Getting ready for financial baby steps

  • Savings plan: organised saving can help you control your finances and reach the pinnacle of smart money management

    Savings plan: organised saving can help you control your finances and reach the pinnacle of smart money management

Dear Dave,

I like your plan, and Iím ready to get control of my finances. Should I catch up on past due bills before saving $1,000 for the beginner emergency fund you recommend in Baby Step 1?


Dear Samantha,

This is a great question, because it gives me a chance to walk you all the way through the Baby Steps plan.

Make sure your necessities are taken care of first. Iím talking about food, clothing, shelter, transportation, and utilities. Then, get current on anything you owe or make payment arrangements for your past due bills. Once you have these things taken care of, itís time to take your first Baby Step.

Youíve already mentioned getting $1,000 in the bank for a starter emergency fund. Thatís Baby Step 1. After that, begin your debt snowball. Thatís Baby Step 2, and here youíll pay off all your debts from smallest to largest, except for your home. Attack the first balance on your list by paying as much as you can each month, while making minimum payments on your other debts. When youíve paid off the first one, add what you were paying on it to the payment on your next debt and start attacking it. In Baby Step 3, youíll save up and increase your emergency fund from $1,000 to a full three to six months of expenses. Trust me, youíll be surprised how quickly you can save money when youíve got all that debt out of the way.

Once you reach this point, itís time to really start looking at the future. In Baby Step 4 you start investing 15 per cent of your income for retirement. College funding for any little ones is next in Baby Step 5, and Baby Step 6 is a big one ó pay off your house early.

But Baby Step 7 is the real deal. When youíre able to build wealth and give with extreme generosity, youíve reached the pinnacle of smart money management. Good luck, Samantha.


Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at and on Twitter at @DaveRamsey.

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Published Nov 24, 2018 at 8:00 am (Updated Nov 24, 2018 at 12:35 am)

Getting ready for financial baby steps

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