Why even care about Dave Ramsey’s budget tips if you don’t budget? Well, because you should. Don’t you want to turn around your financial life completely?
Budgeting is like exercise. People who don’t do it don’t really get the dedication and the excitement of us who do. They don’t understand why we devote so much time to it, why we make meticulous lists and plans, or why we recommend it to all our friends.
The thing is, just like exercise, budgeting comes with a lot of benefits. It saves money, time, and energy. However, you have to do it to actually be able to really understand that. Again, just like exercise. People are aware of general benefits and the vague “Yes, I really should do it” feeling they have, but that doesn’t light a fire underneath them, nor does it motivate them properly.
Although it really should.
Who Even Is This Dave Ramsey Character?
We get it. Taking Dave Ramsey’s budget tips to heart is hard if you have no idea who the chap is. Dave Ramsey has his fingers in a lot of pies. Most of us know him as the personal finance guru, but he’s also a published author and a radio host.
What put Dave on the map was a money management method that helped him and his wife get out from under the thumb of bankruptcy. That was actually the birth of all Dave Ramsey’s budget tips, so let’s dive right into them, shall we?
20 Best Dave Ramsey’s Budget Tips
1. A Zero-Based Budget
The best way to approach the budget is to make it a zero-based one. Those of us who are just starting out with budgeting will find this method the easiest. It’s rather simple — after we deduct all our expenses from our income, the balance should be zero.
Now, this doesn’t mean we should go on a shopping spree to make sure we burn all that cash. Of course not. Instead, we’re supposed to name every dollar we have and tell it where it should go. The first thing we need to do is divide all our expenses into categories. Bills, rent, fun money, groceries, investments, emergency funds — everything needs a category. Then, we fill those up with cash in order of importance.
We should do food and bills first and save the best (fun money) for last, of course. If we have leftover dough, we have to give it an assignment as well (we suggest the investment category).
2. The Envelope System
Those of us who are quick to overspend, even when we make a budget on paper, need to adopt the envelope system. Each category we already mentioned needs to have its own envelope.
Put only the amount of money you need for that category in the envelope. Once the envelope is empty — that’s it. Since we have a zero budget, we won’t have any leftover money to redirect into an emptied envelope. Thus, we won’t be able to overspend.
3. Credit Cards — the Biggest Frenemies
People who already have lots of debt should take this Dave Ramsey’s budget tip to heart — forget about credit cards. They are a slippery slope and will probably cause even more debt.
Having no credit cards is a good idea even for those of us who aren’t in debt. Cards make it easy for us to go over the budget. We’re all guilty of charging our credit cards here and there when we run out of money. Well, those charges can pile up into a massive debt!
4. Get Help
Those among us who dread the thought of putting our finances on paper, making spreadsheets, and calculating everything by hand, Dave suggests budgeting tools.
There are a lot of money management apps out there that can help us keep track of all money that goes in and out of our household. Most of them have great features that show us graphs of what we’re spending money on. These graphs can be real wakeup calls — it’s quite sobering seeing 40% of your budget next to the “eating out” icon.
5. Budget Is a Team Effort
Some people think that money management isn’t a problem for single people. After all, you don’t have to compromise with anyone, right? However, what they fail to realize is that people in relationships have partners who can help them not only set a budget up but also stick to it. Of course, that’s not to say that single people can’t budget. They’ll just have to show more character strength than others.
6. It’s Not a One-And-Done Deal
Just because we made one successful budgeting plan doesn’t mean we’re done. Oh, no! Every month demands a new budget because not all expenses are a constant in our lives. One of the best Dave Ramsey’s budget tips is to always keep working on your plan.
Maybe next month you’ll need to buy school supplies for your kids? Or they’ll have a field trip? That’s extra money that the previous month’s budget didn’t account for! Some months are expense-heavy (just remember Christmas in December and months with big family celebrations). That extra expense needs to be a part of our budget. Otherwise, we won’t have any money for it.
7. Getting Rid of Debt
Those of us who have a lot of debt keep drowning in it because it bleeds most of our resources away. We have to calculate it into our budget (or ignore it until it bites us in the behind). Dave Ramsey’s budget tip for debt is the Snowball Method that will help us slowly but surely get rid of debt. Once we do, we’ll have some wiggle room in our budget for stuff we’ve been denying ourselves.
