show.
Once you’ve built that safety net, it’s time to think about growing your money. Investing might seem daunting, but it’s about letting your money work for you.
Over time, due to the magic of compound interest, even small, consistent investments can grow into substantial sums. Ramsey often emphasizes the importance of starting early, consistency, and seeking advice when needed. “You have to learn to invest and learn to ride the investment waves,” added Ramsey.
2. Spending Money Appropriately
Budgeting might seem tedious, but it’s the ticket to financial freedom in Ramsey’s eyes. He champions the zero-based budget, where every dollar earned has a purpose. Whether it’s for rent, groceries, entertainment, or savings, assigning each dollar a “job” ensures that you control your money rather than the other way around.
Spending money appropriately also means avoiding debt. Ramsey’s take on debt is clear: avoid it like the plague. Credit cards, car loans, and other debts eat into your income with interest and tie down your future earnings. By focusing on spending only what you have and making informed, intentional decisions with your money, you pave the way for a debt-free and stress-free life.
3. Giving
Once you have mastered the first two skills, you can give back. While the first two skills focus on personal financial health, the third is about looking beyond oneself. Ramsey believes that true financial peace isn’t just about accumulating wealth; it’s about making a positive impact in the world.
Why give? For Ramsey, it’s about recognizing we are stewards of our wealth, not just owners. By setting aside a portion of our income for causes we care about, we not only help those in need but also cultivate a sense of purpose and fulfillment in our lives.
Giving isn’t just about money. It’s also about time, skills, and resources. Whether it’s volunteering at a local shelter, mentoring someone, or even helping a neighbor, philanthropy is as much about the act of giving as it is about the amount.
“You also have to learn to give,” said Ramsey during his show. “When you learn to give as the natural rhythm of your life it changes everything.”
Take Control of Your Money
If you’ve veered off track, don’t despair. It’s not uncommon to have a weak area. “Giving, saving, and spending–everyone has at least one that they struggle with,” said Ramsey.
The good news is that you can take steps to improve your financial health today. Mastering these three skills will set you on the right financial path.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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