5 Steps to Change Your Life with Money

by Brad Harmon on November 8, 2009 in Stewardship

5 Steps to Change Your Life with Money | marketplace christianity

Photo courtesy of iStockphoto

Given the financial melt down of the economy over the past year, it’s more critical than ever to make wiser financial decisions in both our businesses and our personal lives. For the small business entrepreneur, these lines are often blurred.

It’s especially important that they concentrate on their own personal finances since those finances are more likely to have a direct impact on their business operations than owners of larger businesses.

I don’t often talk about personal finances on this blog because there are several great resources already that utilize sound Biblical financial principles.  Dave Ramsey’s Financial Peace University is one such resource.

Dave Ramsey: 5 Things that Change Your Life with Money

The Featured Video this week is a presentation by Dave Ramsey to the Catalyst Conference earlier this year.  Dave applies sound Biblical financial principles to help people escape the bondage of debt.

Selected Highlights from the Video

Listed below are some of the quotes and other information from the video that I found helpful. I hope you find them helpful too.

Why Should Small Business Owners Care about Personal Finance?

How often do we, as entrepreneurs, give back to our employees with the gift of financial stewardship?  If this is successful in our own lives, and in our businesses, wouldn’t it also be just as successful in the lives of our employees?

Dave points out in a recent survey of employees that …

  • 33% reported that money worries hamper their job performance
  • 52% felt they were worse off financially in 2005 than they were in 2004
  • 28% believe they are one set back from financial disaster

We need to be the type of leaders that inspire our employees bringing out the very best in them.  With the rising cost of fringe benefits like healthcare, we should start looking outside the box to provide resources to our employees that help them make the most of what they already have.

It’s the hottest thing in Human Resources (HR) right now… to bring financial training into the workplace to show that you care about, that you love on, your people.  That you give them something that doesn’t affect your bottom line as a leader, but it changes their life and then they plug into your crusade.  That’s a 360 degree leader! – Dave Ramsey

What a great benefit to give to our employees!  If we train them to be better stewards of their own money they will be better stewards of ours as well.

5 Things That Will Change Your Life with Money

Here are the five things that Dave talks about in the video that will change your life, and your employee’s lives, with money.

#1 Live on Less Than You Make

Let’s face it.  We love stuff!  One of my favorite quotes from Dave’s radio show is …

Live like nobody else, so that later you can live like nobody else.  When broke people look at you like you are crazy, then you know you are on the right track!

The sad thing is that most of us are up to our eyeballs in debt because we bought stuff that we don’t need, that we couldn’t afford, and that we don’t use (or have time to use) just to impress people that we don’t like and that don’t care anyway.

That’s just insane!  Instead of working to pay MasterCard for last year’s fashion, live on less than you make and later you will be able to pay cash for the good life.

#2 Get Out of Debt!

Did you know that your most powerful wealth building tool is your income?  Before your income gets home it already has someone else’s name on it.  All the money comes in, and all the money goes out.  Only the names are changed to protect the innocent.  That doesn’t work! – Dave Ramsey

That’s what’s going on with your team right there.  You give them a $300 a month raise, and they go get a $400 a month car payment to celebrate.  And then they still can’t figure out what’s going on. – Dave Ramsey

The Famous Debt Snowball

  1. Save up a $1,000 Emergency Fund.
  2. List your debts from smallest payoff balance to the greatest balance.
  3. Pay everything you can on the smallest debt first (pay the minimum on the rest).
  4. Once the smallest debt is paid off, apply ALL of that payment to the next debt.
  5. Repeat this until all debts are paid off.
  6. Call Dave’s talk show and scream “I’m debt free” at the top of your lungs.

I encourage you to read more about Dave’s debt snowball.  It’ll be one of the best decisions you’ve ever made.

#3 Get on a Budget

Make a written budget.  Spend your money “On Paper, On Purpose” before you ever receive it.  This is eye-opening.  Remember that Jesus said where your treasure is there your heart will be also.

A budget is people telling their money what to do, instead of wondering where it went.  – John Maxwell

#4 Save Some Money

Dave recommends 3 to 6 months worth of living expenses set aside in a savings account to use as an umbrella for rainy days.  Given the climbing unemployment rate, and the fact that it looks like it will not be much better very soon, this is very sound advice.

You need a rainy day fund.  You know why?  It’s going to rain!  Money magazine says that 78% of you, and/or the team you lead, 8 out of 10 people on your team are going to have a major negative financial event in any given 10 year period of time. – Dave Ramsey

#5 Giving

If you live on less than you make, get out of debt, spend your money on purpose, and save for the rainy day then you will be able to invest your money long-term with a vision.  What’s this vision?  To give it away making a difference in people’s lives.

Dave says that giving is hard-coded in out DNA.  We long to be able to give to and help others.  It’s also the secret to our success.  Give a to others what you want to receive expecting nothing in return and you will receive what you gave away multiplied many times over.

What Did You Think?

Pretty sound advice, eh?  Have you tried Dave’s tips before?  If so, how did they work for you?  Have some tips that Dave didn’t mention?  Share them with us.

{ 6 comments… read them below or add one }

Dana @ Online Knowledge November 8, 2009 at 6:37 pm

Dave surely share a great thing here. I am start doing this tips now because i think the tips can help me handle my life to better state.

Reply

Brad Harmon November 8, 2009 at 8:12 pm

When Larry Burkett passed away, I wondered who would take up the mantle of personal finance from a Biblical perspective. I think Dave Ramsey filled much of that vacuum, and balances his message for both a Christian and secular audience (much like Zig Ziglar does). He is one of my favorite speakers.

Reply

Paula November 12, 2009 at 5:40 am

I like the idea of saving 3-6 months worth of living expenses for a rainy day. Most people I know live from week to week.

Reply

Brad Harmon November 12, 2009 at 4:42 pm

Paula,

The statistics on how many people live paycheck to paycheck is just staggering. It is like a house of cards – one bad thing can bring it all down quickly.

Dave likes to call this emergency fund Murphy repellent, because it seems like Murphy's Law attacks those less able to cope with it. More likely, it is just that if you are prepared then it is more of an inconvenience than a catastrophe.

Brad

Reply

Qianli December 13, 2009 at 1:05 am

It is very important to have savings.It is sad that most American that I know can’t save because they have too many monthly payments.they can’t even save 200 dollars a week.
As for me,I am struggling to pay the bills too,however,I always try to save some ,no matter it is 50 dollars a month or a hundred dollars a month.

Reply

AggieBrad December 13, 2009 at 7:00 am

It's amazing how much "murphy's repellent" an emergency fund provides you. The average American credit card balance keeps increasing every year. At some point, you just have to stop and realize the madness surrounding credit cards. Dave has a great way of cutting through it all.

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