If anyone knows how to save money and make lots of money, it’s Dave Ramsey. Ramsey’s financial management philosophy has empowered generations of people to get ahead financially through stick-to-the-plan, disciplined action. Over the years I’ve listened to his words, particularly as I work on minimizing impulse spending and investing for the future.
From budgeting to cheap solutions for daily needs, Ramsey’s ideas have taught me that being frugal doesn’t involve compromising joy, but making better choices. Below are 10 Ramsey-style strategies that will revolutionize your financial life, just as they did mine.
Featured Image Credit: Wikimedia Commons.
Build a Zero-Based Budget
Ramsey is a master at the zero-based budget, meaning that you spend every dollar on a mission. In this case, you budget every penny of income for a specific purpose (savings, investments, bills and ordinary costs) until your income minus costs equals zero. Then you’re in charge of every cent, you’re not spending more than you make, and your dollars are going where they’re supposed to.
Use the Envelope System
This Ramsey classic involves putting your money into budget envelopes by spending type, such as food, entertainment and dinner. You only spend what’s in the envelope for that type, so you’re in line. If the envelope is empty, that’s all there’s left, no drawing on your other accounts.
Like our content? Be sure to follow us.
Say No To Credit Cards And Pay Cash or Debit Card
You shouldn’t be borrowing from your credit cards to eat yourself into a hole, Ramsey advises. Instead, he suggests you use cash or a debit card to pay for items. Because, you know, cash-paying makes you more conscious of your budget and it’s easier to track.
Establish an Emergency Fund
Ramsey is a big believer in having an emergency fund for the future. He recommends a $1,000 fund for small emergencies and 3-6 months’ worth of expenses as a buffer. It is a savings account, which helps keep unforeseen expenses (car repairs or hospitalizations) from putting you into debt.
Buy Quality, Not Quantity
Ramsey, too, inevitably argues that we need to buy better things, not less. When you spend money on durable items, you’ll end up saving a few bucks down the road by not having to repurchase them as often. Whether it’s clothes, appliances or furniture, don’t sacrifice quality to replace things time and again.
Cook and Plan Your Meals at Home
Dining out quickly becomes an expense, so Ramsey encourages planning and cooking at home as a proven way to save money. Meals can be planned on a list so that you don’t go out and waste money. Not only do home-cooked meals generally cost less than takeout or restaurants, they’re also healthier.
Buy Used Whenever Possible
Ramsey also loves to save money by purchasing second hand goods. From cars to furniture to clothes, you can get great savings on second-hand purchases over a brand new one. You can buy your items at thrift shops, online marketplaces or garage sales without paying full retail and with very little quality loss.
Avoid Brand-Name Products
For groceries and home products, Ramsey says generic brands are better than name brands. Store brands are most often made from the same ingredients and are as good as name brands, but far cheaper. (When you do this, you’ll be surprised at how much you save on essential items and you’ll never know the difference).
Wait 24 Hours Before Making Impulse Purchases
The 24-hour rule is one of Ramsey’s easiest and most potent suggestions: if you see something you don’t need, wait 24 hours. This delay allows you to reflect on it, resulting in you usually determining that you don’t really need the item.
Set Clear Financial Goals
Ramsey stresses having a financial plan with goals: whether it’s debt elimination, home ownership or retirement savings. When you know exactly what you’re working towards, then it’s easier to be more economical because you have a very good reason to be. It makes you feel accountable and every penny saved counts towards something.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
Like our content? Be sure to follow us.
Read More:
