Dave Ramsey’s Baby Steps Explored: A Must-Read For Everyone

Manage Your Money, Don’t Let It Manage You.

Dave Ramsey is the author of The Total Money Makeover and compiled the 7 Baby Steps, a financial program designed to teach you how to save for emergencies, pay off all your debt, and build wealth. The 7 Baby Steps teaches you to live within your means, but to build beyond them.

  • “If you will live like no one else, later you can live like no one else.” – Dave Ramsey
  • “Act your wage.” – Dave Ramsey
  • “You must gain control over your money or the lack of it will forever control you.” – Dave Ramsey
  • “Change is painful. Few people have the courage to seek out change. Most people won’t change until the pain of where they are exceeds the pain of change.” – Dave Ramsey
  • “A budget is telling your money where to go instead of wondering where it went.” – Dave Ramsey


Baby Step 1: Create a Budget and Build a $1,000 Emergency Fund.

Take control of your money by creating a budget. Write down a comprehensive list of all expenses including bills, necessities, eating out, savings, etc., and allot an amount that is designated to each expense. The key is control, discipline. Stick to the budget that you set for each expense.

Research has shown that the sum of $1,000 covers the cost of most emergencies. In order to avoid having to beg, borrow, or sell something when life happens, budget and set aside money that goes strictly toward building an Emergency fund. Because it is hard to grasp the concept of setting aside any sum when you are on a tight budget, choose a sum (start small and gradually increase it) and have it set up to automatically transfer to your savings account. You’ll be amazed at how you adjust without that amount at your disposal. Put yourself in a position to handle emergencies worry-free.

Baby Step 2: Use the Debt Snowball to Pay Off All Debt Except Your House.

Make a list of all of your debts, regardless of interest rate. Pay only the required payment on each of them; except, beginning with the smallest, pay all you can toward it until you pay it off. Then tackle the next smaller debt in the same manner. It is referred to as the debt snowball because as you pay off each debt, you have more money to pay toward the next.

Baby Step 3: Fully Fund Your Emergency Fund by Saving 3-6 Months of Expenses.

Now that you’ve conquered saving $1,000 for an emergency, it’s time to focus on saving for an unexpected event that lasts an extended period of time (such as surgery, a serious accident, etc.). In the event of such an occurrence, you will need enough money saved to cover the possibility of being without income for at least three, but up to six months or more. Do this by increasing the amount of the automatic withdrawal going to your Emergency fund and decreasing spending wherever possible. Be mindful this money can earn a high rate of return if placed in a higher-yielding savings account.

Baby Step 4: Invest 15% of Household Income for Retirement.

Investing toward retirement is something everyone should do as soon as they start working. Tax deferred accounts like IRAs and 401(k) are ideal. The money in these accounts should be invested in mutual funds, exchange-traded funds (ETFs), or index funds. The surest way to build true long-term wealth is to invest in the stock market. If your place of employment offers 401(k) with matching funds, take advantage of that; you do not want to leave free money on the table.

Baby Step 5: Save for Your Kids’ College Education.

If you have children, you need to start stashing funds toward the cost of college expenses. Research educational savings accounts and the 529 College Saving Plan (keep in mind that money placed in a 529 savings account can only be used to pay college expenses). Have early conversations with your children about college as some children have no desire to extend their education, and these funds can be put to better use.

Baby Step 6: Pay Off Your House Early.

Make accelerated mortgage payments or pay extra each month. Research refinancing or other ways of changing the terms of your mortgage so you can pay it off sooner. Be sure to check with the holder of your mortgage to ensure that there are no prepayment penalties. If your mortgage has a fixed relatively low interest rate, do weigh the pros and cons of paying it off early. You could invest that extra money in mutual funds, stocks, and other equities. However, paying off your mortgage will bring financial freedom and peace of mind.

Baby Step 7: Build Wealth and Give.

Once you reach this step you should be debt-free. Now you can be a blessing by giving to others, including family, friends, charities, etc. Being able to give and help others is the best aspect of having money.


Dave Ramsey’s 7 Baby Steps offers sound financial advice, and is an excellent blueprint to follow while creating a financial game plan that works for you. Keeping in mind, the pace at which you complete the steps varies depending on your circumstances. Read the book for in-depth details of each step.

For expert financial guidance, contact Angenett Curry, owner of Prospective Vision Solutions Financial Coaching and Services (P.V.S). P.V.S. offers credit repair and financial literary workshops, including a Vision board workshop which will teach you how to create a unique vision board that is a visual road map of your goals and dreams. In order to carry out the 7 Baby Steps, financial literacy is key. Let us show you how to develop your financial game plan and help make your life prosperous and fulfilling. Click the following link to get in touch with us today.

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  • “The weird thing is that the more efficient, on task, on goal you are with your time, the more energy you have. Working with no traction, or for that matter simply wasting a day, does not relax you, it drains you. Strange as it may seem, when you work a daily plan in pursuit of your written goals that flow from your mission statement born of your vision for living your dreams, you are energized after a tough long day.”” – Dave Ramsey
  • “Pray like it all depends on God, but work like it all depends on you.” – Dave Ramsey


1) https://www.ramseysolutions.com/ramseyplus/financial-peace?
2) https://www.ramseysolutions.com/dave-ramsey-7-baby-steps
3) https://www.goodreads.com/author/quotes/44526.Dave_Ramsey
4) https://www.jackiebeck.com/dave-ramseys-baby-steps/
5) https://www.bills.com/personal-finance/dave-ramsey-baby-steps


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