As I'm sure is true for many people, Dave Ramsey was my first introduction to the world of personal finance gurus.
Prior to reading his book The Total Money Makeover, most of my education had focused on investing. I had studied finance in college, so I'd read many of the best investing books.
But while those books gave me a solid foundation for investing, I hadn't thought much about my personal finances.
Reading The Total Money Makeover changed that.
I began to realize there was more to finance than just investing. And I started to recognize how much I enjoyed learning about that side of the financial world.
This was all happening around the time I graduated from college, so Ramsey's advice was very useful.
My wife and I paid off around $14,000 in student loans in just one year. Plus, we built an emergency fund and started saving 15% of our income.
It's been 20 years since then, and I've gone much deeper into the world of personal finance.
I became a Certified Financial Planner™, started this blog, and over the years I've probably read well over 100 other books on money and investing. At this point, I live and breathe personal finance every day — so my perspective has naturally evolved.
And as I reflect on Ramsey now, there are certainly parts of his advice I no longer agree with. But I still respect his behavioral approach and the fact that his framework has helped so many people get out of debt and break the paycheck-to-paycheck cycle.
Even with everything I've learned since those early days, many of the lessons I picked up from Ramsey still hold up. Others don't.
So let's start with the ones that have truly stood the test of time.
10 Dave Ramsey Money Tips Worth Knowing
1. “Give Every Dollar a Job”
One thing I've seen over and over again is that most people simply don't know their numbers. They don't know their true monthly spending, their savings rate, or how much they actually have left at the end of the month.
And when you're living paycheck to paycheck, that lack of clarity keeps you stuck.
This is where Ramsey's “give every dollar a job” approach can be incredibly helpful. His version of zero-based budgeting is tight and structured, and for anyone struggling to stay afloat or trying to get out of debt, that level of detail is often exactly what's needed.
Do I think everyone needs to budget this strictly forever? No.
Once you have more margin in your finances, you can move toward something more flexible, like a pay-yourself-first or reverse-budget approach.
But the core lesson still holds: you need to know where your money is going. Whether you assign every dollar or just track your savings rate and monthly surplus, the habit of understanding your numbers is what ultimately moves you forward.
2. “If you will live like no one else, later you can live like no one else.”
A big issue I see is that people take lenders' guidelines as if they are recommendations.
A mortgage lender says you can spend up to 28 percent of your income. An auto lender approves a payment that looks reasonable. Student loan servicers do the same.
Each number sounds fine on its own, but once you stack them together, your fixed expenses can crowd out everything else.
This shows up clearly in the data.
Americans now carry more than 1.6 trillion dollars in auto loan debt, and the average monthly payment has climbed to a level that leaves very little room in the budget.
At the same time, what feels normal has changed. Home expectations are higher. Car prices are higher. People look around and assume this level of spending is simply what everyone does.
The problem is that if you live the way the average person lives, with the average set of payments, you end up with almost no flexibility. It becomes very difficult to build long-term wealth when most of your income is committed before the month even begins.
This is where the idea of “live like no one else” still holds up for me.
I do not think you need to live an extreme or overly restrictive lifestyle.
What matters is being conscious of the choices you make and understanding the opportunity cost behind them.
When you keep your fixed costs under control and avoid locking yourself into payments that limit your options, you give yourself the room to save, invest, and plan for the future.
3. “Do the baby steps in order. You cannot skip steps. You do them one at a time.”
A common issue I see is that people try to work on everything at once. They want to build an emergency fund, pay off debt, save for retirement, and improve their spending habits all at the same time.
When you spread your attention that thin, nothing gets completed and your finances turn into something that simply runs in the background rather than something you actively manage.
This is why Ramsey's idea of taking the baby steps one at a time has helped so many people.
Clear, single-focus goals make it much easier to follow through. You can see this in both his debt snowball method and the full Baby Steps framework.
When people know the next step, they build momentum instead of spinning their wheels.
That does not mean I agree with every part of the system.
For example, I would not skip a 401(k) match to pay off low-interest student loans. But the overall premise of keeping your focus on a small number of goals is something I strongly agree with. It reduces decision fatigue and helps people make real progress.
