I love talking about money matters with people. In the past two years or so, I've become really passionate about helping other people with their finances by sharing what has worked so well for me (and millions of other people, by the way). My wife and I are on our way to becoming debt free in the next several months, and will then be on the path towards true financial success.
My wife often gives me a hard time for how much I share "the good news of Dave Ramsey." But I sometimes just can't help it! When something works so well, I just have to share it with other people if there's the opportunity to do so.
Some of the facts I share with people seriously shock them sometimes. For example: the average car payment in America is $500 a month. Most people, who live normally, will have some sort of car payment for most of their working life.
But let's say instead of having car payments, you save up enough to buy used cars with cash up front, and the put that $500 a month over a working lifetime into a Roth IRA. With a 10% growth rate over 40 years, you'll earn $7.5 million! I've had so many people floored by that fact.
Let's not get too far ahead here though... First, consider what's needed in order to get to that kind of place. How do people become millionaires in this world? Can anyone make it big with the way this world works? Well, of course you can!
The real question you need to ask about money is not if you can win, but how. In the end, it's really rather simple. As Dave explains in the video above, the determining factor is if you control your money, and control where it goes and what it does.
The correlating factor, the data point that we see tied to success the most; in other words, what do you need to do to be successful with money? The thing we find is that, so and so is successful, so and so is not. What's the difference in the ones who are successful with money and those who aren't?
One of the big things we find is that if we can get people doing a written game plan, a budget, a goal, a blueprint, for your money, on purpose, on paper before the month begins, those are the ones that win with money.
That's it, people! When you make a game plan for your money, when you tell it where to go instead of wondering where it went, that is how you win with money.
No one wanders into financial success, no one randomly wakes up one morning and says "hey, I'm a millionaire, how did that happen?" People become successful and wealthy by making a plan and carrying it out.
A large portion of that plan is to have a budget each month, to know what comes in and what goes out, and to manage it so that income is larger than outgo. Each dollar must have an assignment, otherwise those unassigned dollars will leave.
I've learned this firsthand. Our budgeting system is the envelope system, where we get cash for our expenses, put them into physical assignment envelopes, and only take from those envelopes for those things. Now, bills like rent, utilities, car insurance, phone, etc., those are generally on auto pay. But for categories like food, entertainment, car maintenance, miscellaneous, those are cash envelope categories, and we make sure we do not exceed those categories.
I try to share this with as many people as I can because it simply works. My wife and I are on a game plan right now. We are going to get out of debt this year, will build an emergency fund of 3 to 6 months of expenses, and then will invest 15% of our income into retirement for the next 40 years. Along the way, we will be buying a house at some point, and we will pay off the house early so that we can actually own our home.
If anyone does that, I don't care what your demographic is, you will win with money. It's a proven strategy that works. And it all starts with something as simple as writing down a budget each month and sticking to it.