Taking control of your personal finances can be more than a bit stressful. There are bad money habits and previous mistakes that’ll definitely need to be addressed and fixed.
But it can also be incredibly freeing and empowering.
And Dave Ramsey, the money expert, knows this very well. He overcame mountains of debt and continuously shows others how to do the same.
His strategic tips can help you finally gain control of your money and start living a much better life. They take you from living paycheck-to-paycheck to having more than enough money in your bank account.
So here are 23 Dave Ramsey tips that’ll help you get on the right track with your finances.
1. Create Your Budget
This is one of Dave Ramsey’s first tips.
He believes creating a game plan/monthly budget will help you manage your finances a whole lot better.
Also, his app, EveryDollar is a great way to help you keep track every week and month on where you money is actually going. You want (and need) to be in control of your money, not the other way around, and this budgeting app does just that.
And lastly, creating your own budget is a great way to actually achieve your financial goals and not derail progress.
2. Have an Emergency Fund
You want to make sure that you save at least $1,000 for any emergency that might pop up.
And things like Christmas or a birthday don’t count since these are things you know are going to happen and can plan for.
It should only be used for things like a flat tire or a trip to the hospital. That way you never have to go into debt and use a credit card.
TL;DR: Unforeseen expenses will pop up. Be prepared for them so you’re not going back into debt (or adding to it), and so that you can have a peace of mind.
3. Debt Snowball Method
David Ramsey understands that debt is one of the core factors that keeps people from saving and having control of their finances. So he suggests doing something called the “debt snowball method.”
With this method, you pay off your smallest debts first and then work your way up to the biggest one.
How it works is that it helps you to feel incredible when you pay off one, and then it builds momentum and motivation for paying off the other debts.
4. Have Three to Six Months of Expenses Save
Now once you have your emergency fund in place and your debt is gone, you’ll want to start the process of saving up for three to six months of living expenses.
It basically acts as a security net for making sure you don’t go into debt if you have a sudden job loss or if a health issue arises.
5. Plastic Surgery
Dave Ramsey affectionately calls cutting up your credit cards, “plastic surgery.”
And one of the smartest things you can do is to never use credit, only cash. Credit really is one of the easiest ways to get you back into debt, so it’s good to just be done with them.
Also, you’ll be able to see how much money is leaving your wallet, as opposed to a credit card where you won’t even be thinking about it.
6. Shop With a Grocery List and Buy Generic
Ramsey knows that if you decided to take into account the amount of money you spent on groceries each month, you’d realize just how much of it is wasted.
He thinks meals should be planned out before heading to the store. That way you can go for only the necessaries and get rid of any impulse purchases.
Also, try testing out generic brands instead of more expensive name brands to cut the extra cost. It’s such a simple way to save money at the grocery store.
7. Cancel Subscriptions & Memberships
If you’re trying to save some money and get out of debt, then you shouldn’t be paying for unnecessary subscriptions and memberships.
So for instance, if you have a gym membership, temporarily cut it out and start working out at home. That way you can use that money to get rid of that monthly credit card bill.
8. If You Can’t Pay With Cash, Don’t Buy It
Some equipment and appliances that you need for menial tasks or a short amount of time doesn’t need to always be bought. So instead, just try borrowing from a friend or family member and save your money.
Or just save up the money if you really do have a need; there’s no reason to adding to your debts.
9. Pack Lunch and Make Coffee at Home
It’s time to break up with your barista and start meal planning.
Are nice coffees and meals on your lunch break nice? Yes. But are they also contributing to bad spending habits and keeping you from saving or paying off debt faster? Also yes.
So now is the time to just bite the bullet and start doing it from home. This isn’t forever and it teaches you to be more financially smart and care about where your money is going.
10. Invest in Essential Insurance Policies
If you want to protect yourself from going into debt, then essential insurance polices are a must.
Even if you think you’re not going to need it, it’s always great to prepare. Life throws so much at us and a lot of the time, we don’t even see it coming.
Here are the 8 insurance policies Dave Ramsey suggests getting:
- Health insurance
- Auto insurance
- Life insurance
- Long-term disability insurance
- Homeowners or renters insurance
- Identity theft protection
- Long-term care insurance
- Umbrella policy
11. Buy a Used Car and Pay Cash
Never lease and stay away from expensive monthly car payments. It’s such a great way to slow down the process of paying off your debt.
Instead, just save up for a car and buy used. That way it’s one less thing to think about each month.
