Dave Ramsey: Why What You Actually Do With Your Money Matters More Than Your Salary

Dave Ramsey is known for his blunt financial advice, and in his recent video, Ramsey explained that income alone doesn’t create wealth. What matters most is how you handle the money you already make.

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In other words, he believes that acting and looking rich is less important than building wealth and a sustainable financial future. Here are the key takeaways from his message.

Act Your Wage

“Stop acting rich,” he said. “You don’t have any stinkin’ money. Act like a broke person.”

That may sound pretty harsh, but Ramsey’s tough love is meant to warn you against the trap of trying to look wealthy. If you spend all your money on flashy cars, expensive vacations and designer brands just to impress people on social media, you’ll end up broke no matter how big your paycheck. Even a six-figure salary can’t save someone who spends beyond their means.

“Act your freaking wage,” Ramsey said in another one of his videos. “Stop buying stuff you can’t afford with money you don’t have to impress people you don’t even really like. It’s a signal you’re stupid. It’s not a signal you’re rich.”

The core of Ramsey’s point is that your behavior matters more than what you earn. Budgeting, saving and investing consistently will build more wealth than a big paycheck paired with reckless spending.

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What Does It Mean To Act Your Wage?

When Ramsey said “act your wage,” he’s talking about living within the reality of your income, and not the lifestyle you wish you had or the one you think other people expect you to have. Here are some financial habits that Dave Ramsey would approve of.

Live below your means. Make sure you’re spending less than your income each month so there’s room to save and invest. Use a budgeting app like EveryDollar or YNAB to help you keep track of your expenses. Pay off high-interest debt. High-interest credit card debt and personal loans can make it really hard to save each month since a good chunk of your income is going toward paying down interest. Focus on eliminating these debts as soon as you can so they won’t keep dragging you down. Build an emergency fund. Financial experts recommend having an emergency fund worth three to six months of your monthly expenses. So if you’re spending $2,000 each month, your emergency fund should be anywhere from $6,000 to $12,000. Automate your savings. It can be challenging to rely on willpower alone to make good money decisions. By automating your savings, you can remove the mental load and the need to consciously decide how much you’ll save each month.

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Wealth Comes from Discipline

Earning more money is awesome, but it’s meaningless if you have poor financial habits and are spending more than you earn. Whether you bring in $40,000 or $400,000, the choices you make with each paycheck will always matter more than the paycheck itself.

So focus on cultivating healthy money habits and building a budget that works for you and your lifestyle. Consider meeting with a financial planner or coach if you need help managing your money.

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This article originally appeared on GOBankingRates.com: Dave Ramsey: Why What You Actually Do With Your Money Matters More Than Your Salary

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