'Here's what's stupid about them': Dave Ramsey dunks on finance writers who make things complicated — and explains how you can earn enough to retire using '6th-grade math'

Writers are not God

Financial advisers and writers may try to outline your financial future based on precise calculations, but Ramsey doesn’t believe it’s helpful because life is unpredictable.

“These guys, when they’re writing these financial articles, act like if you miss [something] by 0.2% you’re not going to make it,” he said. “You can’t forecast this within 0.2%. Unless you’re God, you don’t know what’s going to happen. And I promise you, God is not writing financial articles.”

He highlights the fact that even his current financial situation was unpredictable. After four decades in the industry, Ramsey is now a multimillionaire and a household name. He’s written several bestselling books and has millions of followers who tune into his show and read his published articles. However, all this success would have been difficult to predict, especially after he filed for bankruptcy in 1988.

“I’ve got hundreds of millions of dollars’ worth of real estate today,” he said. “None of that was in my equation.”

Instead of focusing on exact numbers, Ramsey suggests setting a broad target and working toward it with margins of error in mind.

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The importance of averages

You can’t predict where you’ll be in a few decades. Economic crises, personal lifestyle changes and the success or failure of business ventures are all beyond your control.

So, instead of focusing on an air-tight financial plan, Ramsey recommends setting a long-term target and working with assumptions based on averages. For instance, a saver could assume they will earn the average salary in their industry, retire at an average age, save an average amount every month and earn the average historical return on stocks and bonds throughout their career.

The S&P 500 has delivered an average annual return of 11.36% since 1983, according to Official Data. Adjusted for inflation, the real return is 8.31%. So, let’s say you earn a salary of $60,000, if you saved 10% of that amount ($6,000) and consistently invested it in the S&P 500 for the last 40 years at an annualized interest rate of 11.36%, those savings would be worth around $4 million after 40 years when compounded annually.

Put simply, a 30-year-old can be a millionaire by age 70 simply by earning, saving and investing based on average assumptions.

Of course, your personal situation could be better or worse than average. And past performance is no indication of future returns, so inflation could be higher or stock returns could be lower than expected. But these average assumptions should help any saver create some financial security even if the million-dollar target remains beyond reach.

Alternatively, if you get lucky and experience a windfall or better-than-expected stock performance, conservative estimates will bolster your financial security even further.

Navigating your personal finances is a lot like steering a boat toward the horizon. You may not see the exact landing spot, but by heading in the general direction, and making minor course corrections along the way, you’ll eventually reach your destination.