Dave Ramsey: Do These 5 Things Now to Achieve Wealth Within a Decade

If you do these five things, you will win with money 100% of the time, says Dave Ramsey.

To do so:

• Have a written plan (a budget).
• Get out of debt.
• Live on less than you make.
• Save and invest.
• Be outrageously generous.

Key Points About This Article 

• According to Dave Ramsey, if you want to achieve wealth, do these five key things.
• Create a financial plan with your advisor, which should include all current and expected income sources, investments, and emergency funds.
• Create a budget, track your spending, put needs before wants, pay off debt, and save. Living on less can help with debt reduction, and help you take financial control.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Have a written plan.

That includes current income sources, such as Social Security, pensions, investments, and retirement plans. It should also include projected expenses such as taxes, and money set aside for unexpected events, as compared to expected income numbers.

As you near retirement, “begin with the end in mind,” as noted by Stephen Covey, author of The 7 Habits of Highly Effective People. 

That includes the consideration of how much you need to spend every year on rent or mortgage unless you’re one of the lucky ones who have paid off your mortgage, healthcare and long-term costs, groceries, medication, transportation costs, and perhaps even pet expenses. Plus, do you expect to travel a lot, and how much do you foresee spending? Maybe you have plans to help your children, and even their children with things such as college tuition.

Get out of debt. 

For many of us, getting out of debt is easier said than done.

According to Dave Ramsey, focus on the smaller balances first. That way, you free up even more cash for the heavier debt. Then, once the smaller debts are paid off, you now have new cash flow to tackle to make extra payments on higher interest balances.

Then, as noted by Ramsey Solutions, “Make minimum payments on all debts except the smallest—throwing as much money as you can at that one. Once that debt is gone, take its payment and apply it to the next smallest debt (while continuing to make minimum payments on your other debts).”

Then, repeat that over and over again until you drive down your overall debt.

Or, you could make just minimum payments on all of your debt and put a chunk into the expense with the most interest. Or three, you could take out a consolidation loan, wipe out all of the outstanding debt, and have one balance. Not only could this allow you to manage your debt a bit better, but it may also allow you to put extra funds into an emergency account.

Live on less than you make. 

Dave Ramsey believes living on less than you make is crucial for achieving wealth.

To do so, create a budget, track your spending, put needs before wants, pay off debt, and save.  Living on less can help with debt reduction, and help you take financial control.

In addition, “Dave Ramsey emphasizes the importance of avoiding debt, particularly from credit cards, which can lead to a cycle of overspending and financial strain. Instead, by prioritizing budgeting and saving, individuals can develop a more positive relationship with money, viewing it as a tool for achieving goals rather than a source of stress,” says 247WallSt.com contributor Chris MacDonald.

Save and invest.

An Individual Retirement Account (IRA) allows you to save for retirement with tax-free growth or on a tax-deferred basis. You can invest in a traditional IRA, for example. While it’s best to check with your financial advisor, many times you can deduct contributions on your tax return.

There’s also the Roth IRA, where you make contributions with money you’ve already paid taxes on. With a Roth IRA, your money can grow tax-free with tax-free withdrawals. But again, check in with your financial advisor before doing anything. Or, if you’re self-employed, look into the Solo 401(k), a variation of the 401(k) plan but specifically set up for those who work for themselves.

Be outrageously generous. 

If not with your money, with your time, or with donations of food or clothes suggests Dave Ramsey. As noted by Ramsey Solutions, “Ramsey says that charitable donations can be tax deductible, which can help lower your tax bill. He also says that giving to a charity you’re passionate about can be fun and that you can make a difference in someone else’s life.”

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