Dave Ramsey is one of the country’s most famous personal finance gurus, a famous radio host, a successful businessman and a bestselling author. He is also a self-made man who started with nothing and built a seven-figure net worth and an annual income of $250,000 by the age of 26.
See the list: GOBankingRates’ best banks in 2023
More: With a recession looming, make these 3 retirement moves to stay on track
Now in his early 60s, he has spent many of the years between becoming even richer by helping other people build their own wealth. Here’s a look at some of the most exquisite wisdom and sage advice that Dave Ramsey has dished out along the way to his legions of loyal followers.
Eliminate debt before investing
The No. 1 rule of the Ramsey investment philosophy is not to invest a dime — at least not until you eliminate all of your toxic debt, which he considers pretty much everything but your mortgage. Ramsey insists you can’t build wealth when your primary wealth-building tool — your income — is tied up in monthly financing costs.
Take our poll: What are your financial priorities in 2023?
Harness the power of the snowball method
Eliminating debt is easy to talk about but hard to do, which is why Ramsey is a long-time proponent of the so-called snowball method. This debt reduction strategy requires you to attack your debts in order from smallest to largest, allowing you to rack up quick wins that close outstanding accounts while boosting your confidence along the way. When it’s time to confront your really scary debts, you’ll have momentum on your side—plus, you’ll be able to focus only on them now that your smaller debts are no longer nipping at your heels.
Build an emergency fund before building wealth
The first half of Ramsey’s top investment rule is to get out of debt. The second is to fully fund your emergency savings before trying to grow your money in the market. Eliminating debt puts you on solid financial ground; but without enough money in the bank to cover three to six months of expenses, you’re only one emergency away from being forced to use your retirement account.
Give 15% of every paycheck to your future self
Once you’re debt-free and sitting on enough savings to last you at least a quarter of a year, Ramsey says the most important thing you can do with your paycheck is to save 15% of it — every pay period — in a tax-advantaged account. The best option is usually a 401(k) because every dollar from an employer match is free money, and free money is always a good thing. But if that’s not an option, a pre-tax IRA or an after-tax Roth IRA are the next best things.
Keeping up with the Joneses is an unwinnable game – Don’t play
Sometimes the most important thing is not what you do with your money, but what you don’t do.
In “The Total Money Makeover: A Proven Plan for Financial Fitness,” Ramsey wrote, “We buy things we don’t need with money, we don’t need to impress people we don’t like.”
In today’s world, social media influencers literally use your willingness to part with your money to showcase you to people you don’t even know, much less like. Frivolous consumption is key to creating wealth; remember that every dollar you spend is one you don’t save.
Use money-saving technology
Modern society has access to incredible gadgets and software applications that would have been unthinkable just a generation ago. Many of them can save you money – and Ramsey wants you to take advantage of each one.
That includes smart thermostats to lower utility bills, banking apps that let you automate savings, smart shopping and couponing apps, budgeting apps, and more.
Or Buck the Trend and Go Low Tech
Technology may offer practical tools to save and grow your money, but Ramsey has plenty of followers who have built wealth the old-fashioned way. On his blog, Ramsey profiled a student named Kay N., who said, “Go old school and get your checking account balanced. This is important! Balance your checking account so you know where you are, then start with a basic budget. It’s all about taking small steps.”
Put what you already know into practice
Acquiring knowledge is always a noble endeavor – unless it leads to paralysis by analysis. Remember, every hour you spend learning about new ways to manage and grow your money is an hour you don’t spend building a budget, creating a spending plan, and investing in your future. Of course, you are wise to learn more as you go, but start now with what you already know.
In “The Total Money Makeover (Classic Edition): A Proven Plan for Financial Fitness,” Ramsey wrote, “Winning money is 80% behavior and 20% head knowledge. What to do isn’t the problem; do it. Most of us know what to do, but we just don’t. If I can control the guy in the mirror, I can be skinny and rich.”
Never go into a grocery store without a plan
On his blog, Ramsey cites USDA research showing that even the thrifty average family of four spends nearly $1,000 a month on groceries.
But you can cut that number down by eliminating what Ramsey calls “budget busters” — small, unplanned impulse purchases that add up to big money misspent. His solution is to shop only for the ingredients in a predetermined meal plan – and never deviate from the plan no matter what. He also recommends ordering online and picking up your groceries to avoid temptation – or at least leaving the kids at home when you go to the supermarket.
Know what you don’t know and work with a professional
According to his own blog, Ramsey still works with a professional advisor to help guide his investments and overall financial strategy. No matter how much you follow news and trends, a good money professional will have greater insight and a better perspective based on their own experiences and what you tell them about your goals, strategy and circumstances.
More from GOBankingRates
This article originally appeared on GOBankingRates.com: 10 Brilliant Things Dave Ramsey Says You Should Do With Your Money