There’s so many things that you SHOULD be doing with your money. But if you had to choose what are the top 5 things? Since you had a hard time choosing, I chose for you.
And before I go further, I just need to say that Dave Ramsey could very well be my spirit animal. There is not one thing he has said that I don’t agree with. And although he has so much good freaking money advice, I did take some of his tips and wrap them up into the 5 best money tips that I think all newlyweds (or, literally everyone) should listen to.
When my husband and I first got married, one of our gifts was The Total Money Makeover. I wasn’t super thrilled about getting a book when I really just wanted a KitchenAid – but I made my un-thankful butt read it. Nobody prepared me for the COMPLETE life change this book would cause! Seriously, they need to put a warning on the front of it stating: “You will get super motivated about your money and make your husband crazy while doing it”.
Luckily my husband lived and is a lot more happy that we actually have money saved (and I control my spending a lot better …. sometimes.) The sad thing is that that book consumed my life so much that I started a blog about personal finance. All because of some crazy motivating book.
And while I really encourage you to read it (don’t read it if you’re not ready to totally change your life) I do know that not everyone wants to buy it and would rather just read a post about Dave Ramsey’s best tips.
So here goes: Dave Ramsey’s Top Tips that ALL Newlyweds (everyone) Need to Listen to
Disclaimer – these tips can also be found on Dave Ramsey’s site and are not all directly from his book.
1 – Emergency Fund
Oh my gosh, YOU ARE NOT INVINCIBLE. I literally can not repeat this enough. I can feel people rolling their eyes on their screen and thinking, “There’s no reason I need an emergency fund, nothing is going to happen to me. ” Yes, it will happen to you. It may not be the same thing that happens to your neighbor, but there WILL be a time in EVERY SINGLE COUPLES life where they will need an emergency fund.
Just stop avoiding it. Once you have it you can be done and forget all about it (until, of course, you actually need it. Then you can totally thank me 🙂 )
Dave advises to start out with a goal of saving $1,000 for an emergency fund. From there, start saving up 3-6 months of your expenses.
The best part? If for some absolutely crazy, not-likely, reason that you never use your emergency fund that’s just more money you already have saved for retirement. It’s a win-win situation. Unless you don’t have an emergency fund. Then you lose.
2 – No Credit Cards – kind of
This is a tricky tip. I whole heartedly agree that no one should ever use credit cards. They’re literally there to set you up for disaster. They WANT you to fail and not pay your bills on time because that’s when it starts getting interest – and that’s when they get more of your money. BUT – being newly married, engaged, or just starting a family you definitely need to have a good credit score.
Ideally, we’d all love to have enough money to pay for everything with cash. But unless you’re a Kardashian, you probably won’t be able to buy a house by just showing your face in public. You’re going to have to work a little bit harder to earn your money.
Remember how I said the credit card companies literally want you to fail? And you totally rolled your eyes at me because you just think I’m a conspiracy theorist – 67% of people who have credit cards do not pay their bills on time. It isn’t a theory, they know their audience too well (you) and their marketing is on point. Even though statistics say that OVER HALF of you are going to be in credit card debt, there are some sneaky ways to trick the system.
Pay your bill IN FULL on time – You know when you get your credit card statement and it tells you what the minimum is you can pay? Don’t you dare pay that minimum. Pay the whole freaking thing. And don’t be late when paying your bill. We’re adults here, automate it. If for some reason you can’t pay the whole bill this month, figure out some quick ways to make some extra cash. Then don’t overspend next month. Super simple.
Don’t spend more than you make. This is like a ‘duh’ no-brainer one. You’d be surprised at how many people don’t have a brain and always spend more than they make. To give them credit, they don’t usually do it on purpose. They just choose to be naive and are “too busy” to take an hour every month to track their income and expenses. Don’t be naive. You’re sooooo much smarter than that. You’re way too smart to be part of that 67%. Be different and PAY ATTENTION to where your money is going. If you’re not overspending, you always have money to pay off your credit card bill on time.
Buy some furniture. Okay, you technically don’t have to buy furniture. When my husband and I moved to a bigger place we needed an actual couch. All the ones we had before we had got for free and we were ready for something that was ours. After finally agreeing on a couch (needless to say, we DO NOT like the same things. But, that’s a whole other story ….) they gave us the option to finance it for 12 months interest free. We had money saved up to pay for the whole thing in cash, but with free financing we decided to give our credit a little boost.
The key thing to remember here is we had money saved up for it already. Like in a separate savings account. The payments are automated and it comes out every month from that savings account. If you’re needing a little credit boost AND a new sectional you may want to consider that option. Hopefully you and your spouse agree on a lot more stuff than my husband and I do …
3 – The $5,000 car
You know those parents who buy brand-new cars for their kids’ 16th parent? I don’t either. And if you do happen to know someone who does this, take their credit card away because they are definitely in that 67%.
