Baby Step 1: Save $1,000 for your starter emergency fund
An emergency fund is a savings buffer set aside for unexpected expenses like home or car repairs – so you can avoid going into debt in case of an unplanned financial situation.
“Without an emergency fund, you are one car repair or medical bill away from financial disaster,” Ramsey noted.
But starting an emergency fund doesn't have to be overwhelming.
One of the easiest ways to kickstart your emergency fund is by automatically saving your spare change with Acorns. When you make everyday purchases, Acorns rounds up the price to the nearest dollar and invests the difference for you in a smart investment portfolio.
For example, if you buy coffee for $4.30, Acorns will round up to $5.00 and automatically save that 70 cents. These small amounts can add up significantly – just $2.50 in daily round-ups could accumulate to $900 per year, helping you build your emergency fund without thinking about it.
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Another smart way to grow your emergency fund is by reducing monthly expenses.
For instance, many people are overpaying for car insurance simply because they don't compare rates regularly.
OfficialCarInsurance.com makes it easy to compare quotes from leading insurers in your area, potentially saving you hundreds of dollars annually on premiums.
The process is 100% free and won’t affect your credit score. In just a few clicks, you could pay as little as $29 a month.
The money you save on lower insurance rates can go directly into your emergency fund, accelerating your progress toward financial security.
Baby Step 2: Pay off all debt (except the house) using the debt snowball
As of the third quarter of 2024, total credit card debt in the U.S. reached an all-time high of $1.17 trillion, according to the Federal Reserve.
Dave Ramsey recommends using the debt snowball method to pay off your debts. Focus on paying off the smallest debt first while making minimum payments on the others. Once the smallest is paid off, move that payment to the next smallest debt and keep going.
"Debt isn't a math problem; it's a behavior problem. The debt snowball method helps you change your behavior by giving you quick wins and keeping you motivated,” according to Ramsey. One way to pay down credit card debt quickly is by using a balance transfer credit card, which allows you to transfer your existing debt to a card with 0% APR for a certain period. This helps you save money on interest and pay off your balance faster without the extra cost piling up.
Searching for the right credit card can be overwhelming. But with Cardratings.com, it’s quick, easy and personalized.
Cardratings lets you easily compare a wide variety of rates and balance transfer offers, so you can find the right card that suits your needs.
For example, if you have a $10,000 balance at 22% APR, you'd pay around $2,200 in interest over a year with minimum payments. But if you transfer the balance to a card offering 0% APR for 12 months (with a 2% transfer fee), you'd pay a $200 fee upfront. Even with the fee, you'd save about $2,000 in interest, making it a smart way to pay off debt faster and take another Dave Ramsey Baby Step.
Consolidating all your debts into a personal loan through Credible is another effective strategy to get rid of your debt faster. Instead of juggling multiple monthly payments, you'll have one predictable payment to manage each month.
Through Credible's online marketplace, the process of finding the right loan becomes much simpler. Credible lets you comparison-shop for the lowest interest rates with just a few clicks.
In less than three minutes, you’ll see all the lenders willing to help pay off your credit cards or other debts with a single personal loan.
Baby Step 3: Save 3 to 6 months of expenses in a fully funded emergency fund
Now that your debt is behind you, keep moving forward with Dave Ramsey’s Baby Steps by focusing on building your fully funded emergency fund. “Take the money you were using to pay down debt and set aside three to six months’ worth of expenses,” according to Ramsey.
This will safeguard you from life’s bigger unexpected bumps – like job loss or a medical emergency – and help you stay on track without slipping back into debt.
Parking your cash in a high-yield savings account can significantly boost your savings and help you stay on track.
High-yield savings accounts offer interest rates that are often 10 to12 times higher than the national average for traditional savings accounts, which currently stand at around 0.41%.
With the same FDIC protection and liquidity as a traditional savings account, it’s a smart, low-risk way to make your money work harder. You can check out the Moneywise best high-yield savings accounts of 2025 list to view your options that can earn almost 10x the national average.
Baby Step 4: Invest 15% of your household income in retirement
The next Baby Step is to start investing 15% of your gross income towards retirement.
“By the time you’re 67, you should still be working because you want to, not because you have to,” said Ramsey.
A trusted, pre-screened financial advisor can help you develop a solid retirement strategy.
