By Laura BennettFriday 21 Feb 2020Power Lunch with Laura BennettFinance and BusinessReading Time: 4 minutes
If you’re struggling to see how you’ll ever afford that dream home or education, or how you will ever get out of debt, Dave Ramsey’s advice – in high demand with millennials and boomers alike – could give you the hope you need.
An American finance guru, Dave Ramsey was a millionaire, a husband and father, and a bankrupted struggler, all by the age of 30. In the early years of his marriage, he and his wife had amassed a US $4million property portfolio, were earning $20,000 a month, and were revelling in their lavish new life.
With a young child and another on the way, life was looking good until the bank called in all his loans at once. The couple were forced to sell everything they owned and filed for bankruptcy soon after.
Shamed by the process and wondering what had gone so wrong, Dave committed the next season of his life to finding out what the Bible says about wealth and possessions, steadily reshaping his finances into an order that reflected what he’d learned.
In the years since, Dave has become a NY Times bestselling author with a world renowned personal finance course and nationally syndicated US radio show that draws over 12million weekly listeners.
When fans call in to The Dave Ramsey Show, they’re met with the strong no-nonsense advice Dave has become known for, and a purpose-driven approach to our financial freedom.
“’Freedom’ is not an amount,” said Dave on Power Lunch with Laura, “‘Freedom’ really means, ‘Can I bring some order out of chaos? Can I have a sense of power in a space where most people feel powerless?’”
It’s an approach that isn’t found in a lot of the ‘financial hacks’ we find circulating online.
“Hacks usually make it sound like a ‘get rich quick’ thing that sounds too good to be true [and it] probably is,” Dave said. “There’s not a pill that you can take to get out of debt, it’s a process of change.”
A Biblical Approach to Finance
Bringing his qualifications in finance and real estate as well as his personal faith to the table, Dave’s approach to money often looks at developing the personal character of his clients as well as their financial literacy.
“Personal finance is about 80% behaviour. It’s only about 20% head knowledge”, he said. “Controlling my behaviours, controlling the guy in my mirror, is really what personal finance is about. But [people in the finance industry] always think it’s a brain problem; a knowledge problem, but it’s about behaviour [and] the best for anyone to change a behaviour, is through their spiritual walk.
“When they have a ‘why’ that’s bigger than, ‘I want a nice car’… they’re the ones that will have a higher tendency toward success.”
“Biblical finance uniquely addresses very simple concepts that have very profound on your behaviours; it’s a simple thing to say, ‘Live on less than you make’, but it’s a heart change that causes you to be able to do it… the biblical concepts are always about changing you. And then they give you a money result. Where the academic concepts are always about ‘more knowledge will bail you out’, but it doesn’t work.
“The people that we’ve seen, out of the millions that we’ve walked with getting out of debt and into wealth, the ones that have been most successful have a really big noble ‘why’; ‘I want to change my family tree, I don’t want my kids to ever have a childhood like I had’…
“When they have a ‘why’ that’s bigger than, ‘I want a nice car’… they’re the ones that will have a higher tendency toward success because they will pay a price to win because of the nobility of their reason.”
Focusing on the Long Game
Dave’s research also revealed having a mindset that focuses on the long-game is important for financial wellbeing.
“[At Ramsey Solutions] we always say, ‘Adults devise a plan and follow it, children do what feels good’”, said Dave. “Our ‘Y.O.L.O.’ culture is a good way to stay broke; it’s an excuse for not dealing with the future… it’s fun, but it’s not as if you can’t have fun and plan.
“Wealthy people when they ask a question about money or about their life, they ask ‘How’s it going to affect me 10 years, or 20 years from now, when I buy this car or this house, or make this career change?’… People who aren’t wealthy, tend to think in short planning windows, like, ‘Thank God it’s Friday’ or ‘Oh God it’s Monday’, and they live for the weekend… and so their decision making is very impulsive.”
To help turn your finances around, Dave teaches these Baby Steps:
1) Quickly save $1000US ($2000 for Australia).
2) Pay off all of your debt except your home, using the ‘debt-snowball’ method of listing them smallest to largest, and attacking them in that order, regardless of interest rate.
3) Build up your emergency fund, covering 3 to 6 months of expenses.
4) Save 15% of your income into your retirement fund.
5) Save for your kids’ college fund.
6) Get your house paid off early.
7) Build wealth and give.
Find out more via daveramsey.com