5 Rules To Manage Your Money Like The Rich (Dave Ramsey)

Let's talk about the five things the Bible says we should do with money.

There are a lot of ideas, but if you stick to these five for a couple of decades, every single time, you'll see some amazing results that will make you really happy.

You see, it's like planting seeds in a garden.

If you plant corn seed, don't be surprised when corn grows.

It's like a rule: you get what you put in.

If you don't plant anything and just wait around, well, you'll probably end up with a muddy mess.

So, here's the deal: you're the one in charge of planting these money seeds, and this is how we do it.

Rule #1

Okay, let's talk about the first thing: making a money plan.

We call it a budget in the money world.

It's like this: you wouldn't start building a big tower without first knowing how much it'll cost.

Otherwise, you might run out of money halfway, and everyone will laugh at you.

It's like when you start something, you need a plan.

Zig Ziglar used to say:

if you aim at nothing, you will hit it every time.

While John Maxwell says:

a budget is when you tell your money what to do instead of wondering where it all went.

Winning isn't a lucky accident. It's something you work on.

Like in the Super Bowl, those guys didn't just accidentally win. They practiced and trained for years.

Nobody grows a big, healthy crop of plants by accident, except maybe weeds.

So, you need to plant something on purpose.

You can control the things you can control. Write it all down, make a plan, and stick to it.

Take care of your family first, and follow your plan. Doing this can change everything for the better.

Rule #2

The second thing is you should try to get out of debt.

Now, you probably expected me to say that, right?

Well, it's because owing money to others can make you feel like you're not in control. It's like being a slave to them.

I know this because I lost everything by letting others have control over my life. And that's not a good feeling.

Now, I understand not everyone agrees with me about debt, and that's okay. In America, we have the freedom to have different opinions.

But I can tell you that this has helped me to get out of debt and become wealthy. I'm not saying this to brag, but to show you that it's possible.

Being in debt is not fun.

It's like being in a never-ending loop where money comes in, and it all goes out, and you don't know where it went.

We work hard, make money, but it seems to disappear.

You know why?

Because we give most of it to a financial system that's designed to take it away from us.

We need to stop that.

So, what I did was stop borrowing money completely, no matter what it was for. And something strange happened.

Without any debts to pay, when I earned money, I got to keep it.

I used that money to buy assets that made me more money, and I paid for them in cash.

It was amazing because I didn't have to worry about any payments, well, except for what the government takes in taxes.

But I mean, there were no more payments to worry about, and it was an incredible feeling.

Those first few years were a bit tough, though, because there were things I wanted to do, but I didn't have the money for them.

And that's when I had to learn a magic word, an ancient word, and it's called "no." You see, most people don't really know this word.

It's tricky.

You press your tongue toward the roof of your mouth and release air, like this: "No, No."

Yep, it can be tough.

So, you know what I do?

I got out a pair of scissors, metaphorically speaking, and I said, "No more! I'm not playing your game anymore."

I got rid of all my credit cards, and I haven't had one ever since. That's because I learned some valuable lessons from the Bible.

Now, when you look at my wallet, you won't find a bunch of credit cards.

Nope, just four simple things:

my debit card for my business,
my debit card for my personal expenses,
my driver's license,
and some spare cash.

That's it.

I once had a friend who was really worried about his car payment.

I asked him, "How much is your car payment?"

He replied, "It's $783."

I was shocked. I asked him how much his house payment was, and he said, "Well, I live in a flat, and it's $560."

I couldn't believe it. I told him, "Dude, if your car payment is bigger than your house payment, you might be out of your mind."

The truth is, when your car payment is taking up more of your income than your home, it's a sign that something's not right.

That car doesn't belong to you; it owns you.

It might have seemed like a good idea at the time, but we both know why you called me.

You just needed someone to say it out loud with you. Because, my friend, that's just plain old-fashioned stupid.

That car’s got to go, and it’s running your life, and that's crazy. You need to get a car that you can actually own instead of one that owns you.

It's time to make a change.

Rule #3

The third one might surprise some folks, and it's all about building strong, high-quality relationships.

You know, the Bible tells us, "Be not deceived, evil company corrupts good habits."

What this means is that the people you spend time with can have a big impact on who you become.

Did you know that studies show your income over the next decade will likely be within 10 to 15 percent of the average income of your ten closest friends?

So, if your friends are doing well financially, it's more likely that you'll do well too.

But if you find yourself in the company of people who make poor choices, it can rub off.

