Ever dream of hitting millionaire status by the time you’re ready to retire? Maybe you think it’s reserved for Silicon Valley CEOs or Wall Street bigwigs. Think again. Dave Ramsey, renowned personal finance guru and author, believes it’s not only possible but entirely doable with the right focus and discipline.
Even if you’re starting late or feel behind, these 25 money moves can set you on the millionaire track by 65. No gimmicks, no nonsense, just solid advice.
Live Below Your Means
It’s common sense, but it’s all too often ignored. Make less than you spend. Ramsey emphasizes, “It’s not what you make. It’s what you keep.” According to CNBC, 55% of millionaires live in homes priced below $500,000, proving that penny-pinching works. By prioritizing needs over wants and avoiding lifestyle inflation, you can allocate more resources toward investments and long-term growth.
Budget Every Dollar
It may not be sexy, but making a zero-based budget means every dollar has a job. U.S. Bank research says only 41% of Americans budget. Don’t be in the other 59%. An efficient budget starts with recording all sources of income and categorizing expenses into essentials (like housing, groceries, and utilities) and discretionary items (like entertainment or dining out).
Dump Debt ASAP
Debt is the largest wealth thief. Ramsey’s “Debt Snowball” plan is to tackle smaller debts first to get momentum.The average American debt, according to Experian data, was $96,371 in 2021. This figure encompasses various types of personal debt, including mortgages, car loans, student loans, and credit cards.
This average debt balance was higher than the $92,727 average in 2020, driven by increases in mortgage and auto loan balances, according to Bankrate. That’s a weight on your future self’s back!
Save an Emergency Fund
Three to six months’ worth of bills may bail you out in an emergency. As Ramsey puts it, “Emergencies will happen. Plan for them.” Bankrate statistics show that 57% of Americans cannot pay a $1,000 emergency, so having this nest egg is ahead of the game.
Invest Early and Ongoing
Compound interest is your buddy. If you invest $500/month starting at age 25 with an 8% return, you’ll have over $1 million by age 65. Could you do it now; time equals money. According to a study by Fidelity, those who started saving in their 20s saved more than twice as much for retirement compared to those who started in their 30s.
Follow the 15% Rule for Retirement Savings
Ramsey advises contributing 15% of your earnings to retirement plans like a 401(k) or IRA. Fidelity says that followers of the 15% rule were estimated to replace their income in retirement. Remember, the earlier you begin saving, the greater the impact of compounding interest on your investments.
Don’t Let Lifestyle Inflation Creep In
Got a raise? Good, but don’t go out and buy a new house or car yet. This behavior can make it difficult to build wealth over time, as increased income fails to translate into greater financial security. Ramsey says, “Keep living like you’re broke while your bank account starts to grow.”
Cash Rules
Avoid financing cars, boats, or high-end vacations. Pay cash or wait until you can. In 2022, a Cars.com survey revealed the average car payment hit $700/month. Consider where that could go instead! By prioritizing cash payments and avoiding debt, you not only save money but also unlock the opportunity to build long-term wealth.
Cut Up Your Credit Cards
This is tough, but paying with cash or debit means you only spend what you have. Ramsey suggests, “Credit cards make you spend 12-18% more than you would otherwise.” Studies have shown just how addictive credit cards can be. The convenience of swiping leads many to overspend without a second thought, which is why the average American carries a credit card balance of over $5,000.
Prioritize Your Net Worth, Not Your Income
Income is flashy, but net worth is what counts. Building assets while keeping liabilities low is what makes millionaires. For example, someone earning $100,000 a year but spending $90,000 has only $10,000 left to grow their net worth. Meanwhile, another person earning $60,000 but spending just $30,000 has $30,000 to invest or save—tripling their potential to build wealth.
Your net worth is a reflection of how well you manage your money, not just how much you make.
Invest in Index Funds
Ramsey says to keep it simple, and index funds allow you to do that. They track entire markets and charge less. For example, Vanguard’s S&P 500 index fund averages a 10.29% annual return. With consistent contributions and patience, index funds can deliver significant growth, making them a smart, beginner-friendly investment option for long-term wealth building.
Be Intentional about Big Purchases
When you’re making significant financial decisions, like purchasing a car or a home, it’s essential to evaluate all factors carefully. Start by considering how these purchases align with your financial goals and budget. For homes, aim to keep your mortgage payment at or below 25% of your take-home pay, as this ensures you’re not overstretched and leaving little room for other expenses or savings.
If you’re buying a car, avoid brand new vehicles that lose value the moment they’re driven off the lot—instead, focus on reliable used cars that fit your budget, ideally purchasing with cash to avoid interest payments.
