Personal finance expert Dave Ramsey says many Americans fail to build wealth despite earning a decent income because they don't intentionally manage their money or practice financial discipline.
Talking about the importance of intentionality and paying attention to one's finances on "The Ramsey Show," he said people often end up "broke" because they don't plan their spending carefully and move from one impulse to the next instead of managing their money thoughtfully.
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"Bother to care, tell your money what to do," Ramsey said. "Don’t be sitting down and looking at your tax return and going, ‘We made $85,000, would somebody tell me where it went?' Well, you lost it because you had no idea what you were doing; you were lost as a ball in tall weeds. You watch 38 hours of television every week. You know exactly who got thrown off the island, but you don’t know what happened to your $85,000."
‘You Live Impulse to Impulse'
Ramsey said that deliberately focusing on something and dedicating time leads to real results. He thinks people making as much as $150,000 can still have "nothing" because they live on impulse.
"You live impulse to impulse," Ramsey said. "Thank God it’s Friday, Oh God it’s Monday. I know I used to do this stuff, and you’re freaking broke. Make $80,000 a year, got nothing. Make $70,000 a year, $50,000 a year, $150,000 a year, got nothing, because you didn’t bother. Intentionality moves the needle."
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Ramsey said it's possible to retire a millionaire by consistently investing just $100 a month over several decades.
"One hundred dollars a month from age 25 to age 65 in a decent growth stock mutual fund, put it in a Roth IRA, you’re going to have $1,176,000 if it averages 12%," Ramsey said. "There’s no excuse to not retire a millionaire in this culture."
‘I Know What Stupid Looks Like'
Ramsey thinks people are unable to become wealthy because they are not taking control of their finances and instead look for external factors to blame for their lack of wealth. He said that when he was struggling financially, he used to blame others, but eventually realized he had to take responsibility for his mistakes and fix them.
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"It’s just pitiful," Ramsey said. "I used to do it too. I know what pitiful looks like. I know what stupid looks like. I used to see him in the mirror pretty regularly. When I went broke, I sat around and whined, and blamed everybody else, acted like it’s somebody else’s fault. And then one day I grew up, realized it was my fault."
Ramsey advised his followers to create a plan for each month and strictly allocate their funds for every expense in advance.
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