The Snowball Method tells us that we shouldn’t be shy about tackling our debt. However, we should do it gradually. First, we should attack a small debt and keep making payments until it’s paid off. This will give us a sense of accomplishment and the confidence to move on to the next, more significant debt.
8. Trim the Budget, If Necessary
At this point, we’ve already been following Dave Ramsey’s budget tips, and we’re making budgets each month while keeping an eye on our overall progress. So, if we notice that nothing is changing, that we’re still drowning in debt, overspending, or wasting money, we need to trim our budget.
We can’t allow ourselves frivolous spending if we keep coming up short with rent or utility money. Tightening the belt isn’t easy, but there are ways to do it without making ourselves miserable.
9. Save on Groceries
We all spend a lot of money on groceries. However, the kicker is that we don’t even realize how much of our income we leave at the supermarket.
If we do start paying a bit of attention, we’ll see that it’s quite simple to cut our expenses by saving a few bucks on groceries. All we have to do is change some habits or adopt new ones.
Making well-organized trips to the store — bringing a checklist and buying only the items that are on it — will make a huge difference. The same goes for not being wasteful. How many of us have ever bought some food and told themselves, “Oh, this will make a good lunch tomorrow!” and then thrown that into the pantry and promptly forgot about it? Probably too many.
So, before every grocery trip, we should check the food we already have and use it when making meals for the following week.
10. Stay Away From Name Brands
While we’re on the subject of grocery shopping, buying off-brand is another great Dave Ramsey’s budget tip. When making our grocery lists, we should make sure to only write down generic item names. We don’t need Ben & Jerry’s, we need ice cream. Does the brand matter so much? Of course not!
Yes, we understand that name brands might be better. However, the difference in the price outclasses the difference in taste. What’s more, some brands are only worth their name. We only think they are better because they blast their name all over the media. So, they only have better marketing, not necessarily a better product. Are we really ready to waste money on that?
11. Unsubscribe From Everything
We’re all wasting a lot of money on automatic subscriptions. Sure, we might need some of them, but do we really need them all? Let’s take that gym membership we have as an example. Is one half-hearted trip to the gym per month worth so much money? If we cancel automatic subscriptions for one month, we’ll see that we don’t need all of them (or even most of them).
12. Eating Out? No! Staying In!
We never heard our mother’s voice ringing in our heads as loudly as when we realized that eating out is a waste of money. “We have food at home” used to be a sentence we hated when we were kids. Why couldn’t we just get some McDonald’s?
Well, because we had pasta at home. Eating out is a huge blow to any budget, especially if people tend to do it multiple times a week. That’s why meal planning and prep are the budget’s best friends. Buying food and preparing it at home is healthier and cheaper than blowing money on overpriced meals that probably won’t even taste as good as ours would.
The same goes for going out for drinks. Staying in and inviting a few friends over for a B.Y.O.B. party will be beneficial for your budget. Plus, there are no silly limitations or other people you don’t know to bother you. It’s a win-win!
13. Starbucks? I Don’t Know Her
Just like eating out, buying coffee at shops (especially overpriced ones) is draining our budget one $5-dollar latte at a time. These small expenses usually slip by unnoticed, which is why we sometimes spend an exorbitant amount of money on coffee. It’s only $5, right? Yes, but if we buy two cups of coffee every day, that’s a lot of money.
Spending $200 per month on coffee isn’t a cardinal sin, but it also isn’t ideal. Think about all the ways you could spend those $200 if you made coffee at home and brought it with you.
14. Chase Discounts and Coupons
Now, we’re not suggesting that you become an extreme couponer. But, every now and then, you can clip a couple of coupons. It won’t kill you. What’s more, buying discounted items and specifically searching them out in stores during our grocery shopping trips can ease the strain on our budget.
Furthermore, Dave Ramsey’s budget tips also suggest that we should all ask for discounts. Discounts aren’t always prominently displayed. What’s more, maybe we’re a part of a group that always gets discounts. Military personnel, students, kids, seniors, etc. usually have a lot of discounts available. Why not use them?
15. Visit the Library
When we feel like reading, we should hit the library rather than a bookstore. Lending books is more budget-friendly (and environment-friendly, when we think about it). This is one of Dave Ramsey’s budget tips that are actually broader, as we can apply the same wisdom to practically anything.
