The one money mistake you make that could derail your financial future

A recent survey reveals that 51% of Americans have spent more money than they can afford to impress others, with a high trend among young people and men. The result of this behavior is dire, with many spiraling into financial maelstroms with no apparent exit.

“Most people don’t have anything written down as a budget,” Ramsey said in an interview with TheStreet. “They have no idea where their money is going. When you start being intentional about it, it’s an activity of self-awareness. Look at what we spend here to eat out.”

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He didn’t mince words when he assessed the growing reliance on online shopping and frictionless spending. “Personal finance is about 80% behavior. It’s only about 20% math or head knowledge,” he said. “But what happens is we start spending money we don’t have. We feel trapped like we have to keep up — or keep repeatedly hitting the Amazon Prime button and buying extra stuff.”

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The basis of Ramsey’s advice can be summed up in one word: awareness. He reflected on his own experience and shared, “One of the things that happened to me in my 20s is that I was broke and I lost everything. Through that experience, I looked in the mirror and found the problem: me. I was the idiot. I was the problem.”

But Ramsey’s message wasn’t all negative. He emphasized that people can control their financial future. “The good news is that I also found the solution. I can change it tomorrow. I can decide. I don’t spend money I don’t have anymore,” he said.

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The reality of overspending is even more troubling when juxtaposed with McKinsey’s findings, which indicate that while personal income has increased, consumers plan to cut back on discretionary purchases due to falling disposable income. However, dining out is a significant splurge category for many.

“A guy sitting in one of our groups said, ‘I think we found out why we don’t have any retirement money when we did our budget. I think we’re eating them,” Ramsey said. “And that’s exactly it. They go out to eat every night.”

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Ramsey made it clear that he’s not opposed to dining out. “I love restaurants,” he said. “But you can’t go out to eat every night if you’re broke. So again, all these things are about self-awareness.”

The story continues

The clear warning signs have not deterred many Americans from living beyond their means. Statistics reveal that half of US adults carry credit card debt from month to month—a burden that often seems insurmountable.

Ramsey doesn’t shy away from offering a good dose of tough love, insisting that more often than not, it’s just the approach needed to push people to action. “People call it tough love, but I just love you enough to tell you the truth and no one else will,” he said. “And sometimes that sounds harsh to people, but it’s not harsh. I care deeply that you understand that.”

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This article Dave Ramsey Warns: The One Money Mistake You’re Making That Could Derail Your Financial Future originally appeared on Benzinga.com

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