Dave Ramsey Recommends Following These 5 Habits of Millionaires

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Could adopting these habits help you become wealthy too?

Key points

  • Dave Ramsey suggests adopting certain habits of millionaires.
  • These include reading often and avoiding debt.
  • Following Ramsey's advice may not always work in every situation.

Wealthy people often approach their financial situations differently than people who struggle more with their money. For those who are hoping to become rich themselves, it could be worth observing what financially successful people do.

In fact, personal finance guru Dave Ramsey has suggested following five key habits that are common among millionaires. Here's a closer look at what they are.

These are the five habits of millionaires Dave Ramsey believes you should adopt

The five habits of millionaires that Ramsey is a proponent of include the following:

  1. Reading often: Using free time to read enables wealthy people to become leaders and to grow their knowledge. Ramsey believes reading often is one habit that helps people build wealth.
  2. Embracing delayed gratification: By making sacrifices in the short-term, wealthy people are able to achieve long-term success. This can include living in smaller homes or driving cheaper used cars rather than focusing on short-term pleasures.
  3. Avoiding debt: Ramsey believes it is a myth that millionaires use debt as a tool, and he suggests that instead of borrowing, it's best to save up and pay cash for purchases.
  4. Budgeting: Ramsey believes it's impossible to build a million-dollar net worth without living on a budget that provides you with a financial plan for success.
  5. Giving to worthy causes: Ramsey actually suggests that a desire to give to others is one reason why wealthy people continue building wealth even after they've amassed a lot of riches.

Should you listen to Ramsey's advice?

Adopting many of these habits can only improve your personal and financial situation. After all, no one ever ended up worse off by improving their knowledge through reading. And finding a budgeting method that works can definitely help you to make better use of your money by taking control of where it's going and ensuring you're spending it on things you value most.

But, Ramsey's advice tends to be a little too general. His suggestion to avoid debt may be grounded more in his own beliefs than in the actual habits of most millionaires. Ramsey is a vocal proponent of avoiding debt of any sort, but the reality is that many wealthy people do use debt strategically.

Ramsey gave the example of Warren Buffett as a billionaire who has followed these smart habits because he has a modest home in Omaha. But, Buffett took out a mortgage to buy a second home in 1971, rather than paying cash for it -- even though he could easily have afforded to do so. And he did that because, as he explained, he "could probably do better with the money than have it be an all equity purchase of the house."

Buffett put down just $30,000 on the $150,000 home he bought. He borrowed the rest, and he bought shares of Berkshire with the money he didn't spend on the home. The shares he purchased were recently valued at around $750 million -- which is a lot more impressive of a return on investment than he'd have gotten had he simply avoided mortgage interest.

This example shows why there's no one-size fits all approach to building wealth and why following blanket rules like "avoiding debt" may not always make sense. Instead, it's important to consider the opportunity cost of each financial decision you make and to devise financial habits that work for your specific situation.

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