Dave Ramsey's 7 Baby Steps (2024)

Dave Ramsey's 7 Baby Steps (1)

You can take control of your money! Dave Ramsey's 7 Baby Steps will show you how to save for emergencies, pay off all your debt for good, and build wealth. It’s not a fairy tale. It works every single time!

Find Out Which Step You're On

Step 1: Save $1,000 for your starter emergency fund.

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Step 2: Pay off all debt (except the house) using the debt snowball.

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Step 3: Save 3–6 months of expenses in a fully funded emergency fund.

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Step 4: Invest 15% of your household income in retirement.

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Step 5: Save for your children’s college fund.

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Step 6: Pay off your home early.

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Step 7: Build wealth and give.

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Why the Baby Steps Work

Forget everything you know about money-management plans. With Dave’s 7 Baby Steps, you don't need a degree in finance to take control of your money. Anyone can do it! With each step, you’ll change how you handle money—little by little.

Dave Ramsey's 7 Baby Steps (9)

Education

Learn how to better manage your money.

Dave Ramsey's 7 Baby Steps (10)

Encouragement

Build momentum with small wins along the way.

Work the Baby Steps

Follow the proven plan that’s helped millions of people ditch debt and build wealth!

Dave Ramsey's 7 Baby Steps (12)

Financial Peace University

Take the course that's helped millions of people beat debt, build wealth, and live and give like no one else.

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The Total Money Makeover

Get Dave’s #1 bestselling book and readinspiring stories of people who have learned how to manage their money the right way.

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Baby Steps Millionaires

You canbaby step your way to becoming a millionaire. Learn the quickest right way in Dave's newest book.

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Dave Ramsey's 7 Baby Steps (15)

FREE Customized Plan

We’ll create a custom plan just for you to help you take control of your money. It only takes threeminutes—and it’s FREE!

Take the Assessment

Baby Step 1: Save $1,000 for Your Starter Emergency Fund

In this first step, your goal is to save $1,000 as fast as you can. Your emergency fund will cover those unexpected life events you can't plan for. And there are plenty of them. You don’t want to dig a deeper hole while you’re trying to work your way out of debt!

Create Your First Budget

Baby Step 2: Pay Off All Debt (Except the House) Using the Debt Snowball

Next, it’s time to pay off the cars, the credit cards and the student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one. Attack that one with a vengeance. Once it's gone, take that payment and put it toward the second-smallest debt, making minimum payments on the rest.That's what's called the debt snowball method, and you’ll use it to knock out your debts one by one. Find out your debt-free date with the Debt Snowball Calculator.

Get Rid of Your Debt

Baby Step 3: Save 3–6 Months of Expenses in a Fully FundedEmergency Fund

You’ve paid off your debt! Don’t slow down now. Take that money you were throwing at your debt and build a fully funded emergency fund that covers 3–6 months of your expenses. This will protect you against life’s bigger surprises, like the loss of a job or your car breaking down, without slipping back into debt.

Start Saving Money

Baby Step 4: Invest 15% of Your Household Income in Retirement

Now you can shift your focus off debts and what-ifs and start looking up the road. This is where you begin regularly investing 15% of your gross income for retirement. Because if you're still working at 67, it should be because you want to, not because you have to. An investing pro can help you build a solid strategy.

Find a SmartVestor Pro

Baby Step 5: Save for YourChildren’s College Fund

By this step, you've paid off all debts (except the house) and started saving for retirement. Next, it's time to save for your children’s college expenses (that is, if they pass Algebra II and Chemistry). We recommend 529 college savings plans or ESAs (Education Savings Accounts).

Learn to Save for College

Baby Step 6: Pay Off Your Home Early

Now, bring it all home. Baby Step 6 is the big dog! Your mortgage is the only thing between you and complete freedom from debt. Can you imagine your life with no house payment? Learn how extra money put towards your mortgage can save you tens (or even hundreds) of thousands of dollars in interest with our Mortgage Payoff Calculator.

Baby Step 7: Build Wealth and Give

You know what people with no debt can do? Anything they want! The last step is the most fun. You can live and give like no one else. Find out your current net worth, then keep building wealth and become outrageously generous, all while leaving an inheritance for your kids and their kids. Now that's what we call leaving a legacy!

