Do Dave Ramsey’s ‘Baby Steps’ still work in 2026? | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Dave Ramsey may have created the popular financial program, “Baby Steps,” but he doesn’t care if you like him. The polarizing pundit doles out his advice using a blunt, “tough love” approach, and often yells at his callers when he believes they’re being stupid.

Sure, there’s entertainment value to showcasing desperate people making “dumb decisions,” and that might be one reason why over 20 million combined listeners tune in weekly to his self-titled podcast.

But to many others, the methods outlined in Baby Steps simply make sense.

Ramsey has spent the past three decades teaching people how to beat debt and build wealth, often using Biblical verses to explain how money should really be used — as a tool to do God’s work. But does his 1990s approach to financial freedom still make sense in the modern economy?

What is Dave Ramsey’s net worth in 2026?

Baby Steps implies making small changes, but the conservative Christian media personality has amassed a substantial fortune from his financial programs. In October 2025, he revealed on the School of Hard Knocks podcast that he had made $300 million that year alone.

Yahoo! Finance reported that Ramsey also stated his real estate portfolio, which comprises rental and commercial properties, was valued at $850 million, and that Ramsey Solutions, his financial education business, was valued at $650 million.

His podcast, The Ramsey Show, grew from a local call-in show in Nashville into one of the most-listened-to business programs on Spotify. It’s also broadcast on 600 radio stations and on YouTube, but it all started as a way for Ramsey to promote his book, Financial Peace, which detailed his Baby Steps plan as well as his own struggles with debt.

Ramsey declared bankruptcy in 1988 after his speculative real estate investments collapsed. He has even characterized himself as earning a “PhD in DUMB” to describe his early mistakes.

“Love tells the truth, even when it is uncomfortable,” Ramsey often says, telling Insider Radio he’s “watched millions of people get out of debt, find jobs they love, have healthier marriages, become millionaires, and ultimately live better, more peaceful lives. That’s what the show is about — providing REAL hope.”

What are Dave Ramsey’s Baby Steps? How relevant are they in 2026?

The core of Ramsey’s financial philosophy is a 7-point plan he calls “Baby Steps,” a strict, behavioral approach that transforms overwhelming debts into small wins.

The fundamental principles of Ramsey’s Baby Steps entail living on less than you make, saving for emergencies, and avoiding debt at all costs. And because it focuses on psychological factors, such as discipline, motivation, and focus, many people believe Ramsey’s Baby Steps plan is still relevant in 2026.

However, critics argue that his approach can be “outdated” and “too rigid.”

Let’s consider each step:

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

Ramsey wants everyone to have at least $1,000 in the bank as a down payment for the unexpected. He even offers an assessment to help you figure out how to get to that thousand-dollar mark if you’re new to saving or are currently struggling with debt.

Ramsey calls this a “starter fund” for a reason — another one of his other Baby Steps calls for people to save even more — but critics believe a $1,000 cash reserve simply isn’t enough in light of inflation, which has risen at an average annual rate of 2.49%. They believe that number should be closer to $2,000.

One Reddit thread remained hotly divided on the issue.

2. Pay off all debt (except your mortgage) using the Debt Snowball Method

Ramsey’s Debt Snowball Method is a strategy for eliminating all debt — including credit cards, car loans, student loans, and medical expenses — by paying off your smallest balances first.

Once your smallest debt is erased, you can move on to the next-smallest, and so on.

The reason Ramsey wants people to focus on their smallest debts is that he believes doing so will give them a psychological boost as well as the confidence that they can also successfully tackle their other debts.

“Personal finance is 80% behavior and 20% head knowledge,” he told Forbes.

But other experts disagree, citing the principle of compounding interest, which can quickly turn small debts into a mountain of expenses.

Instead, finfluencer Suze Orman advocates the “Debt Avalanche Method,” where people tackle debts with the highest interest rates first. This saves money over the long term because it stops interest from accruing faster.

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

To Ramsey, achieving the debt-free milestone may be cause for celebration, but that doesn’t mean you should stop saving.

