Which order matches the first four Baby Steps?

Save a $1,000 starter fund, pay off all debt except the house, save 3–6 months of expenses, then invest 15% for retirement

Invest 15% for retirement, then save $1,000, then pay off debt, then build the full emergency fund

Pay off the house, save for college, then save $1,000

Build the full emergency fund, pay off the house, then invest

Dee and Ray just paid off the truck loan and both cards. In the Baby Steps, what comes next?

Build a full emergency fund of 3–6 months of expenses

Respected teachers differ on the employer match while you pay off debt. What does Dave Ramsey's plan do?

Pause all investing, even the match, until consumer debt is paid off and 3–6 months is saved

Always take the match, no matter what

Borrow from the 401(k) to pay off debt faster

Where do the Winter Fund and the tax set-aside fit in the plan?

The tax set-aside starts with the first 1099 or cash payment; the Winter Fund starts once the $1,000 cushion is in place and runs alongside every Baby Step after that

They replace the $1,000 starter cushion

When does the lesson suggest reviewing your 10-year plan?

Once a year, in winter, when the season slows

Only when you get a pay increase

Lesson P202.9 · Personal Finance 202: Lead Your Family

Your 10-year money plan

5-minute read · Figures checked October 2026

An older couple walks hand in hand down a sidewalk past houses, one holding flowers — Photo: RDNE Stock project / Pexels, Pexels License

The short answer

Answer three questions on paper: where you are, where you're going and how you'll get there. Where you are is your money snapshot. Where you're going is a short list of goals, each with a price and a date. How you'll get there is the order most money teachers agree on, best known as Dave Ramsey's Baby Steps. Review the plan every winter, when the season slows.

Where you are and where you're going

Start with your money snapshot from P101.1: what you own, what you owe, what comes in and what goes out. Update it with this year's numbers.

Then name the goals. Tony Robbins built a step of his book MONEY Master the Game around one question: "What's the Price of Your Dreams?" Put a dollar figure and a date on each goal: a paid-off truck, a house, the kids' school fund, a business of your own, the age you'd like to slow down. Keep the list short enough to remember.

How you'll get there: the milestone order

Most money teachers agree on the order. Dave Ramsey's Baby Steps are the best-known version:

Save a $1,000 starter emergency fund.
Pay off all debt except the house, using the debt snowball.
Save 3–6 months of expenses.
Invest 15% of household income for retirement.
Save for your kids' college.
Pay off the home early.
Build wealth and give.

The National Pavement Maintenance Contractors Association (NPMCA) Money Milestones checklist follows this order and adds two things for this trade. The tax set-aside starts with your first 1099 or cash payment and never stops: set aside the tax the day the money arrives. The Winter Fund starts once the $1,000 starter cushion is in place; from then on, every in-season check feeds it, alongside whatever Baby Step you're on. It sits on top of the starter cushion, not in place of it.

Example (made-up numbers). Dee and Ray have $72,000 of household income and $3,500 a month of essential expenses.

Years	Milestone	Their numbers
Now	Tax set-aside from every payment; the starter cushion, then the Winter Fund	$1,000 cushion; $6,000 Winter Fund target
1–2	Pay off the truck loan and two cards	$18,000
2–3	Full emergency fund; they chose 6 months because Ray's pay swings	6 × $3,500 = $21,000
3–10	Invest 15% for retirement	15% × $72,000 = $10,800 a year
4–10	Save for the kids' school	$100 a month per child
6–10	Extra payments on the house	What's left after the lines above

Decide what "enough" is, then review every winter

Decide what "enough" looks like before every pay increase turns into a new payment. Ramsey's guideline for vehicles is one example: keep all of them together worth no more than half your yearly income. Before the next pay increase arrives, decide where it goes. In Thaler and Benartzi's Save More Tomorrow study, workers who agreed ahead of time to save part of future pay increases raised their average saving rate from 3.5% to 13.6% over 40 months.

Once a year, when the season slows, hold a winter review:

Update the snapshot and mark where you are in the milestones.
Check your beneficiaries (P202.4) and your Social Security record (P202.6).
Set next year's goals and write January's budget from your lowest month.

Different approaches

Where respected teachers differ

Employer match while paying off debt. Everyone agrees: get high-interest debt gone before you invest. Dave Ramsey's plan pauses all investing, even an employer match, until consumer debt is paid off and 3–6 months is saved, so the focus gets you out fast; then you restart with the match. Caleb Hammer encourages taking an employer match once your emergency fund is built and high-interest debt is gone. Run the match calculator with your own numbers, then pick a path and stick with it.

Snowball or avalanche. Ramsey's debt snowball pays the smallest balance first, so you see wins fast. The avalanche pays the highest interest rate first and costs less interest. The best method is the one you finish.

How big a cushion. Ramsey's Baby Step 1 is $1,000, then 3–6 months of expenses in Baby Step 3. Caleb Hammer suggests $500–$1,000 to start, then 3–6 months of essential expenses, or 9–12 months if you're self-employed. If your work is seasonal, the Winter Fund is extra, because winter isn't an emergency.

Pay off the house early or invest. Ramsey's Baby Step 6 is paying off the home early, after investing 15% and saving for kids. Others prefer investing the extra when the mortgage rate is low. Run both with your numbers.

Your Move

Do this week

Update your money snapshot.
Write your goals for the next 10 years, each with a price and a date.
Mark where you are in the milestone order and write down your next step.
Put a winter review on the calendar for a date in your slow season, repeating every year.

Log it: Wrote our 10-year plan.

Common questions

What order should I follow?

The order most money teachers agree on, best known as Ramsey's Baby Steps: starter cushion, debt, full emergency fund, 15% for retirement, kids' college, the house, then build wealth and give. Teachers differ on a few points, shown above.

How often should I update the plan?

Once a year at a set time, plus whenever life changes: a marriage, a baby, a new job, a business of your own.

What do I do with a pay increase?

Decide where it goes before it shows up in your check, so it moves you toward the next milestone.

Watch out for

Every pay increase turning into a bigger truck payment.
Speculating with money meant for bills, the emergency fund or retirement.
A plan that lives only in your head. Write it down and keep it with your budget.

Free help

Kiplinger's free calculators for retirement, savings and net worth
Nonprofit credit counseling through the NFCC: 877-360-6322 (nfcc.org)
HUD-approved housing counselors: 800-569-4287 (HUD)

Free practice

Lesson check

5 questions on this lesson, one at a time, with the answer and the reason after each. Pass with 4 right, including every must-know question.

This is general education, not tax, legal, investment or insurance advice. Rules change and every situation is different. Check the sources below, and talk to a qualified professional before you act on it.

Sources

Ramsey Solutions: The 7 Baby Steps
Ramsey Solutions: The 401(k) company match
Ramsey Solutions: How much car can I afford?
Caleb Hammer: How much should an emergency fund be?
Caleb Hammer: How to start investing
Simon & Schuster: MONEY Master the Game, by Tony Robbins
Thaler and Benartzi (2004): Save More Tomorrow
Kiplinger: Tools and calculators

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