Calculate Your Net Worth

Baby Step 1: Save $1,000 for Your Starter Emergency Fund

In this first step, your goal is to save $1,000 as fast as you can. Your emergency fund will cover those unexpected life events you can't plan for. And there are plenty of them. You don’t want to dig a deeper hole while you’re trying to work your way out of debt!

Free Resources for Baby Step 1

How to Make a Budget: Your Step-by-Step Guide

Budgeting can seem overwhelming, but you can do it. Learn how in just five steps.

Read More

30 Easy Ways to Save Up to $1,000

Saving money doesn’t have to be hard. Check out these quick, simple ways to find up to a grand.

Read More

34 Ways to Make Extra Money

Who couldn’t use extra cash? Here are 34 ways to line your pockets with more money.

Read More

Baby Step 2: Pay Off All Debt (Except the House) Using the Debt Snowball

Next, it’s time to pay off the cars, the credit cards and the student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one. Attack that one with a vengeance. Once it's gone, take that payment and put it toward the second-smallest debt, making minimum payments on the rest.That's what's called the debt snowball method, and you’ll use it to knock out your debts one by one. Find out your debt-free date with the Debt Snowball Calculator.

Get Rid of Your Debt

Baby Step 3: Save 3–6 Months of Expenses in a Fully FundedEmergency Fund

You’ve paid off your debt! Don’t slow down now. Take that money you were throwing at your debt and build a fully funded emergency fund that covers 3–6 months of your expenses. This will protect you against life’s bigger surprises, like the loss of a job or your car breaking down, without slipping back into debt.

Start Saving Money

Baby Step 4: Invest 15% of Your Household Income in Retirement

Now you can shift your focus off debts and what-ifs and start looking up the road. This is where you begin regularly investing 15% of your gross income for retirement. Because if you're still working at 67, it should be because you want to, not because you have to. An investing pro can help you build a solid strategy.

Find a SmartVestor Pro

Baby Step 5: Save for YourChildren’s College Fund

By this step, you've paid off all debts (except the house) and started saving for retirement. Next, it's time to save for your children’s college expenses (that is, if they pass Algebra II and Chemistry). We recommend 529 college savings plans or ESAs (Education Savings Accounts).

Learn to Save for College

Baby Step 6: Pay Off Your Home Early

Now, bring it all home. Baby Step 6 is the big dog! Your mortgage is the only thing between you and complete freedom from debt. Can you imagine your life with no house payment? Learn how extra money put towards your mortgage can save you tens (or even hundreds) of thousands of dollars in interest with our Mortgage Payoff Calculator.

Talk to a Mortgage Expert

Baby Step 7: Build Wealth and Give

You know what people with no debt can do? Anything they want! The last step is the most fun. You can live and give like no one else. Find out your current net worth, then keep building wealth and become outrageously generous, all while leaving an inheritance for your kids and their kids. Now that's what we call leaving a legacy!

Calculate Your Net Worth

Baby Step 1: Save $1,000 for Your Starter Emergency Fund

In this first step, your goal is to save $1,000 as fast as you can. Your emergency fund will cover those unexpected life events you can't plan for. And there are plenty of them. You don’t want to dig a deeper hole while you’re trying to work your way out of debt!

Free Resources for Baby Step 1

Create Your First Budget

Check out EveryDollar—our zero-based budgeting app that helps you track, plan and save with just a few swipes.

Try It for Free

14-Day Money Finder

This free two-week series teaches you how to find extra money in your budget each month—to the tune of $2,000 more a year!

Start Saving

Get Started Assessment

After you answer just a few questions, we’ll give you a money plan that meets you right where you are.

I’m in

Baby Step 2: Pay Off All Debt (Except the House) Using the Debt Snowball

Next, it’s time to pay off the cars, the credit cards and the student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one. Attack that one with a vengeance. Once it's gone, take that payment and put it toward the second-smallest debt, making minimum payments on the rest.That's what's called the debt snowball method, and you’ll use it to knock out your debts one by one. Find out your debt-free date with the Debt Snowball Calculator.

Get Rid of Your Debt

Baby Step 3: Save 3–6 Months of Expenses in a Fully FundedEmergency Fund

You’ve paid off your debt! Don’t slow down now. Take that money you were throwing at your debt and build a fully funded emergency fund that covers 3–6 months of your expenses. This will protect you against life’s bigger surprises, like the loss of a job or your car breaking down, without slipping back into debt.

