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Live Life Like A Millionaire: Breaking Down The Dave Ramsey Budget

by Oct 7, 20210 comments

Does a person need to be a millionaire to follow the dave ramsey budget? If I asked you to name me a millionaire, who would come to mind? A television star like Oprah Winfrey?

Maybe a professional athlete like LeBron James or Serena Williams?

For me, I would have to say Dave Ramsey. He’s a financial advisor who uses his radio show and books to help people overcome debt– me included!

Making my budget according to Dave Ramsey and his principles helped make me who I am today.

So what’s so great about him? Let’s take a look at Dave Ramsey’s budget and see just how this millionaire makes his money work for him:

Who is Dave Ramsey?

If you didn’t already know, Dave Ramsey is one of the most famous financial advisors in the US. As a successful businessman and investor, he has a net worth of over $200 million.

He’s authored a number of books such as The Financial Peace Planner and The Total Money Makeover. Through his platforms, he has helped thousands learn how to spend and save their money.

In fact, his advice even helped me pay off $200,000 in debt. You can read more on that topic here.

How To Create a Budget

Before we break down your budget into percentages, we first have to determine your monthly net income. This means all the money you earn every month minus any mandatory subtractions, like taxes. If you want to have a bigger budget, then you’ll have to have more and/or better sources of income.

Once you have your net income, then you can break everything down into percentages. Make sure to leave every single dollar accounted for.

Breaking Down The Dave Ramsey Budget

When you’re learning a new skill, it’s good practice to learn from the experts and see how they do it. So let’s learn from the best, sis, and break down Dave Ramsey’s budget:

Food – 5-15%

Although you eat every day, that doesn’t mean you have to spend a huge chunk of money on food. Your food budget includes the money you spend on both groceries AND eating out. If you want tips on how to lower your monthly food spendings, be sure to check out my article here.

Savings – 10-15%

Setting aside money in a savings account is incredibly important. Not only should you be saving for retirement, but also for any emergencies that may suddenly come up. If you’re already thinking about retirement, then you should read my article on the various retirement accounts.

Housing – 25%

Ideally, you should only have to spend this much on mortgage and rent payments. However, this can be challenging if you live in an expensive area like Seattle. You should still try to minimize housing costs though, as spending more can hurt your other budget categories, like savings.

Transportation – 10%

For some people, this budget category is unavoidable but you’d want this to be as low as possible. Instead of taking an Uber everywhere, try to mix in some walking and other means of public transport.

Clothing – 2-7%

New clothes every month isn’t a necessity for most people. It would only really be worth spending so much on clothes unless your profession demands it. If you want to learn how to decrease your spending on clothes, check out my article on the topic here.

Health – 5-10%

Your health is one of the most important things you can spend on. Over-the-counter meds are essential if you can’t miss a day of work. Check if your workplace also offers healthcare benefits and see if you use those as well.

Charity – 10-15%

Unlike other financial advisors, Dave Ramsey actually suggests giving part of your income away, and I agree. Donating to charity, even just a little bit, is a great way to help other people while also keeping yourself grounded.

Personal – 10%

We all have things that we want to buy, and that’s okay. Spending and investing in your hobbies means investing in yourself and your happiness. Just be sure to not go overboard and spend too much.

Why You Need a Budget

The hardest part comes last– sticking to your budget. At first, having a budget can feel like a huge burden. It can be very stressful to make sure that you’re not going a cent over. 

But whatever you do, don’t give in to any temptation to spend beyond your means. Believe me, it’ll only bite you in the back later on. You need to have self-control during the first few months of living on a budget, and then it’ll get easier.

The best way to keep yourself from spending aimlessly is to remind yourself why it’s important to track your cash. Budgeting every single cent will help you build the habits you need to reach your long-term financial goals. If you hope to buy your own house or car one day, then it’s better to build this mindset ASAP.

After a while, you’ll find that living with a budget is a lot easier than you might think. You’ll have to make sacrifices, like fewer shopping trips or UberEats orders but it’s better to delay your gratification. Believe me, sis, you’ll be doing yourself a favor if you keep your eyes on the prize: your financial freedom.

If you enjoyed that article and want to talk money with me some more, you should join my financial freebies fam. I give weekly personal financial tips for my queens. Financial freedom is a goal that’s on your mind every day, and we help keep it front and center.

Financial freedom is a goal that’s on your mind every day, and we help keep it front and center.

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