He recommends a second emergency fund that covers 3–6 months of living expenses to protect families from major life disruptions, such as job loss or medical emergencies.

For those who are single or married and have stable incomes, Ramsey believes only three months of savings are needed. Those married with only one income or single parents should save for six months.

But three months may be too little in 2026. According to Bankrate’s 2026 Annual Emergency Savings Report, one out of three U.S. adults needed to dip into their emergency savings in the past year, and while 85% of respondents believed they needed at least three months of expenses to feel comfortable, more than half — 63% — believed they needed to save even more than that, up to 6 months.

4. Invest 15% of your household income into retirement

To accomplish this step, Ramsey recommends talking with a Ramsey SmartVestor Pro, a service that’s unaffiliated with Ramsey Solutions but one he is paid to promote.

SmartVestors offers financial planning, wealth management, and estate planning advice, among other services. Advisors are required to be registered financial professionals, understand Ramsey’s 7 Baby Steps, and agree to Ramsey’s code of conduct.

The up-front cost for investors, Ramsey promises, is “zilch.”

But the financial advising industry seems to be going the way of the dinosaur in 2026. According to YouGov data, only 27% of Americans used a financial advisor in 2025. The industry has been shrinking by 0.2% a year, McKinsey & Company adds, only to be replaced by low-cost mobile investing apps and calls for increased transparency, with many questioning the need for commission-based advice in the first place.

On top of that, Mutual of Omaha says there is no one-size-fits-all approach to retirement saving. While investing 15% of your annual income into retirement accounts is the basic rule, that’s only a general target, and a person’s ideal savings rate depends on their “age, current savings, and retirement goals.” For instance, if someone already has a substantial retirement nest egg, they might not need to save as much of their income.

5. Save for your child’s college fund

Ramsey encourages families to save for their children’s college tuition through vehicles like 529 plans or Education Savings Accounts and to avoid student loan debt entirely by paying for it all in cash.

But based on data from the Education Data Initiative, this may be one goal that’s too lofty to reach. More than half — 53.3% — of undergraduates utilized student loans as of February 1, 2026, with the average public university student borrowing $31,960 to attain their bachelor’s degree.

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However, beginning July 1, 2026, with federal loan caps and the elimination of Grad PLUS loans restricting borrowing options, Ramsey’s guidance may seem at least more relevant, if not entirely feasible.

6. Pay off your home early

“Imagine how it would feel for your home to be 100% yours — no mortgage payment, just freedom,” Ramsey writes, suggesting that homeowners make extra principal payments and use things like salary bonuses or tax refunds to pay off their homes as soon as they can.

But this advice may not be as appropriate in 2026 as it was in 1992, due to the high cost of housing. While paying off a mortgage early can save homeowners a lot of interest over the life of the loan, those extra payments could actually yield better returns in the stock market or other investments.

According to Investopedia, which examined the performance of the housing market alongside the stock market (as measured by the S&P 500) between 1995 and 2024, the S&P 500 increased by more than 1,200%, or roughly an average of 10% per year, while home prices grew by just 310%, or just 5.5% per year.

7. Build wealth and give generously

Ramsey believes that once your debt is gone and your savings goals are met, you have finally attained financial freedom.“You’ve put in the work,” he writes. “You’ve said ‘no’ a thousand times. It’s time to finally say ‘yes’ for a change! Allow yourself to enjoy spending money on the things you never thought you’d be able to. Take your family on vacation. Grab the new clothes. Buy the boat. You’ve earned it! Now enjoy it.”

Other financial experts, like Ramit Sethi, believe you don’t have to be that hard on yourself. He encourages people to “spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”

Instead of micromanaging every dollar that comes in, he believes that if you have a clear financial plan in place, one that includes paying off debts and building substantive savings, you can also enjoy the things that are meaningful to you, even if they cost money.

20–35% of Sethi’s recommended budget is allocated to “guilt-free spending,” so you can take that vacation or buy the latte, if that’s what your heart desires.