Stop Taking Vacations You Can’t Afford
Instead of booking that luxurious getaway, consider exploring budget-friendly alternatives closer to home. Road trips, camping, or even discovering nearby hidden gems can offer meaningful experiences without draining your wallet. Plan your vacations around off-peak seasons to get better deals on flights and accommodations, and don’t forget to set a travel budget in advance.
Remember, memorable vacations are less about extravagant spending and more about who you’re with and the experiences you create together. By opting for smarter travel choices, you can enjoy life’s adventures while staying true to your financial goals.
Max Out Tax-Advantaged Accounts
Grow your money tax-free with Roth IRAs, 401(k)s, or HSAs. Ramsey stipulates, “Uncle Sam gets enough of your money. Don’t give him more than you have to!” For 2023, the contribution limit for a 401(k) is $22,500, with an additional catch-up contribution of $7,500 for those aged 50 and older.
For IRAs, you can contribute up to $6,500 annually, and if you’re 50 or older, you get a $1,000 catch-up.
Educate Yourself on Personal Finance
Most millionaires read 2-3 money books a year. Ramsey suggests being a lifelong learner. Pair Ramsey’s “The Total Money Makeover” with other great books like Napoleon Hill’s “Think and Grow Rich.” According to studies, individuals who regularly educate themselves on money management are more likely to make smarter financial decisions and also experience less stress about their finances.
Teach Your Kids About Money
Wealth begins with money education. Ramsey suggests involving your kids in money conversations and educating them on the value of saving. Start by introducing children to the concept of earning money through chores or small jobs appropriate for their age.
Choose a Lucrative Side Hustle
Need a little extra push? Side hustles can increase your income quickly. Uber or Etsy are two great places to start. Side Hustle Nation says that 45% of Americans now have side jobs. When choosing a side hustle, focus on aligning it with your skills, interests, and available time. If you’re skilled in writing or design, freelancing on platforms like Upwork or Fiverr can deliver consistent returns.
Avoid Get-Rich-Quick Schemes
If it sounds too good to be true, it is. Ramsey is famously quoted as saying, “If you want to build wealth, stop trying to get rich quick.” Scams often prey on the desire for quick and easy wealth, promising enormous returns with minimal effort. Pyramid schemes, multi-level marketing traps, and speculative investments can lead to devastating losses.
Always Be Insured
In case it is health, life, or home insurance, shield your hard-earned money from unexpected losses. Ramsey says, “Insurance isn’t sexy, but risk is scary.” Insurance acts as a financial safety net, protecting you from significant losses that could derail your financial stability.
Invest in Yourself
Invest in yourself with training, certifications, or courses. Studies show that employees with specialized knowledge earn 20% more than those without (Pew Research Center). According to a report by the World Economic Forum, 50% of all employees will need reskilling by 2025 to keep up with the changing job market.
Hang Around Good People
Build some serious foundation by networking with a group of financially savvy peers. Ramsey says, “Your network determines your net worth.” Studies show that individuals who actively surround themselves with driven, supportive, and goal-oriented peers are 33% more likely to achieve their personal and professional aspirations.
This is because networks of like-minded people create an environment filled with encouragement, accountability, and shared knowledge. When you engage with people who share similar financial goals, you’re more likely to stay motivated, make smarter decisions, and remain on track toward success. After all, positive influences can inspire positive outcomes.
Track Your Progress
Track your income, expenses, and investments regularly. Personal finance apps like Mint or EveryDollar are excellent tools to stay on track. By regularly checking in on your income, expenses, and savings, you can identify patterns, make adjustments, and celebrate milestones along the way.
For example, setting a monthly budget and reviewing it at the end of each month can help you pinpoint areas where you’re overspending or opportunities to save more. This consistent monitoring builds awareness and also fosters accountability, keeping you motivated to achieve your long-term objectives.
Be Generous with Giving
This is the surprise one, but giving rewires your money relationship. Ramsey pleads to live with an open hand, writing, “Generous people aren’t ruled by their money.” . Acts of giving have been linked to increased happiness, reduced stress, and even improved physical health.
Don’t Be Afraid of Hard Work
Ramsey has frequently stated, “Live like no one else, so later you can live like no one else.” Millionaires are made by hard work and laser-like focus over decades of commitment. Additionally, research from Harvard Business School highlights that grit and resilience often outweigh raw talent when it comes to long-term success—proving that committed hard work can open doors to extraordinary opportunities.
Work with a Financial Advisor
Investment management and wealth building can be overwhelming for you. Ramsey suggests teaming up with a good financial advisor to make your choices. . This partnership can provide peace of mind, allowing you to make confident, informed financial decisions.
Disclaimer: The Finance key does not provide and does not intend to provide financial, investment, tax, or legal advice. Information contained in this article is for informational and educational purposes only. This list is solely the author’s opinion based on research and publicly available information. The inclusion of links to third-party content is not an endorsement by The Finance Key of such content or services. Please do your due diligence and use your discretion.
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