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1. Have a written plan

If you’ve never made a budget before, the process might seem daunting and complicated at first. Ramsey’s solution is to break the process down into digestable bit and pieces and then tackle each step one at a time. His five steps for budgeting are:

  • List all of your sources of income for the month after taxes and other deductions, with a separate line for each item.
  • List your expenses and organize them into categories. Start with food, utilities, housing and transportation, and then categorize your other expenses — such as insurance and any debts — as needed.
  • Subtract your expenses from your income. This should equal zero. Every dollar should have a purpose — including debt reduction, savings and charity.
  • Track each of your transactions. This will help you stay accountable, keep you from overspending and highlight where you might need to adjust your budget going forward.
  • Make a new budget before the next month starts. While many items won’t change from month-to-month, some may have seasonal or annual expenses that need to be accounted for.

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2. Get out of debt

In the third quarter of 2023, aggregate U.S. credit card balances rose 4.7% from the previous quarter to a record $1.08 trillion outstanding.

So, if you’re like most Americans, you probably have some type of debt. But if you want to build wealth, you’ll need to reduce and eventually eliminate this debt.

Ramsey said the first step toward paying off debt should be to save $1,000 in an emergency fund. Why? Because this will help build a safety net and prevent you from having to go deeper into debt for unexpected expenses.

Once you’ve done this, you’ll want to get serious about reducing your debt using methods such as the avalanche method, where you pay off your highest interest rate debt first, or the snowball method, where you pay off the debt with the lowest balance first to gain momentum with the bigger debts.

3. Live on less than you make

Almost two-thirds (62%) of Americans live paycheck-to-paycheck, which makes it impossible to build wealth.

Therefore, the only way to pay down debt and start saving is to live on less than you make. This may mean cutting costs or finding ways of making more income, or both.

Start by looking at ways you can cut expenses, such as certain food items (like that expensive daily latte) and entertainment (all those streaming services), or consider joining the 23% of Americans who have a side hustle.

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4. Save some money

Rich people get rich by saving money, according to Ramsey.

If you free up money with the three steps above, you can then start building wealth by saving instead of spending on discretionary items.

5. Be generous

Once you get back on track financially, start giving some money away. “Giving is the antidote for selfishness,” Ramsey wrote in a 2022 blog post. “It’s the hallmark character quality of those who win with money.”

He argued that the biggest benefit of generosity is contentment. And don’t we all just want to be content at the end of the day?


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There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Vawn Himmelsbach Freelance Contributor

Vawn Himmelsbach is a journalist who has been covering tech, business and travel for more than two decades. Her work has been published in a variety of publications, including The Globe and Mail, Toronto Star, National Post, CBC News, ITbusiness, CAA Magazine, Zoomer, BOLD Magazine and Travelweek, among others.


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.