Given the financial melt down of the economy over the past year, it is more important than ever to make wiser financial decisions in both our businesses and our personal lives.

The line between these two are often blurred with small business entrepreneurs, so it is especially important that they concentrate on their own personal finances because it is more likely to have a direct impact on their business operations.

I don’t often talk about personal finances on this blog because I believe there are already several great resources out there that speak to this topic utilizing sound Biblical financial principles.  One of these resources is Dave Ramsey’s Financial Peace University.

Dave Ramsey: 5 Things that Change Your Life with Money

The Featured Video this week is from a presentation Dave Ramsey gave to the Catalyst Conference earlier this year.  Dave Ramsey applies sound Biblical financial principles to help people escape the bondage of debt.

Selected Highlights from the Video

Listed below are some of the quotes and other information from the video that I found helpful. I hope you find them helpful too.

Why Should Small Business Owners Care about Personal Finance?

Often, we tend to think (at least I do) of only the business owner when we talk about personal finances.  How often do we as entrepreneurs give back to our employees with the gift of financial stewardship though?  If this is successful in our own lives, and in our businesses, wouldn’t it also be just as successful in the lives of our employees?

Dave points out in a recent survey of employees that …

• 33% reported that money worries hamper their job performance
• 52% felt they were worse off financially in 2005 than they were in 2004
• 28% believe they are one set back from financial disaster

As small business entrepreneurs, we need to be the type of leaders that inspire our employees and bring out the very best in them.  With the rising cost of fringe benefits like healthcare, we should start looking outside the box to provide resources to our employees that help them make the most of what they already have.

It’s the hottest thing in Human Resources (HR) right now… to bring financial training into the workplace to show that you care about, that you love on, your people.  That you give them something that doesn’t affect your bottom line as a leader, but it changes their life and then they plug into your crusade.  That’s a 360 degree leader! – Dave Ramsey

What a great benefit to give to our employees!

5 Things That Will Change Your Life with Money

Here are the five things that will change your life, and your employee’s lives, with money.

#1 Live on Less Than You Make

Let’s face it.  We love stuff!  One of my favorite quotes from Dave’s radio show is …

Live like nobody else, so that later you can live like nobody else.  When broke people look at you like you are crazy, then you know you are on the right track!

The sad thing is that most of us are up to our eyeballs in debt because we bought stuff that we don’t need, that we couldn’t afford, and that we don’t use (or have time to use) just to impress people that we don’t like and that don’t care anyway.

That’s just insane!  Instead of working to pay MasterCard for last year’s fashion, live on less than you make and later you will be able to pay cash for the good life.

#2 Get Out of Debt!

Did you know that your most powerful wealth building tool is your income?  Before your income gets home it already has someone else’s name on it.  All the money comes in, and all the money goes out.  Only the names are changed to protect the innocent.  That doesn’t work! – Dave Ramsey

That’s what’s going on with your team right there.  You give them a $300 a month raise, and they go get a $400 a month car payment to celebrate.  And then they still can’t figure out what’s going on. – Dave Ramsey

The Famous Debt Snowball

1. Save up a $1,000 Emergency Fund
2. List your debts from smallest payoff balance to the greatest balance.
3. Pay everything you can on the smallest debt first (pay the minimum on the rest).
4. Once the smallest debt is paid off, apply ALL of that payment to the next debt.
5. Repeat this until all debts are paid off.
6. Call Dave’s talk show and scream “I’m debt free” at the top of your lungs while Dave plays the clip of Mel Gibson yelling, ‘FREEDOM” in the background.

You can read more about Dave’s debt snowball here.

#3 Get on a Budget

Make a written budget.  Spend your money “On Paper, On Purpose” before you ever receive it.  This is eye-opening.  Remember that Jesus said where your treasure is there your heart will be also.

A budget is people telling their money what to do, instead of wondering where it went.  – John Maxwell

#4 Save Some Money

Dave recommends 3 to 6 months worth of living expenses set aside in a savings account to use as an umbrella for rainy days.  Given the climbing unemployment rate, and the fact that it looks like it will not be much better very soon, this is very sound advice.

You need a rainy day fund.  You know why?  It’s going to rain!  Money magazine says that 78% of you, and/or the team you lead, 8 out of 10 people on your team are going to have a major negative financial event in any given 10 year period of time. – Dave Ramsey

#5 Giving

If you live on less than you make, get out of debt, spend your money on purpose, and save for the rainy day then you will be able to invest your money long-term with a vision.  What’s this vision?  To give it away making a difference in people’s lives.

Dave says that giving is hard-coded in out DNA.  We long to be able to give to and help others.  It’s also the secret to our success.  Give a to others what you want to receive expecting nothing in return and you will receive what you gave away multiplied many times over.

Related posts:

1. The Law of Sowing and Reaping – Jim Rohn