The 3 Basic Money Skills You Need To Know

Summary

In this video, Dave Ramsey answers a listener’s question about struggling to spend money, even when they can afford to do so. Ricky, from Washington, has saved enough to upgrade his car but finds it difficult to part with the money due to emotional attachment to savings. Ramsey discusses the psychological differences between spenders and savers, and emphasizes the importance of balancing saving, spending, and giving. He encourages viewers to practice generosity to help release their grip on money, and underscores that enjoying life with money is essential once financial goals are met.

Takeaways

• 😀 People often struggle to spend money even after achieving financial security, especially if they've been wired as savers.
• 😀 The emotional discomfort of letting go of saved money is common, even for those with a fully funded emergency fund.
• 😀 Money behavior is often influenced by whether someone is a spender or a saver, and this dynamic can create tension in financial decisions.
• 😀 Savers derive comfort from having a financial cushion, while spenders find more comfort in enjoying their money on lifestyle purchases.
• 😀 Financial freedom involves finding a balance between spending, saving, and giving, all of which play a role in financial well-being.
• 😀 Generosity can help people release their grip on money, making it easier to enjoy their wealth once they’re comfortable giving.
• 😀 Spending on things like a reliable car or travel is okay once basic financial goals (emergency fund, debt payoff) are met.
• 😀 It’s important to enjoy life and the rewards of hard work, not just save indefinitely for the future.
• 😀 Building wealth allows for more freedom in spending and giving, which enhances your overall quality of life.
• 😀 A healthy financial mindset involves giving, saving, and spending in ways that align with personal values and financial goals.

Q & A

Why is it hard for people to spend money even when they have it?

It’s a common struggle for people who are wired as savers. They feel a sense of security from having extra money saved, and releasing it, even for necessary expenses, can feel emotionally challenging. This difficulty is rooted in the mindset of wanting to preserve that sense of financial security.

What are the three basic money skills mentioned in the script?

The three basic money skills are: 1) Spending properly and enjoying money responsibly, 2) Saving for emergencies, retirement, and building wealth, 3) Giving generously, which can bring fulfillment and change lives.

How does giving money help people become more comfortable with spending?

Giving helps release the grip that money has on a person. When people give, it can ease the discomfort of spending on themselves, as it creates a sense of fulfillment and generosity, which shifts their mindset and makes it easier to enjoy their money.

What is the emotional aspect of the struggle to spend money?

The emotional struggle comes from the security that saved money provides. For savers, spending money—especially on bigger purchases like cars—can trigger anxiety or guilt, as they feel like they’re losing the safety net they've worked hard to build.

How does the speaker describe their own relationship with money?

The speaker describes themselves as a spender who initially struggled with saving. They found that once they started saving and investing, they could enjoy spending more without feeling guilty. Their motivation to save was to be able to spend and give more, rather than for the sake of accumulating wealth alone.

What does the speaker mean when they say 'money's fun if you've got some'?

The speaker is highlighting that money should be enjoyed once you’ve reached a stable financial position. After securing emergency funds and savings goals, it’s important to enjoy some of the rewards of your hard work, like buying a reliable car or indulging in life’s pleasures.

How can spending responsibly and enjoying life with money be balanced?

Spending should be balanced with saving and giving. After securing financial stability, you can enjoy money on lifestyle purchases, travel, and experiences while also giving to others and investing for the future. This balance creates a fulfilling, well-rounded financial life.

Why does the speaker encourage people to buy a reliable car?

The speaker encourages buying a reliable car because it contributes to a more stable and stress-free life. Continuing to drive unreliable cars, even when the money is available to buy something better, may signal a fear of spending or a reluctance to enjoy the financial success one has achieved.

What role does mindset play in managing money according to the speaker?

Mindset plays a crucial role in managing money. The speaker emphasizes that once people overcome their emotional attachment to saving and start thinking about money as a tool to enhance life and help others, it becomes easier to enjoy and spend money responsibly.

What does the speaker suggest about people who have a lot of money but spend it in a balanced way?

The speaker provides an example of a wealthy individual who spends a proportionate amount of their wealth on a house. The key is balance—if someone has wealth but spends responsibly, giving generously and investing wisely, their financial decisions are considered healthy and aligned with their values.