Literally every kid dreams of getting a brand new car until you grow up and realize that you actually have to drive. And that sometimes driving really sucks. You know what sucks even more? Having a car payment. You know what’s totally unnecessary? Having a car payment.
The greatest thing my parents ever did was not buy me a brand-new car. The first car I got they paid $1,000 bucks for. Because I was super naive back then and thought it was super affordable to get a car, I convinced my parents to let me buy my own 2007 Jetta VW. I then realized it wasn’t as affordable as I thought after figuring out that I had to make payments EVERY month on it. Silly me.
If your parents were anything like mine and laughed when you hinted around to buy you a new car for your magical 16th b-day, then you learned a thing or two. Like what it means to actually work for what you want. And also how much it sucks to have to pay your own car payment. The difference is I grew up and learned how unnecessary it is to have a car payment. Want to know why? You guessed it … Dave Ramsey!
He brought up a concept in his book that is totally mind-boggling to most of the US population.
You really don’t need that brand-new fancy car.
WHAT?! Okay, okay being a little dramatic here … Basically to avoid having a car payment (and paying a ridiculous amount of interest) you save up a lower amount of money, like $5,000, and buy a car in that price range. As you drive that car around for another year or two (no doubt being petrified that your neighbor will see you pulling out of the garage in it) you save up another $5,000. You go trade that car in and can look for something for up to $10,000. Drive that one around for another year or two (feeling a little more confident in stopping at the mailbox in this one) and save up another $5,000 and trading in again for a car up to $15,000. You get the point.
You have now successfully avoided all that interest that would have cost you double what the car is worth, and you actually OWN it. Think of how awesome it’ll be when you’re driving down the road and wave to your neighbor in the car that you OWN. You’re not borrowing it, it’s actually yours. No more icky payments month to month. Sure, you may have to drive some crappy cars for a few years, but I promise that people don’t judge you on your car as much as you think they do. (trust me, I’m telling myself that just as much as I’m telling you!)
But Kenzy, there is NO WAY we could save $5,000 in two years let alone one! How much is your car payment now? My guess, anywhere from $200-$400 a month. Get rid of your car. Just sell it, use that cash to start on your $5,000 car journey. Heck, you may even have more than $5,000 and start out at $10,000. After you sell your car and find something you can pay for cash, you just continue paying yourself however much your previous car payment was. If your payment is $400 right now, you just continue paying yourself $400 until you reach another $5,000.
And you thought it was hard to save money!
4 – Invest in Yo’self Before you Wreck Yo’self
What does everyone look forward to the moment they start working? Retirement. Oh, the things you’ll do and places you’ll go. Like back to work because oops, you found out you that social security isn’t actually enough to pay for all your bills. If you’re just planning on social security then you can for sure plan on finding a way to make extra, because $1,300 isn’t going to cut it. (Yes, that is the average social security check.) You’re definitely not going to be doing any site seeing using that check when you retire. Unless you want to drive for Uber.
What can I do to boost my retirement so I can travel to Cabo and take my whole family to Hawaii? I’m so glad you asked! You need, need, need to invest in yourself. The sooner the better. I can not stress this enough … literally, start today if you can.
The best place to start investing is in a Roth IRA. This is like an extra savings account with max interest. With an interest of 8-12% you can bet your bottom dollar that investing early will return some pretty pennies for you.
Basic details: Here’s the low down – in a Roth IRA you can put up to $5,500 a year into it. It grows and grows and grows on high interest – while you still contributing every year – until you hit 59 1/2 when you can start pulling money out of it (tax free) for whatever you feel like. If you’re not taking advantage of a Roth IRA you NEED to. It’s so so easy. I don’t care if you’re just putting in $100 to begin with. Do it, and do it soon. The longer you wait the less you have. Make your money count (and then watch it double every year in an IRA).
In Dave’s book he talks a little bit more about other ways to invest but I want you to just focus on one thing for now. (The Roth IRA). You can check out his book here if you’d like to see what else he suggests you do.
5 – If you live like no one else, later you can live like no one else
This is his signature quote and one that everybody should live by. Most people feel they need every new gadget and toy, to go on endless trips to Hawaii and have those fancy cars. While that’s all great in the moment, you have nothing to show for when retirement comes. There will still be new and better things – and Hawaii will still be there.
By sacrificing a few years now to get on track financially, you can have an easy-going, hefty retirement life to live. You have your whole life to spend money on things you don’t need. But, make sure you do it when your bank account is ready.
By living like no one else right now (meaning not indulging in every want and desire), later you can live like no one else and have the stuff that no one else will because they’re in too much debt. And debt is not good no matter what anyone says.
There you have it – the 5 best money tips that can actually change your life. If you have to ignore every other piece of money advice, let these 5 be the only ones you take to heart.
It’s not as hard as everyone thinks to be financially ahead in life. It can take a little bit of effort at the beginning, but you’ll come out so much further ahead. I’d love to know below what tip you really took to heart and are thinking of improving on!
P.S. Know someone that could seriously use these money-changing tips? Be sure to share with friends and family below … 🙂