Following Dave Ramsey’s Total Money Makeover Plan in Singapore

total money makeover

I came across a speech/sermon by Dave Ramsey on Youtube about being intentional with money. His “giving every dollar a job to do” catchphrase is very attractive. I borrowed and read his book The Total Money Makeover to get more details.

I was looking for ways to better manage my finances as I prepare to go back to work after nearly a year of rest. I thought I’ll use his methodology to guide me on my financial journey.

This post documents my attempt at following Dave Ramsey’s Total Money Makeover as a Singaporean.

Financial Goal

My goal is to be financially free to do whatever I want. For me, this means my passive income surpasses my expenses. I would like to achieve this by 2026. It is a tight deadline.

I’ve started to rethink my initial financial goal. From information I can gather, it does not seem appropriate for me to aim to create passive income from my investments because I should be building my retirement funds, not trying to generate income from them. Therefore, I decided to lengthen my investment horizon to fit my age group.

As for passive income, I will actively look at ways to create passive income apart from using investments.

What is the Dave Ramsey’s 7 Baby Steps?

Baby steps

Which Step am I on?

I currently have cash savings of more than 3 months of my take home pay that act as my emergency fund. I also do not have any debt except my home mortgage. This means that Baby Step 1 to 3 are already done. I don’t have any children, so I do not have to do Baby Step 5 Save for college funds.

So, I am currently on Baby Step 4 and 6 simultaneously.

Baby Step 4 – Invest 15% of Household Income in Retirement

Dave Ramsey advocates investing 15% of household income in retirement. Like many, my first question was “Why 15%”. He offered 2 reasons:

  1. It is an industry standard.
  2. Leave some money for the kids’ college fund and the home mortgage.

He said that 15% is actually insufficient for retirement, so if I do not have kids or a mortgage, more should go to retirement.

There are differences in the retirement programmes between Singapore and United States so, I need to work out how they affect my Total Money Makeover plan.

1. The Central Provident Fund (CPF)

CPF is similar to the 401K in the US. I contribute 20% of my income to CPF and my employer contributes 17%. A total of 37%. So, it seems like I am already investing more than 15% of my income to retirement. But that is not quite true because CPF has other uses.

I have 3 accounts in CPF. The 37% contribution is split between the 3 accounts:

  1. Ordinary account (OA) for house purchases and funding education
  2. Special Account (SA) for retirement
  3. Medisave (MA) for healthcare

After the split, I’m contributing less than 15% towards retirement in my SA account. On top of that, the interest rate for SA is 4% which is lower than the 10% assumed by Dave Ramsey.

2. Supplementary Retirement Scheme (SRS)

The SRS is a voluntary savings scheme towards retirement that comes with some tax relief. The maximum contribution of $15,300 is an absolute amount. Tax relief is great, but the scheme comes with some limitations.

Firstly, it is illiquid. Withdrawal before the statutory retirement age attract a 5% penalty and withdrawal amount is 100% taxable.

Secondly, the types of instruments I can invest SRS in are limited and again, does not hit the 10% rate of return assumed by Dave Ramsey.

It took a while, but I managed to work out my SRS portfolio strategy.

3. cash retirement fund

I think I need to supplement my retirement besides CPF and SRS. I will invest 15% of my take home income as instructed in Ramsey’s Total Money Makeover to an additional cash retirement fund.

The question now is figuring out a retirement portfolio strategy that suits me. I’m looking for wealth accumulation with regular and automatic contributions.

Baby Step 6 – Pay off your home early

I have a private home mortgage with an interest rate that is rising fast. I am planning to sell it off a year or two later. I will then try to purchase a smaller place without borrowing money. Then I will be debt-free and have completed Baby Step 6.

I will do a separate financial plan for my housing need and see how it impacts my budget.

Is the Singapore Government Reading Dave Ramsey?

As I learnt more about the Dave Ramsey’s principles, I am amused how much the Singapore Government’s policies mirror his Baby Steps.

  1. The OA acts like forced savings for Baby Step 5 and 6 although Dave Ramsey does not like nanny governments. I’m used to it so that’s okay.
  2. The MA resembles the Health Savings Account (HSA)
  3. The SA and SRS are like the 401K

Reading List

Ramsey, D. (2013). The total money makeover: A proven plan for financial fitness. Nelson Books, an imprint of Thomas Nelson. [ Affiliate link] – The Total Money Makeover outlines the 7 steps in the plan and provide key information on each step.

Ramsey D. (1998). The financial peace planner : a step-by-step guide to restoring your family’s financial health. Penguin Books. [Affiliate link] – The Financial peace planner offers more detailed discussion and rationale behind the Baby Steps and their sequence.

Ramsey Solutions. (2022, October 4). How to win with money in 7 baby steps. Ramsey Solutions. Retrieved January 4, 2023, from

Ramsey Solutions. (2022, October 20). How to build wealth at any age. Ramsey Solutions. Retrieved January 4, 2023, from

Ramsey Solutions. (2022, October 20). How do I save for retirement, college, and pay off the mortgage at the same time? Ramsey Solutions. Retrieved January 4, 2023, from

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