Dave Ramsey Says Money Is Behavior, Not Math — 5 Bad Habits To Break Today
Most people get the math of personal finance: spend less than you earn, invest it in a couple diversified funds and don’t touch it until retirement. To the extent that math is involved, it’s third-grade math.
But resisting temptation and emotion, day in and day out? That’s much harder.
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Dave Ramsey frequently makes this point. He put it simply on Facebook:
“Personal finance is 80% behavior and only 20% knowledge. You know what to do … JUST DO IT!”
In particular, watch out for these five bad financial habits that keep you from the wealth you want.
1. Ignoring Your Finances
You probably know how much you earned last month. But do you know, to the dollar, how much you spent? How much you saved? How much you invested? Do you know your current net worth and your target nest egg to make working optional?
“People avoid opening their statements, avoid checking their balances and having honest conversations with their partners about money,” said Michael McAuliffe of Family Credit Management. “By the time they call us, many are genuinely shocked by the amount of their debt they’re dealing with.”
Ignoring your finances leads to overspending, overborrowing, lifestyle creep and lack of progress toward financial goals. Like so much else in life, ignore your money and it will go away.
2. Impulse Spending
People spend money when they’re bored, when they’re stressed, when they’re frustrated, when they’re feeling inadequate beside their flashy friends. Justin Moran, founder of Enough Financial Wellness, sees this among clients all the time.
“Companies design their interface to make it easy to spend without thinking,” Moran said.
Platforms like TikTok Shop combine the “keeping up with the Joneses” pressure of social media with one-click checkouts to minimize the friction between “seen” and “sold.”
“Break this by adding a 24-hour wait period for online purchases, deleting your saved credit card information from sites, deleting bad behavior apps like DoorDash or talking through the decision with a friend to make sure you make mindful spending decisions,” said Moran.
3. Comparing Yourself to Others
The curated photos and videos you see on other people’s social media feeds don’t reflect their financial statements. It’s just flash and sizzle: people painting themselves in the best possible light.
“Maybe that amazing vacation they posted about put them deeper into credit card debt," Moran said. "Maybe the down payment on their new house was gifted by their parents. And that can’t-miss-it hair conditioner you saw on Instagram? Likely gifted to the influencer in exchange for PR (whether they disclose that or not).”
People building true wealth don’t typically flash it. Dave Ramsey himself observed on Facebook that the top three car brands driven by millionaires are Toyota, Honda and Ford. Get vividly clear on your financial and lifestyle goals — and the savings rate you need to achieve them.
4. Checking Your Investment Balance Too Often
When people get serious about building wealth, they often go from one extreme to the other, checking their investment portfolio every day or week.
The problem: they panic when their balance swings downward and they sell at a loss.
The kind of investments that build long-term wealth require long-term commitment. If you want to earn 8%-10% returns on stocks and passive real estate investments, you need to leave them untouched for years.
Find the right balance by checking your net worth either monthly or quarterly. If you save and invest 10%-30% of your income each month, your net worth will move up and to the right — even if it occasionally gyrates down before popping back up.
5. Procrastination and Relying on “Future You”
As the old proverb goes, the best time to plant a tree was 20 years ago; the second-best time is now.
Start by writing out a plan specific financial goals and firm dates. Aiming to become debt-free or start investing “someday” doesn’t help in the slightest.
“A goal without a date isn't a plan, it's a mood swing,” said Vignesh Coumarane of InvestEd. “We assume some better-behaved version of us will sort it out later but they never show up. Change this once and for all by automating the plan: schedule the extra debt payments or recurring savings, set up automated investing through a robo-advisor. Make the decision once on a good day, so a bad day you don't undo it.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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