When it comes to financial advice, there are few people as well-known as Dave Ramsey. His 7 Baby Steps have helped millions of people get their finances in order and achieve their goals.

But you may be asking yourself, does the program really work?

In this blog post, we will break down each step of the program and give you our opinion on whether or not it is effective.

We will also provide some tips on how you can follow the steps yourself and see results!

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baby step in sand

Breaking Down the Dave Ramsey 7 Baby Steps

Dave Ramsey’s philosophy for personal finance is based on the idea that you shouldn’t take unnecessary risks with your money.

A simple and disciplined approach will set you up for success in the long run.

It is not the most exciting approach, but it has proven effective for many people.

However, it may not work for everyone. This is because mindset and behavior are key factors in financial success.

Some people don’t find any issue with a slow and methodical approach, while others crave the excitement of taking risks.

Dave Ramsey’s baby steps will work wonders for someone looking to settle down, raise kids and save for retirement.

Young entrepreneurs with ambitions that differ from these aspirations may find the program too restrictive.

It depends on your goals, lifestyle, and risk tolerance.

That said, Dave Ramsey’s baby steps include insightful wisdom about personal finance that anyone can benefit from.

Let’s explore each of his financial steps in more detail!

Baby Step 1: Save $1,000 to start an emergency fund

The first step is to save $1000 as quickly as possible.

This may seem like a lot, but it is important to have an emergency fund in case something unexpected comes up.

Once you have saved this money, you can move on to the next step.

Tips for this baby step:

  • Start by saving $50 from each weekly paycheck. This will get you to your goal of $1000 in 20 weeks.
  • If you get a bonus or tax refund, put it towards your emergency fund.
  • Cut back on expenses so that you can save more money each month.

Related Content: Emergency Fund – What is It and Why You Need One

Baby Step 2: Pay off your debts (except the house) using the debt snowball method

This means you will focus on paying off your smallest debt first while making minimum payments on your other debts.

Once the smallest debt is paid off, you can move on to the next one.

Tips for this baby step:

  • Make a list of all your debts from smallest to largest.
  • Focus on paying off the smallest debt first.
  • Make minimum payments on your other debts.
  • Once the smallest debt is paid off, move on to the next one.

Related Content: Debt Avalanche: A Method to Becoming Debt Free

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

This will help you cover your expenses if you lose your job or have another unexpected financial setback.

Tips for this baby step:

  • Calculate your monthly expenses and multiply by three to six.
  • Save this money in a high-yield savings account.
  • Automate your savings so that you can reach your goal quickly and easily.

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

This includes any employer-sponsored retirement plans, such as a 401(k).

Dave Ramsey also prefers mutual funds, but index funds can work as well as they typically charge less in fees.

Tips for this baby step:

  • If your employer offers a retirement plan, such as a 401(k), contribute at least enough to get the employer match.
  • If you don’t have an employer-sponsored retirement plan, start saving in an individual retirement account (IRA).
  • Automate 15% of your income to invest. This can be done through a Robo-advisor or online broker.

Related Content: How We Save 56% of Our Income [Family of 3]

One way you can increase your savings and investments is by mico-investing.

ACORNS is a popular platform that can round up money from purchases and automatically allocate those funds to diversified investments.

You can check them out today and receive a $20 bonus investment!

Baby Step 5: Save for Your Children’s College Fund

This can be done through a 529 plan or a Coverdell ESA.

Dave Ramsey believes it is important to save money for your child’s college fund because he knows how college debt can be a burden.

Tips for this baby step:

  • Start saving early and often. The sooner you start, the more time your money has to grow.
  • Save automatically through a 529 plan or Coverdell ESA.
  • Invest in a mix of stocks and bonds to help minimize risk.
  • Save each month automatically. This can be done through a 529 plan or Coverdell ESA.

Related Content: What is a 529 Plan? – Everything you Need to Know

Baby Step 6: Pay Off Your Home Early

Dave Ramsey recommends this because it will save you a lot of money in interest payments.

He also believes that your home should be paid off before you retire.

Having a place where you can live rent-free can be a huge financial burden lifted off your shoulders in retirement.

It can free up cash flow for other things, like travel or hobbies.

Tips for this baby step:

  • Make extra payments each month.
  • Refinance to a shorter loan term.
  • Apply any windfalls towards your mortgage balance.

Baby Step 7: Build Wealth and Give (Like No One Else!)

Dave Ramsey recommends that you invest in mutual funds.

He also believes that you should give generously to charities and other causes that are important to you.

His belief on wealth is that it should be used to bless others and not just for your personal gain.

Dave Ramsey is not a fan of gambling or higher-risk investments. This is because he has seen too many people lose their hard-earned money in these types of investments.

Tips for this baby step:

  • Invest in a mix of different mutual funds to help minimize risk.
  • Save automatically each month with a dollar-cost-average strategy.
  • Give generously to charities and other causes that are important to you.

Do the Baby Steps Really Work?

Ramsey’s baby steps have helped people across the globe get out of debt and live better lives.

Although we do not follow all of his steps, we feel most of his teachings are on the right track, especially for those looking to gain control over money and avoid risk.

Having an emergency fund has provided us with profound peace of mind. The debt snowball helped me pay off 56K in student debt!

Using cash to buy reliable second-hand cars has been a great benefit to us as well.

We have also opened up education savings accounts for both of our kiddos.

We follow most of Dave’s teaching but with a few key differences.

We believe that you should start saving for retirement as early as possible.

The earlier you start, the more compounding interest will work in your favor, even if it’s just a little each month.

We agree that consumer debt should be paid off aggressively. However, not all debt is bad debt.

Debt can be a wise investment decision and can be used to purchase assets, such as real estate or a business.

We currently have one rental property and see it as a valuable asset where the reward outweighs the risk.

Using credit cards to build credit has been a great tool for us, but they must be used very carefully.

Step 5 is also not applicable to everyone as some people prefer not to have children or cannot have children. In this scenario, people can still benefit from following the other steps.

All in all, we think that Dave Ramsey’s baby steps are a great starting point for anyone looking to get out of debt and improve their financial situation.

However, it is important to take into account your personal circumstances when following his advice.

Some people believe that Dave Ramsey’s advice is too ‘old school’ and that he is too rigid with his approach.

Critics believe that he needs to get caught up with the new realities of finances. However, it is difficult to deny the timeless wisdom he teaches.

It clearly applies to money management, no matter what the current economic conditions may be.

Dave Ramsey Baby Steps: Conclusion

Whether you agree with him or not, Dave Ramsey’s baby steps have helped millions of people get out of debt and improve their financial situation.

For that, we believe that he is worth considering if you are looking for advice on getting your finances in order.

Dave Ramsey seems like a genuine person and really does take plenty of time to help people.

He is America’s favorite financial coach, and for good reason.

Ramsey provides practical solutions that have helped millions get out of debt and improve their lives.

Although we do not agree 100% with his exact steps, his teachings are fundamental and can undoubtedly be a saving grace for many people, including us.

We hope this has helped clear some things up for you if you are wondering whether Dave Ramsey’s baby steps actually work.

Do your own research and be sure to carefully consider your personal circumstances before making any financial decisions.

If you are considering using Ramsey’s baby steps to help you get out of debt, we suggest you speak with a financial advisor to see if it is the best action for your unique situation.


We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!