Start Saving Money

Baby Step 4: Invest 15% of Your Household Income in Retirement

Now you can shift your focus off debts and what-ifs and start looking up the road. This is where you begin regularly investing 15% of your gross income for retirement. Because if you're still working at 67, it should be because you want to, not because you have to. An investing pro can help you build a solid strategy.

Find a SmartVestor Pro

Baby Step 5: Save for YourChildren’s College Fund

By this step, you've paid off all debts (except the house) and started saving for retirement. Next, it's time to save for your children’s college expenses (that is, if they pass Algebra II and Chemistry). We recommend 529 college savings plans or ESAs (Education Savings Accounts).

Learn to Save for College

Baby Step 6: Pay Off Your Home Early

Now, bring it all home. Baby Step 6 is the big dog! Your mortgage is the only thing between you and complete freedom from debt. Can you imagine your life with no house payment? Learn how extra money put towards your mortgage can save you tens (or even hundreds) of thousands of dollars in interest with our Mortgage Payoff Calculator.

Talk to a Mortgage Expert

Baby Step 7: Build Wealth and Give

You know what people with no debt can do? Anything they want! The last step is the most fun. You can live and give like no one else. Find out your current net worth, then keep building wealth and become outrageously generous, all while leaving an inheritance for your kids and their kids. Now that's what we call leaving a legacy!

Calculate Your Net Worth

Dave Ramsey's 7 Baby Steps (22)

Who Is Dave Ramsey?

More than 25 years ago, Dave Ramsey fought his way out of bankruptcy and millions of dollars of debt. He took what he learned and started teaching people God's and Grandma's ways of handling money. Since then, Financial Peace University has helped nearly 10 million people take control of their money for good. Today, The Ramsey Show, formerly known as The Dave Ramsey Show, reaches more than 18 million listeners every week on the Ramsey Network radio show and podcast.

Get a FREE Customized Plan for Your Money!

Answer a few questions and we’ll create a custom plan just for you to help you take control of your money. It only takes three minutes!

Take the Assessment

Dave Ramsey's 7 Baby Steps (23)
Dave Ramsey's 7 Baby Steps (2024)

FAQs

Dave Ramsey's 7 Baby Steps? ›

Do Dave Ramsey's Baby Steps Work? They can, but they might not be for everyone. Ramsey's steps are sound and logical, but they rely on some best-case scenarios. Not everyone makes enough money to save 15% for retirement while also saving for college and paying the mortgage early.

Do the seven baby steps work? ›

Do Dave Ramsey's Baby Steps Work? They can, but they might not be for everyone. Ramsey's steps are sound and logical, but they rely on some best-case scenarios. Not everyone makes enough money to save 15% for retirement while also saving for college and paying the mortgage early.

What is the 80 20 rule Dave Ramsey? ›

There's an 80-20 rule for money Dave Ramsey teaches which says managing your finances is 80 percent behavior and 20 percent knowledge. This 80-20 rule also applies to constructing a healthy life. Personal wellness is 80 percent behavior and 20 percent knowledge.

What is the 7 rule for savings? ›

The seven percent savings rule provides a simple yet powerful guideline—save seven percent of your gross income before any taxes or other deductions come out of your paycheck. Saving at this level can help you make continuous progress towards your financial goals through the inevitable ups and downs of life.

What is Dave Ramsey's famous quote? ›

If you will live like no one else, later you can live like no one else.

How much is 3,6 months of living expenses? ›

As a general rule of thumb, many financial experts recommend setting aside 3-6 months' worth of living expenses. So if you generally spend $2,000 per month on rent, utilities, food, gas, healthcare, and other necessities, you should try to save between $6,000 and $12,000.

What are the 7 levels of wealth? ›

The 7 Levels of Wealth: Level 1: Living paycheck to paycheck Level 2: Budgeting money Level 3: Paying down debt Level 4: Saving an emergency fund Level 5: Investing Level 6: Multiple income streams Level 7: Financial freedom Money is a tool. Every dollar should be working.

What is the 50 20 30 budget rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

What is the Ramsey method? ›

The snowball method that Dave Ramsey refers to here means that you start by paying off small debts first and work your way up to the bigger debts. Debts can include paying off your car, credit card debts, and student loans.

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