According to research by Vanguard, people who work with financial advisors see a 3% increase in net returns. This difference can be substantial over time. For instance, if you start with a $50,000 portfolio, you could potentially retire with an extra $1.3 million after 30 years of professional guidance.
Finding the right advisor for your needs is simple with Advisor.com. Their platform connects you with experienced, qualified financial professionals in your local area who can provide personalized guidance.
A professional advisor can also help you assess how many years you have left to invest before retirement and determine your comfort level with market fluctuations, both of which are key to creating the right asset mix for your portfolio.
Through Advisor.com, you can schedule a free consultation with no obligation to hire to discuss your financial goals and retirement planning needs.
Baby Step 5: Save for your children’s college fund
By this point, following Dave Ramsey’s 7 Baby Steps, you’ve paid off most of your debts (except the mortgage) and started saving for retirement. The next step is to begin saving for your children’s college expenses.
If you want to give your children the gift of education without the burden of student loans, Wealthfront offers a powerful combination of tools to help make college savings easy and efficient. Start by opening a high-yield cash account that puts your money to work immediately, earning competitive interest rates while maintaining the flexibility you need.
Wealthfront's platform makes it simple to automate regular transfers from your high-yield cash account directly into a 529 college savings plan. This automation helps ensure consistent contributions toward your children's education fund. Your investments grow tax-free, and as long as the money is used for qualified education expenses, you won't pay taxes on the withdrawals either. It's like getting a bonus on top of your savings.
By combining these two powerful tools – earning higher interest rates on your cash while systematically funding a tax-advantaged 529 plan – you can build a solid college savings strategy that works in the background while you focus on other aspects of family life and the next Dave Ramsey Baby Step.
Baby Step 6: Pay off your home early
Now, bring it all home. Your mortgage is the only thing between you and complete freedom from debt. Ramsey said, “Baby Step 6 is the big dog!”
Refinancing your home loan through Mortgage Research Center could help you pay off your mortgage early in two effective ways. By securing a lower interest rate, you can either maintain your current monthly payment while more of it goes toward the principal, or you can opt for a shorter loan term to accelerate your path to homeownership.
When you refinance to a shorter term, such as moving from a 30-year to a 15-year mortgage, you'll typically receive a lower interest rate while significantly reducing the total interest paid over the life of your loan. Though your monthly payments may increase, you'll build equity faster and own your home outright years earlier than planned.
Mortgage Research Center, licensed in all 50 states, can help you explore your refinancing options and find the solution that best fits your financial goals.
Their team of experienced professionals will guide you through the process, helping you understand the potential savings and timeline to become mortgage-free and cross out another Ramsey Baby Step.
Baby Step 7: Build wealth and give
Ramsey said the last step is the most rewarding: keep building wealth, become outrageously generous and leave a legacy.
Real estate has long been a proven path to building generational wealth. For the 12th year in a row, Americans have ranked real estate as the best long-term investment in 2024, according to a new Gallup survey. With the help of First National Realty Partners (FNRP), you can invest in necessity-based commercial properties.
These are a few examples of past properties or acquisitions from FNRP. For a full list of currently available properties, visit the FNRP deal room.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to Triple Net (NNN) leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.
Crowdfunding platforms are another avenue for investing in real estate. For as little as $100, Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals, curated and vetted for their appreciation and income potential.
Backed by world class investors like Jeff Bezos, Arrived makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process allows accredited and non-accredited investors to take advantage of this inflation-hedging asset class without any extra work on your part.
Building wealth creates an opportunity not just for personal gain, but for meaningful impact through charitable giving. As your investments grow, you can establish a legacy of generosity by supporting causes close to your heart.
To protect and preserve this legacy, creating a comprehensive will is essential. A well-structured will ensures your real estate investments and charitable giving intentions continue according to your wishes. This will help minimize estate taxes, prevent family disputes and ensure peace of mind.
With Ethos Will & Trust, you can create a will online from the comfort of your home in as little as 20 minutes. All documents created on the platform are vetted by experienced estate-planning attorneys, giving you complete peace of mind.
You can also make unlimited updates forever as your life changes, helping you secure your legacy for your loved ones.
You can create a will starting at just $149. Plus, if you’re not happy with the results, you can get a full refund within 30 days.