Why the debt snowball works (according to research): Researchers Alexander L. Brown and Joanna N. Lahey found that people are more motivated when they achieve small wins first, which is the same principle behind the debt snowball. In their Consumer Financial Protection Bureau study, “Small Victories: Creating Intrinsic Motivation in Task Completion and Debt Repayment,” they showed that completing smaller subgoals increases follow-through and boosts motivation to complete bigger goals.
4. “You don't have a money problem, you have a marriage problem.“
To paraphrase one of Ramsey's well-known lines, many couples do not really have a money issue. They have a communication issue.
Ramsey is a strong advocate for combining finances and keeping everything open, and I have seen that approach work well for many couples.
I have also seen couples succeed with partially combined or even mostly separate systems.
What matters most is not the structure you choose. It is whether you have a shared vision.
When couples do not agree on goals or values, money becomes a constant source of friction. I hear versions of the same story all the time.
A husband complains about how much his wife spends at Target or one spouse stresses over every purchase while the other avoids looking at the accounts.
The real problem is not the spending itself. It is that they never agreed on what they are working toward in the first place.
When both people know the plan and feel ownership over it, the arguments usually disappear. A shared vision does more for your financial life, and your relationship, than any specific budgeting rule ever will.
5. “Personal finance is 80 behavior and 20 head knowledge”
Ramsey often says that personal finance is mostly behavior, and I agree.
It is one of the few areas of life where you do not always get better results by working harder. In fact, many times the best thing you can do is stop doing things.
On the investing side, that usually means not trading, not trying to outsmart the market, and not constantly adjusting your portfolio.
This is the complete opposite of what most of us were taught growing up.
We are used to hearing that if you study more, learn more, and work more, you will get better outcomes.
But money does not always work that way. You can read the best personal finance books of all time, and it still will not matter if you overspend, panic sell, or chase whatever is popular in the moment.
Even after writing about personal finance for almost two decades, the same themes repeat themselves.
The people who tend to do well are not the ones who know the most. They are the ones who consistently follow a few simple behaviors. They spend less than they earn. They save automatically. They invest steadily. And they avoid the big mistakes that set people back.
6.”Don't let your mistakes define you”
One principle from Ramsey that has always stuck with me is the idea that your mistakes do not define you.
He says this often on the show, and it is usually followed by very simple, practical advice.
If someone calls in and says they bought too much car, the answer is usually to sell it. People expect a complicated rescue plan, but sometimes the fix is straightforward.
I like this mindset because it applies far beyond personal finance. In business, for example, you do not have to make money back the same way you lost it.
You learn the lesson, adjust, and move forward. The same is true with money.
Overspending, taking on too much debt, or making a bad investment does not have to follow you for the next decade.
There is always a next step you can take.
7. “If you can't write a check or pay for a car with cash on the spot, you can't afford it.”
Ramsey often says that if you cannot pay cash for a car, you cannot afford it.
I do not take this literally, but I do think there is an important point behind it.
Debt has become so normalized that almost every purchase now comes with a payment plan.
We have financing for cars, homes, phones, furniture, groceries, and even small everyday items (thanks to Buy Now, Pay Later apps).
When you are surrounded by options to split everything into monthly payments, it becomes easy to stretch yourself too thin without realizing it.
I am not anti-payment. We have one car payment in our household, and I have a few simple rules I follow when buying a car. What concerns me are the eight-year loans, the rolling negative equity, and the idea that carrying credit card debt is no big deal.
Those are the patterns that keep people stuck.
8. “If anything can go wrong, it will”
One thing I have learned is that you can get away with living on the edge for a while. You can go a year or two without an emergency fund. You can take risks with investments. You can stretch your budget and hope nothing breaks. And for a while, it often works.
But it only takes one major event to undo years of progress. Most people will face at least one serious financial crisis in their lifetime.
For some, it happens every decade.
It might be a job loss, a business failure, a medical issue, or something completely unexpected. The specific issue does not matter. What matters is that the impact can be devastating if you are not prepared.
This is why Murphy's Law is worth paying attention to. Anything that can go wrong eventually will. The goal is not to live in fear. The goal is to avoid the single large financial hit that can set you back ten years.
The best protection is simple. Keep high-interest debt out of your life and make sure you have a real emergency fund. Long-term financial success is often less about hitting home runs and more about avoiding the losses that take you out of the game entirely.
9. Use Sinking Funds
When I first started paying attention to my finances, I'd feel great about coming in below budget one month. Then, the next month, I'd beat myself up for going over budget.
