Budgeting Tips from Dave Ramsey
By Ashley Cairns
For the vast majority of people, one of the most common problems you’re going to face is being able to manage money better. Money makes the world go around and without spending it wisely, we are often limited in what we can do and achieve. However, as discussed before, it’s so easy to overspend on frivolous expenses and life pursuits. In a bid to help you manage money better, here is a collection of budgeting tips from money mastermind Dave Ramsey.
Dave Ramsey is a radio host and a bestselling author on money management. For me, and for many others, these tips will radically alter how we spend money moving forward.
Stop spending so much online
The first major budgeting tip that Dave Ramsey gives out is to stop spending so much on the internet. By this I don’t mean buying things over the internet. But it means our internet bills are often gargantuan compared to what they could be. And getting it down to a more manageable level, is going to be absolutely essential.
You can use tools such as Trim to help you start making more informed decisions. Someone from Trim will literally call your internet provider for you and help you to get a better payment from your ISP. They are expert negotiators and can play a big role in helping you to avoid spending so much online.
Start making a saving commitment
Another great way to manage money better, Dave reckons, is to use a tool called Empower. Empower is a system that allows you to tell them exactly how much money you want to start saving per month. They can then start taking that agreed fee from your current account and placing it into a savings account automatically.
This is useful as relying on yourself to do it often means not investing the money as intended. This helps you to make the commitment and actually put the cash away.
Always have a plan
However, outside of hiring someone to do the ‘dirty work’ for you, you need to use your own time better. To manage money better, Dave Ramsey recommends that you have a clear written plan – an actual written budget to follow. Instead of managing in your head on a day-to-day basis, build a clear budget. Having a physical plan will also help you to feel accountable for it, which means more likely to put it into action
Further, a robust plan should cover everything that you are committed to spending before the week even begins, letting you know exactly how much this leaves you to play with. A plan is so vital to helping you manage money better, as it’s easy to mentally forget a bill payment that ends up putting you in red.
Start reducing your debt
Moreover, without doubt the most important step to budgeting money easier is to start reducing your debts. Debts are a plague on your expenditure, and will minimise everything else in your plan. The sooner you can either pay off a debt or refinance it to pay off less each week/month, the sooner you can hold more control financially.
Build a list of your debts from lowest to smallest, and then start putting as much as you can towards the smallest debts. Pay them off from smallest to largest, helping to eat away at your expenditure each month. Each debt you pay off is a standing order you don’t have to pay which can go towards another debt, and so on.
Stop spending more than you make
Finally, this might seem obvious but it’s the single best Dave Ramsey budgeting tip that you can find out there. Many of us spend more than we make. This often leaves us chasing our tail until we run out of energy and succumb to our growing debts.
Dave (and others) reckon that spending everything you make is simply foolish. When your lifestyle becomes more expensive, so do your expenses. This means not only spending more today but spending more tomorrow. Every investment beyond your means is an investment you have to pay today and tomorrow, leaving you in a pretty tight spot.
So, it’s recommended that to manage money better you spend less than you make. Even if you are only saving 5-10% of what you make at the end of the month, it’s better than being in a negative sum of money. Keep this in mind, and it’ll be much easier to stop spending more money than you are making. It’s only once you realise the damage that it is doing to your finances that you will be inclined to stop. So, keep that in mind!
Making the next step
I hope that you found these budgeting tips useful, I know that I have found them helpful managing my own finances. They are solid, catch-all tips which are likely to provide meaningful results you can benefit from. Now, I also recommend you take a look at some of my other articles on financial health. It’s a major topic and one that is very important to not only understand, but own, if you wish to go further in life.
So, make sure you take the next step in life and make an ambitious decision. To manage money better, start with the above and build from there.