Think about it like this: You wouldn't want your little son, Kevin, hanging out with someone who's always up to no good, right?

Because if he does, he might start picking up their habits and talking in a way you don't want him to.

You'd wonder, "Where did he learn that?" Certainly wasn't from us. So, you really do become like the people you spend time with.

If you hang out with generous folks, you'll become more generous too.

If you surround yourself with people who treat their spouses with respect, you'll likely start treating your spouse that way as well.

It's kind of like a magic trick, but it really works.

Now, I'm not saying you should be mean to anyone or exclude people from your life.

No, I love people, even those who might not be making the best choices.

But what I'm talking about is your inner circle, the folks who have the biggest influence on your life.

For me, it's the guys who shape the way I talk, impact my spirituality, generosity, business thinking, and skills.

And ladies, this applies to you too.

You'll become more like the people you choose to hang around with, so choose your friends wisely.

Rule #4

Now, let's move on to the next one: saving and investing.

When you don't have any debts and you've got a good plan in place, the first thing you want to do is start saving and investing.

You see, there's this proverb that says, "In the house of the wise, there are stores of choice food and oil."

But it also says, "A foolish man devours all he has."

What this means is that if you spend everything you make, according to the Bible, you're acting foolishly.

I know what it's like to be foolish in this sense. I used to spend every dime I earned because I always thought I could make more money.

I believed I could out-earn my own bad spending habit. But let me tell you, that's not a winning strategy.

It feels like being broke, and it's not a good place to be.

So, what's the wise thing to do?

Start by saving for an emergency fund.

Save up enough to cover your expenses for three to six months. Imagine having something like $20,000 dollars set aside for unexpected situations like a rainy day.

In 2020, when unexpected events happened, having that cushion would have made a world of difference.

On the other hand, if you had $20,000 in payments and no money for emergencies, those events would have hit you very differently.

So, the lesson here is clear: save and invest wisely, and prepare for unexpected challenges. It's a smart way to handle your finances.

Rule #5

Then, this leads you to a position where you can be incredibly and outrageously generous.

It's not easy to be generous when you're struggling financially.

Sure, you can still be kind, smile, and hold the door for someone, but what I'm talking about here is something more significant.

I'm talking about writing a check to help feed hungry children, buying a car for a single mom who needs it, or helping someone who's going through a tough time by covering their electricity bill for the rest of the year.

I'm talking about acts of generosity that might even be spontaneous and extraordinary. You can do all of this when you're not broke, and your own financial matters are in order.

When my own bills are paid, I can extend a helping hand to others. But if I'm still struggling to make ends meet myself, I might not even notice someone else who needs help.

Here's a little challenge for you to try.

Next time there's a holiday, like Easter or Thanksgiving, and you're driving to grandma's house with the kids, consider doing something special.

You know you're headed for a big feast that day, but along the way, I want you to do something a bit crazy.

Stop at a place like McDonald's. Leave the kids in the car with the engine running, and pull up in front of the window so you can see inside.

Go inside by yourself, leaving the kids in the car.

Sit at the counter and order a cup of coffee.

Remember, it's Thanksgiving morning, and this person is working on a holiday.

Pay for your coffee and then take three or four of those hundred-dollar bills and slide them under your coffee cup before you slip out.

Go back to the car and tell the kids to watch carefully because they're about to see something incredible.

The waitress will come over, pick up the cup, and spot the money.

At first, she might wonder if it's some kind of trick because for her, it's been a while since anything good has happened.

But when she realizes it's real, and this happens every single time, she'll say thank you.

Then, when she thinks no one is looking, she'll probably look at it one more time, not believing her luck.

Little does she know; there's a family with a six-year-old in a van nearby, watching her.

Their mom or dad just pulled off this incredible gesture, and that six-year-old's life is being changed forever as they witness this act of kindness.

And then, you'll see her do a little dance, a dance of pure joy, because that small act just made the whole difference for her month.

Fun Challenge For You!

Now, here's a fun challenge for you: go out and spend $300 dollars on a wonderful night out with your loved ones and enjoy yourselves.

It's important to learn how to enjoy your money.

But here's the real challenge: I dare you to even have more fun with $300 dollars by being outrageously generous, like we talked about earlier.

If you're not able to be as generous as you'd like because you're:

in debt,
haven't saved money,
don't have a financial plan,
or you're surrounded by people who are only concerned about their Instagram photos,

then it's time for all of us to step up and make some positive changes.

- Ivan