Dave Ramsey's
7 Baby Steps

You can take control of your money! Millions of people have left their money worries behind by working this plan. It’s time to start managing money the right way.

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.

Get Started with the Baby Steps

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

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!

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 your student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest. This is called the debt snowball method, and you’ll use it to knock out your debts one by one.

Debt Free Couple

Baby Step 3: Save 3–6 Months
of Expenses in a Fully Funded
Emergency 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.

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

It's time to get serious about retirement—no matter your age. Take 15% of your gross household income and start investing it into your retirement. Start with your company’s 401(k) plan and receive the full employer match. Invest the rest into Roth IRAs—one for you and one for your spouse (if you’re married).

Baby Step 5: Save for Your
Children’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 make it through Algebra II and Chemistry unscathed). We recommend 529 college savings plans or ESAs (Education Savings Accounts).

Paid off Car

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? Any extra money you can put toward your mortgage could save you tens (or even hundreds) of thousands in interest.

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! Keep building wealth and become insanely generous. Leave an inheritance for your kids and their kids. Now, that's what we call leaving a legacy!

Who Is Dave Ramsey?

More than 25 years ago, Dave Ramsey fought his way out of bankruptcy and millions of dollars in debt. What he learned turned into Financial Peace University—the program that has helped more than 5 million people change their financial futures and family trees. Now, his radio show and podcast, The Dave Ramsey Show, reaches more than 13 million listeners each week.

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 3 minutes!