Taking a closer look, however, I realized that in the months I went over budget, most of my living expenses were the same. I was going over budget because of infrequent expenses (such as a wedding gift or my annual life insurance premiums) that just so happened to pop up.
This is when I first started using Ramsey's sinking funds account concept, which has you set aside money this month to pay for future expenses.
For example, you could choose to save $50 a month in a sinking funds account to pay for Christmas every year.
This helps eliminate wild swings in your monthly budget. And, just as importantly, it helps you avoid beating yourself up for going over budget because of an expense that was predictable.
10. Don't Overlook the Power of a Tribe
In the best-selling book Atomic Habits, author James Clear writes:
“As a general rule, the closer we are to someone, the more likely we are to imitate some of their habits. One groundbreaking study tracked twelve thousand people for thirty-two years and found that “a person's chances of becoming obese increased by 57 percent if he or she had a friend who became obese.”
It works the other way, too. Another study found that if one person in a relationship lost weight, the other partner would also slim down about one third of the time. Our friends and family provide a sort of invisible peer pressure that pulls us in their direction.”
Ramsey has created a community where working two jobs, eating rice and beans, and buying a $1,000 car with cash — all in an effort to pay off debt as fast as possible — is the norm.
This is one of the most underrated reasons why you'll find the hashtag #DebtFreeScream filled with so many success stories.
When you're part of a community where behaviors like this are the norm, it makes it far easier to succeed in your goal.
While this isn't something you'll learn from Ramsey directly, it's something you'll learn by watching him. At the end of the day, he's helped many people get out from living paycheck to paycheck, and the sense of community he creates is a powerful part of that.
Being part of a tribe is something you can implement across the other areas of your life where you're trying to improve.
For example, when I started building an online business in 2009, I joined a mastermind group of others who were doing the same.
Back then, outside of this community, building an online business sounded crazy. So it was helpful to be part of a group of likeminded people, where talking about SEO or making money online didn't look like you were trying to scam people.
The Worst Dave Ramsey Advice
There is a lot about Ramsey's approach that works, especially his focus on behavior and simplicity.
But several parts of his advice are not supported by academic research or by modern financial planning standards.
Here are the areas where his guidance can lead people off track and what the evidence shows instead.
Investing advice
Ramsey often says investors can expect a 12 percent annual return, but long-term market data does not support this. NYU Stern's data from Professor Aswath Damodaran shows that historical stock market returns average closer to 8 percent before. Vanguard's most recent long-term outlook projects annual U.S. stock returns in the 4.2% to 6.2% range..
Better approach: Use diversified, low-cost index funds and base your planning assumptions on realistic long-term return ranges. You can also run the numbers through a Monte Carlo simulator to see how your portfolio might perform in different market environments. If you want a simple tool to do this, check out these free Monte Carlo simulation calculators.
Withdrawal rate
Ramsey has suggested that retirees can safely withdraw 8 percent per year. No credible research supports a withdrawal rate anywhere near that high. Even the experts who developed the original 4 percent rule have updated their thinking. Bill Bengen's more recent work shows that a historically safe withdrawal rate may fall closer to 4.7 percent and, in certain market conditions, as high as 5.25 to 5.5 percent.
Better approach: Use a conservative, evidence-based withdrawal range and adjust your plan as markets, spending, and your own needs change.
Paying off your mortgage as fast as possible
Ramsey strongly encourages paying off your house early. While being debt-free is a great goal, aggressively prepaying a low fixed-rate mortgage can come at the cost of higher-return investment opportunities.
Better approach: Balance mortgage payoff goals with investing, liquidity, taxes, and long-term planning needs.
What about a 15-year fixed rate mortgage? There are some pros and cons, which I cover in the post: Is Dave Ramsey Right About How Much House You Can Afford?
Final Thoughts on Dave Ramsey
At the end of the day, Ramsey has helped a lot of people get out of debt and stop living paycheck to paycheck.
That is something I completely respect.
His work gave me a strong foundation early in my own financial life, and I am grateful for that.
But, like many others have discovered, personal finance and building wealth are far more complex than following six simple steps.
As with any financial advice, the goal is to understand what works for you, understand why it works, and let go of the parts that do not fit your situation.
That takes time, and it takes learning. But the time you invest in understanding how money really works always pays off.
