7 Timeless Money Rules Dave Ramsey Preached in the 1990s That Still Apply Today

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Dave Ramsey, author, personal finance guru and host of The Ramsey Show, has been helping people get out of debt and find financial independence since 1992. His advice has stood the test of time and it still applies today.

Here are seven timeless money rules Ramsey preached in the 1990s that still apply today — what he calls “The 7 Baby Steps.”

Your Starter Emergency Fund

Ramsey recommended starting with a small emergency fund of $1,000. This, he said, is the first step that will help you stop living paycheck to paycheck. When something unexpected happens, you’ll be able to use this fund to pay for it, instead of having to juggle your bills. Put a little bit of money aside from each paycheck until you’ve built up your starter fund.

The Debt Snowball

The next thing you want to do is to pay off your debt — all of your debt except for your mortgage. Ramsey suggested a method he calls the “debt snowball,” where you pay off your smallest balances first, then use the money you’re no longer spending on that debt to put toward the next largest. This method gives you the satisfaction of wiping out a small debt to give you the motivation you need to continue.

Fully Fund Your Emergency Fund

Now that you’ve paid off your debt, it’s time to beef up that emergency fund. You should have the equivalent of three to six months’ worth of expenses in your fund, so it can carry you over in case of an unexpected illness, job loss or some other unforeseen emergency. If this sounds like a lot, remember that it’s expenses, not salary.

Invest In Your Retirement

The next step is to start planning for your future. Retirement may seem like it’s a long way away, but any retiree will tell you it comes up fast. Ramsey said you want to save 15% of your income toward your retirement. If you have a retirement plan at work, you can have the money taken out of your paycheck before you ever see it — a painless way to prepare. If your company matches your contributions — even better. That’s free money. Invest in a target date fund that’s tied to your projected retirement date or consult a financial advisor about how to invest.

Your Children’s College Fund

Since your kids will typically go to college before you retire, you may be surprised to see this step after retirement savings. But there’s a good reason for this, according to Ramsey. Your kids may not go to college and you’re definitely going to retire. Another reason is that there’s no financial aid for retirement. So put your own mask on before helping your child, as they say on the airplane.

Pay Off Your Mortgage

If you’ve gotten this far, you’re out of debt, with a solid emergency fund and have saved for your retirement and your children’s education. Now you can really turbocharge your journey to financial freedom by paying off your mortgage. Owning your home free and clear is a huge financial accomplishment and one that will pay dividends for you and for future generations.

Build Wealth and Give

Once you’ve reached this last step, you’re ready to create generational wealth and do good with the money you’ve worked so hard to earn and save. This is the ultimate goal: to have enough money to live comfortably without worry and to build wealth to provide financial support to the people who are important to you.

These money rules worked in the 1990s when Ramsey first espoused them — they still work today and they’ll continue to work in the future. Are they easy to follow? No, but if you are dedicated to achieving financial security for yourself and your family, they provide a solid blueprint for how to get there.

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