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Dave Says – Try to help him, but move slowly

Need some financial advice? Debt and income crisis? Pay off the house mortgage first? Check cashing? Taxes? Credit Cards? Check out what folks are asking Dave Ramsey.

Try to help him, but move slowly

Dear Dave,
My boyfriend lives in a different state, and I’m planning to move there when we get married. I know I love him, but sometimes he is not what I consider to be responsible with money. There have been times in the past when he has taken out small loans or paid bills late in order to buy something he wanted. How can I talk to him about this?
Heather

Dear Heather,
If it were me, I think I’d make sure things move a little more slowly in the relationship until he gets his spending under control. Sometimes when things like this happen it’s just a situation where a person needs to learn the benefits of budgeting and handling money in a mature, responsible way. You can’t do something if you haven’t been taught how to do it, and hopefully this is the case with your boyfriend.

You mentioned marriage, so that tells me you’re both taking this relationship seriously—that you’re in the process of making sure you want to spend the rest of your lives with each other. Bring it up gently, and tell him why you’re concerned. Share your hopes and dreams for the future with him. You might even offer to help him make out a monthly budget. That way, once he understands the process and value of spending money on paper before the month begins, it will be easier for him to stick to it.

Good luck, Heather!
—Dave

READ: Five tips for buying your first home

 

Don’t let budgeting myths sabotage your finances

Dear Dave,
I made a resolution to start following your plan in 2021. I talked to my parents about this, and while they like some parts of your teaching, they don’t think living on a budget is necessary if you make good money. They also said budgeting is extremely difficult. Are they right?
Jensen

 

Dear Jensen,
For whatever reason, I’m afraid your parents are way off base on this one. A lot of people trash talk the idea of budgeting, and make up all kinds of excuses for not living on one. The truth is a written, monthly budget is essential when it comes to beating debt and winning with money—period. It’s the map you need to get where you want to go in your financial journey.

There are lots of myths, and just some bad information, out there where living on a budget is concerned. Making a budget isn’t rocket science. If you can do basic math, you can create a budget. Your income minus your outgo needs to equal zero. That’s it! You might spend a couple of hours tallying all your expenses when you first start, but the process soon becomes faster and easier. All it takes is a little practice.

If you think doing a budget is only for people who have trouble making ends meet, think again. My wife and I have lived by a written, monthly budget every single month for about 30 years. It doesn’t matter whether you’re a multi-millionaire, or if you have just $100 to your name, knowing exactly how much money you have—and where it’s going—is an essential part of managing your finances accurately and successfully.

Believe me, I hear dozens of other excuses, too. You’d be amazed at how many people don’t make a budget every month because they think it’s “boring.” Others claim they can do their budgets in their heads. I don’t think so! For a budget to really work, it needs to be something you can track down to the last penny. And if you’re married and saying you can do a monthly budget in your head, that means only one of you is involved in the decision making. That’s a recipe for disaster in your finances and your relationship.

A budget represents your financial game plan for the upcoming month and years ahead. As Benjamin Franklin said, “If you fail to plan, you are planning to fail.”
—Dave

First, define long term

Dear Dave,
What is your advice when it comes to investing a one-time, lump sum of $4,000 for a long period of time? I recently received an inheritance from an uncle who passed away, and I want to make the money work for me. I’m 33 and my home is paid for, plus I have no debt and an emergency fund of six months of expenses. I am also maxing out my 401(k) at work. Thank you for your advice.
Pat

Dear Pat,
I’m sorry to hear about your uncle, but I’m sure he was proud of the responsible young man you’ve become. You’ve made some very mature decisions where your finances are concerned, and as a result you’re at a great spot in life.

When it comes to investing, I consider a “long period of time” to be 10 years or more. If this is the case with you, I’d suggest a good mutual fund with a solid track record of between 15 and 20 years.

I know some folks like to take chances and play single stocks on a one-time investment like this, but I don’t think that’s a good idea. Single stocks just don’t consistently generate the kinds of returns a good mutual fund will over time.
— Dave

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