The “Baby Steps” are the seven individual phases of Dave Ramsey’s Total Money Makeover plan. They are steps because they occur in order: Ramsey rarely allows for the next step until the previous one is completed. They start small and grow in complexity and scope: Baby Step One is saving $1,000 for emergencies; Baby Step Two is getting out of debt; Baby Step Three is saving three to six months of emergency funds; Baby Step Four is investing for retirement; Baby Step Five is starting a college fund for one’s children; Baby Step Six is paying off one’s mortgage; and Baby Step Seven is to accumulate wealth.

Ramsey insists that those who attempt the Total Money Makeover plan need a budget, a written monthly plan that dictates how all income will be allocated to different life expenses. Ramsey praises American pastor John Maxwell’s statement that “a budget is people telling their money where to go instead of wondering where it went” (62). The book includes budgeting forms and a Financial Peace software program to help people do the practical work of creating a budget.