Dave Ramsey’s Top 26 Tips That Will Save You From Financial Disaster

August 10, 2024 DINARRECAPS8

Gabrielle Olya Thu, Aug 8, 2024

When it comes to personal finance, money expert Dave Ramsey is known for having your financial health in mind.

Whether you’re buying your first car or want to start saving for retirement, following Ramsey’s strategic tips can empower you to kick bad money habits to the curb and develop the necessary skills to comfortably reach your goals.

Put yourself on the right track for financial success with his 26 best money tips:

1. Gain Control of Your Money

If you’re unsure how to start fixing your financial situation, Ramsey recommends taking control of your money.

Gaining control of your money starts by making a financial plan. Ask yourself what you want for your finances and how your money can take you where you need to go.

2. Set a Budget and Give Every Dollar a Name

A big part of gaining control over your money is creating and sticking to a budget, which Ramsey highly recommends. Those who have a monthly budget can control their money and reach their financial goals, whether that means paying off debt, buying a home or investing for retirement.

Before each month begins, Ramsey said you need to give every dollar a name. These names may include buying groceries, making a mortgage or rent payment or contributing to your emergency fund, just to name a few. Every dollar in your budget should have an assignment as this is a big part of effectively managing your money.

3. Save $1,000 in a Starter Emergency Fund

The first of Ramsey’s 7 Baby Steps is to save $1,000 for your starter emergency fund.

Typically, emergency funds are advised to have between three to six months’ worth of expenses. However, Ramsey recommends getting started with this smaller buffer fund to help cover any unforeseen expenses that may come with everyday life.

Having a starter emergency fund gives you peace of mind in knowing you have enough money to pay for these emergencies and will not need to resort to going into debt to cover costs.

4. Use the Debt Snowball Method To Pay Off Debt

Step two in Ramsey’s 7 Baby Steps is to pay off all of your debt. You can get a jump on eliminating debt using Ramsey’s debt snowball method.

How the debt snowball works is you start by paying off debt with the smallest balance. Once this piece of debt has been repaid, you work your way up, or snowball, to repay debt with the biggest balances. Debt snowball comes with plenty of psychological wins, like gaining confidence that your quick wins will allow you to confront your worst debts and pay them off in full.

5. Work a Side Hustle

Even if you carefully budget and work a good full-time job, you might find you need a way to earn extra money to reach your financial goals.

Ramsey recommends working a side gig to earn extra cash and fulfill goals like paying off debt or building your starter emergency fund. You might decide to drive rideshares, sell gently used items on platforms like Facebook Marketplace, or offer tutoring services.

6. Do Not Invest Until Your Debt Is Paid Off

This tip is often considered a bit controversial, but it is one that Ramsey firmly stands by.