Dave Ramsey has taught and encouraged millions to get out of debt and to achieve an improved financial situation through his “seven baby steps,” which are: (1) establish a $1,000 emergency fund; (2) pay off debt; (3) save three to six months of expenses; (4) invest 15 percent of income in pre-tax retirement funds; (5) plan for the funding of the college education of children; (6) pay off mortgage as soon as possible; (7) build wealth and give.

An alternative perspective to this approach might be:

1. Create a larger initial emergency fund.
2. Instead of paying off the smallest debts first, pay off the ones with the highest interest.
3. A minimum of six months for expenses is needed, with twelve months more realistic.
4. Take advantage of any 401k matching offered by employers.
5. College may not be the right educational choice for everyone. Also, those who go to college should be responsible for a portion of education costs.
6. Home ownership may not be appropriate for everyone. When buying a home, paying off a mortgage may be a higher priority than saving for college to reduce the amount of interest paid.
7. Making money, saving money, and donating to charity should be the main focus.

For additional information on personal financial planning actions, click here.

Teaching Suggestions

• Have students survey others regarding their use of these personal financial planning suggestions.
• Have students obtain additional financial planning suggestions using online research.

Discussion Questions 

1. What do you believe are the most important actions that should be taken regarding wise personal financial planning?
2. How would you communicate these financial planning actions to others?