7 Actual Baby Steps toward financial freedom

Baby steps.

We all take them.

Today, let’s go over the first 7 for a personal finance newbie should to start learning how to manage their money.

This week, meet:

➡️ 7 baby steps, for giants
➡️ My BEEF with Dave Ramsey
➡️ 7 ACTUAL financial baby steps you can start today
➡️ Budget Bites

7 baby steps, for giants

I humbly propose that there are 7 baby steps to life.

I would outline them as follows:

1. Go to college.

2. Become famous.

3. Make 1,000 friends.

4. Plan a destination wedding.

5. Birth half a dozen children.

6. Achieve every goal you’ve ever set for yourself.

7. Experience enlightenment.

I’m sorry - you say that this sounds ridiculous? That, while these are all achievable steps for humans, that they are not exactly “baby steps”? That they are not possible all at once?? They are not right for every human???

Huh.

I guess I’d have to agree with you.

If I was going to state an actual “baby step of life,” I’d say:

• Obtaining nutritious food 3 times a day.

Or something like that. Basic. Necessary. Will allow you to get to a place where you can start making more advanced decisions.

Hopefully this illustration helps you understand my frustrations with one particular 63-year-old man…

My BEEF with Dave Ramsey

A “baby step” for personal finance, one would think, would be to start planning about money when you’re never really sat down and thought about it before.

It would be taking control of you in-flow and out-flow of cash, when it’s something that’s always felt entirely out of your control.

So can you tell me why Dave Ramsey has made a career peddling THESE 7 baby steps for managing money?

Read those carefully again.

Does any one of those steps sound achievable for a nation in which 70-80% of people live paycheck to paycheck?

But in all fairness…

The thought behind Ramsey’s 7 Baby Steps is: “these are the baby steps to become a millionaire.” As in, “anyone can be a millionaire if they follow these steps.”

But when I think of baby steps, I think “these are the baby steps to handling your money if you’ve never really done it before.” As in, “these are your very first steps, as if you were, say, a baby.”

There’s a real cost to Ramsey’s baby steps… and it’s not very beginner-friendly:

That’s a grand total of: $963,994.

Aka, not an amount of money that you or I or any financial-baby can even think about without breaking into hives.

So as an alternate, let’s talk about…

7 ACTUAL financial baby steps you can start today

I’m gonna give each step 2 tiers:

• Tier 1: My suggested action.

• Tier 2: The baby-er action if you’re not yet ready for tier 1.

1. Track your expenses.

Tier 1: Open a spreadsheet. You can use mine (here). Or if you like something super basic (and super free), just open a blank sheet.

Add every single purchase from your bank and credit card statements by hand.

Tier 2: Do the exact same thing. No easy version. This is important. Do it.

If you haven’t done this and you struggle with spending, it could single-handedly change your financial life.

2. Prioritize your expenses.

Tier 1: In my opinion, it’s not enough to simply track, you also have to place VALUES. Like it or not, spending money on something is you saying you value it. So learn what you’ve been valuing with your dollars.

What % of your income is going toward essentials? What % toward “shouldn’t have” purchases? What non-essential costs do you ACTUALLY care about? (I like my spreadsheet because all this prioritization is built-in without requiring more work than necessary. But you do you.)

Tier 2: See Tier 1.

3. Pick a %.

Tier 1: Move that much of your paycheck to your savings account EVERY payday. Before you spend on ANYTHING else.

Tier 2: Open a savings account, if you don’t have one. If you do have one, but the percentage idea feels terrifying, pick a tiny number like $10 or $20 to move to savings every payday.

4. Attack high-interest debt.

Tier 1: How much income do you earn in 1 month on average? Write that number down.

Once you have that number in your savings account, throw your regular “savings %” of your paycheck entirely at your high-interest debt. This is anything with an interest rate higher than 7%.

Tier 2: If you have debt but have no clue what the interest rate is, then do this… Sign into all your accounts, look up your interest rates or APRs, and write them down all in one place. Now you know!

5. Open a high-yield savings account.

Tier 1: Once you hit your target goal for your savings account AND pay down your highest-interest debt, open a HYSA.

Then throw your % into this account.

The number you wrote down for #4? Keep that amount in your regular savings, and throw everything else in your HYSA.

Tier 2: Research high-yield savings accounts. See what your options are. Do the math on how much interest you could make from one. Use that as fuel.

6. Raise your credit score.

Tier 1: This should happen naturally when you do all the other stuff.

But the basics are: Prioritize making payments on time. Try to never use more than 10% of your credit limit at once. Look into becoming an authorized user if nothing else is working.

Tier 2: Look up your credit score with either TransUnion, Experian, or Equifax. (And ALWAYS make minimum payments on time. This is the #1 thing that raises or wrecks your credit score.)

7. Start a retirement account.

Tier 1: Contribute up to $500/month to a Roth IRA. AND meet your employer’s match for a 401k if you’re offered one.

Tier 2: Learn about Roth IRAs. Do some research. Mess around with a compound interest calculator to get yourself psyched about investing for retirement.

Maybe open an account if you’re feeling feisty? That way it’s there and ready the day you realize you make enough to start setting aside for retirement.

Budget Bites

🥬 Losing lettuce: No lie, I spent over $500 setting up my garden last month

💵 Rich & Happy: What do you consider a lot of monthly income?

🎥 Which would it be: if your life was a movie?

📈 A little hope: in case you’re feeling broke right now

🫴 Venmo request: how to tell your rich friends from your poor friends

“Wait, I need MORE”

A couple things happening in the Meet Your Money world:

• More budget breakdowns and real talk on finances here on the newsletter & on socials. Completely free, always.

• Budget Club. Twice monthly. Currently at my house. With my friends. You’re not invited. (I hope to make this a recurring, free, online event soon… Stay tuned!)

• And coming soon — templates and 1:1 consulting time for those who need a little extra nudge.