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The Problem with the “Baby Steps”

Danielle Nava

Where do you get your financial advice? (Aside from us, of course. 😉) Your friends? Parents? Coworkers? YouTubers? “Money gurus?”

Some of the most popular money gurus out there (we won’t name names) have a process called “the baby steps,” designed to get you started with your financial education. But we have a little bit of a problem with those baby steps. OK…a lot of problems. 

We break down every step in this method, talk about the pros and cons of each, and share our own insight — including what we think you should be doing instead.

The Reality of Money Gurus and Debt

We’re gonna play it safe and start things off with a disclaimer first: this blog isn’t meant to badmouth money gurus out there. Nor is it meant to imply that people who listen to these money gurus are dumb. We simply think there are better sources of financial advice available, sources that are more in tune with what people need today.

Case in point: most money gurus focus on paying down debt a lot. Debt is made out to be this huge, scary, unavoidable thing. If you throw enough money at it, you’ll defeat it, and feel a lot safer. This is an attitude our generation has been taught our entire lives! But the reality is, debt is not all bad

Debt is relative, and debt is fluid. It’s not black-and-white. There’s a sliding scale on debt.

Why were we fed these scary stories about debt? Our parents’ generation grew up in a high-interest environment. It was expensive to borrow money. That’s no longer the case, especially now with the COVID-19 crisis, but that attitude about debt still trickled down to us. And with the soaring cost of student loan debt, it’s really easy to hang on to that attitude.

What We Think of the “Baby Steps”

Let’s quickly go over what most financial personalities say are the “baby steps” to financial freedom:

  1. Save $1,000 ASAP.
  2. Pay off all debt, starting with the lowest interest first.
  3. Save 3 to 6 months for your full emergency fund.
  4. Invest 15% of your household income for retirement.
  5. Save for a college fund. (Because everyone has to have kids, apparently.)
  6. Pay off your home early.
  7. Build wealth and give. (Mostly to the church, if you follow their steps exactly.)


Well, if you’ve read our other blog posts, used one of our free planning resources, or have completed our Know Your Numbers Challenge, you know that we’re totally on board with having emergency funds, investing for retirement, and saving for intermediate goals like your child’s college fund. 

However… Why are these goals tackled one by one? Why can’t you work on them simultaneously? (Hint: that’s what the bucket strategy is all about. You can read more about it in our post about why Net Worth is King or Why Your Money Needs Direction post.)

That last step, for example. If having a giving strategy is important to you, then you should work it into your plans at the start. And why is “building wealth” saved for the very end? You should plan to build your wealth from the very beginning! If you don’t, you’re losing out on the most important advantages you have: time and compounding interest.  

While we do like the advice given in some of these steps, there’s no reason you have to follow them one-by-one, separately. You can make your money work different jobs for you at the same time. That means you’ll hit many of your goals a lot sooner.

Choosing Your Own Relationship With Debt

Hopefully you now feel motivated to kick (outdated) advice to the curb… and find something that fits you better. This is where we recommend Wealth by Design™, our modern DIY financial planning program that helps you create a total financial plan. 

Wanna know how much to save? Create and stick to a budget? Understand investment strategies? Wealth by Design™ gives you the tools you need to do all that and more. Learn more about the program here!

The opinions voices in this material are for general information only and are not intended to provide specific advance or recommendations for any individual.

There’s a lot of bad money advice out there.

What if you had a clear formula to help you figure out how much to save… while paying down debt and enjoying life? It is possible… when you know your numbers.
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