Anything that we don’t need regularly, we can borrow. That’s especially true for big purchases. Power tools like the heavy-duty power drill that we’ll maybe use once a year isn’t worth the dent it will make in our budget. Instead, we should ask a friend or neighbor who already has one to borrow it to us.
16. Staycations for the Win
If we need to tighten the belt and trim our budget, then we need to let some things go. Vacations are one of the more significant expenses an average person has during the year. In fact, unless we’re buying a house or a car this year, our biggest expense will be the vacation.
Because it’s such a huge investment, it’s also the most effective money-saving method. Of course, just because we’re canceling our plans to spend two weeks tanning in Aruba doesn’t mean we shouldn’t have a vacation. A staycation is a budget-friendly version of a holiday.
Just think about it. There’s so much in your own city that you probably never thought to visit and explore. This is the perfect opportunity. Plan a staycation and have a holiday on a budget!
17. Yard and Garage Sales
We already mentioned the staple Dave Ramsey’s budget tip — don’t buy, borrow. Well, if we aren’t able to borrow something that we need, we should try to find it at the most affordable possible price. Yard and garage sales are excellent opportunities for us to save a buck or two.
We can find real gems at garage sales. People are willing to sell anything. And, sure, we might not be able to find something as soon as we need it, but regularly visiting garage sales (and setting money aside in the budgeting plan for it) is an excellent money-saving idea. Who knows? Maybe we even find that heavy-duty power drill at half the price!
18. Tracking Progress is Vital
Whether we make minor or severe budget cuts, we have to monitor our own progress. Every budget needs continual tweaking. Therefore, we should all check in on our budgeting plans from time to time. And we’re talking in-depth analysis here. To know which tricks work and which ones don’t, we have to always keep an eye on our progress.
This also shouldn’t be a solitary activity. If we’re a part of a household, our partners and other contributors should also participate. They might see something that we missed or have an idea on how to better our approach to budgeting.
19. Set Financial Goals
Here’s the thing, if our only goal in life is to live to see our next paycheck, we’ll quickly lose the will to move ahead. Goals are important because they motivate us to continually try to be better. Of course, if we’re in debt or in-between jobs, our primary financial goal will definitely be to keep floating (financially). It’s perfectly logical that, when faced with a difficult situation, we won’t lose time on huge dreams. We’ll deal with pressing issues instead and try to stay out of debt, if possible.
However, if we’re starting to peak above the deep waters of debt, and are managing to save and invest some money every month, then we should dream a bit bigger. We should set achievable long-term goals to motivate us to budget until we can reach them. A new car, an expensive vacation, a specific amount of profit from wise, frequent investments, early retirement — these are just some of the financial goals that we should work toward.
20. Set Aside Fun Money
All work and no play makes Jack a dull boy, right? The same goes for budgeting. If we only set money aside for categories that are must-haves (groceries, rent, savings, etc.), we’ll find ourselves without money for simple pleasures.
Now, we know that this Dave Ramsey’s budget tip is a bit different, given that up until this point, we’ve been strong advocates of frugalness. However, if we don’t indulge from time to time, or allow ourselves the opportunity to “sin” a little, we won’t stay on budget for long. Sooner or later, we’ll say, “What’s the point of saving if I can’t enjoy life?” and throw all our meticulous budget plans down the river (or in the bin, whatever). The kicker is, we’d be right to say that. What is the point of being careful if we can’t allow ourselves something that we want?
Having fun money provides precisely that. We can play hooky, buy that 15th pair of shoes we don’t need, go out for drinks, or anything else that we feel like doing. We’ll blow off steam and be ready for new budgeting wins the next day!
A Few Parting Words (and Tips)
These are by no means all of Dave Ramsey’s budget tips. For example, the clever chap also advises against impulsive shopping, since it makes us more prone to extensive, reckless spending. Furthermore, Dave is a huge believer in the emergency fund. Every household should have one and save themselves the bottomless pit of debt any potential emergency usually brings.
Overall, Dave has some excellent budget tips. If we manage to implement all of them and plan our spending around them, we’ll surely not only get out of any debt but also ensure that our financial situation is reliable and stable. Not a bad outcome, right?