12. Cancel Certain Email Subscriptions
If you’ve signed up for certain store’s emails to receive discounts and offers, then it’s time to unsubscribe.
When you’re trying to fix your finances, you don’t need to be getting notifications from H&M or Home Depot that they’re having a sale. There’s no need to have reminders of ways you can spend your money during a time when that money should be used to help you become financially free.
13. Invest 15% for Retirement
Now once you’ve finished Dave Ramsey’s first 3 Baby Steps, it’s time to start investing for your future self.
He gives the advice to automate a certain amount into an account like an after-tax Roth IRA or a 401(k).
And if you need to be more aggressive because you’re getting a later start than others, then Ramsey says to invest 15% of your gross income.
14. Start Side Hustles
It can be so easy to say, “Well I have a job, but I don’t really know how to make more money outside of that.”
But you kind of know deep down inside that if you really did take the time to think about it and research, you’d be able to figure it out.
So whether it’s freelancing, flipping furniture, or learning a new set of skills, there are always ways for you to find a side hustle and bring in more money.
15. Invest in Financial Education
Some companies offer you classes and the help you need to learn how to manage your money better.
So check it out, see if yours does, and take advantage of this opportunity to become more financially intelligent.
But if they don’t, there are plenty of great books and courses you can learn from yourself (like Dave Ramsey’s Financial Peace University!)
16. Start Couponing, But Do It Smart
Have you ever thought about how much money you could save each year just by couponing? It’s probably a lot more than you think!
But make sure to use coupons only for products you already use. Otherwise, you’ll end up buying things you don’t really need and still waste money.
17. Save Money On Your Kids’ Clothing
Kids grow so quickly, but before you head to the store to buy them new clothing, quickly go through their wardrobes and closets. See what still fits and what can be passed down to the younger ones.
Second hand clothing really is a simple way to save money.
18. Cut the Cable Connection
Basically all of your favorite TV shows are available online now. So, why would you spend between $45-$145 a month while you have so many good options? It’s an easy way to get rid of another monthly expense while still keeping yourself entertained.
19. Stop Eating Out
When you eat out at your favorite restaurant, you probably feel pretty free since you don’t need to cook that night.
But have you noticed that you’re also hurting your finances too? So right now, the best way to socialize is a taco or homemade pizza night with your friends or family at home.
20. Visit the Library Instead of a Theater
The library is the best place to borrow your favorite movies and books.
So, instead of heading to the theater, start visiting your local library to spend less. At the end of the year, you might be surprised by how much you’ve saved.
21. How to Say “No”
When it comes to spending money unnecessarily, it can be pretty hard to resist yourself and what you want in the moment.
But there’s an easy solution to this. Just add one single new word to your dictionary: “NO.”
Love this word and embrace it tightly if you wanna improve your financial situation. This is seriously one of the hardest Dave Ramsey financial tips, but it is so important to master!
22. Try Less Expensive Hobbies
Sometimes hobbies can make you spend quite a bit of money. So if you can’t afford them right now, then just avoid them all together and try adopting something new that won’t hurt your budget.
23. Include Your Kids in On Your Budget
Kids aren’t going to understand why you’re always wanting to save money instead of spending it. So, prepare your kids for their own financially smart future by making their own personal monthly budget. This will get them used to handling money responsibly and not become an emotional spender.
24. Look for More Ways to Cut Unnecessary Expenses
Go through your bank statements and make a list of common and uncommon unnecessary monthly expenses.
There are probably going to be things you’re spending money on that you don’t even think about.
Maybe it’s a monthly Target run for when you have nothing to do, buying those splurge items at Trader Joe’s, or just going out for brunch with friends every other week. I promise you, there’s going to be a few things you can cut out and put towards your debt.
TL;DR: If it doesn’t work with your financial plan, cut it out.
Grace Moser is the author and founder of Chasing Foxes, where she writes articles to help women create a life they love in big and small ways. She's been a full-time traveler since 2016 and loves sharing her experiences and exploring the world with her husband, Silas. Her lifestyle and travel advice can also be seen on sites such as Business Insider, Glamour, Newsweek, Huffpost, & Apartment Therapy.
Silas & Grace,
I love the idea of buying generic. Sometimes I prefer buying handicrafts and handmade over branded products.
And, I love cooking, so no I hardly do takeouts or buy lunch. Saves a lot + yummy food guaranteed 🙂