Double for couples?
Dear Dave,
Does the amount you advise saving for a beginner emergency fund in Baby Step 1 double for a couple, or does it stay the same?
Charlie
Dear Charlie,
Whether you’re single or married, Baby Step 1 of my plan is to save $1,000 as quickly as possible for a starter emergency fund. This may not sound like a lot of cash to have on-hand in the event of an emergency, but you need to remember the $1,000 figure is a temporary thing.
Baby Step 1 is saving up $1,000 for a beginner emergency fund. Baby Step 2 is paying off all debt, except your home. The vast majority of folks working my plan are debt-free, except for their mortgage, in two years or less. Then, you move to Baby Step 3, which is increasing your emergency fund from $1,000 to three-to-six months of household expenses.
In reality, we’re talking about a pretty short period of time where you’d have just $1,000 in emergency savings. Plus, it serves as an exercise in financial discipline. A lot of people have nothing saved before beginning the Baby Steps.
If that makes things seem a little scary at the start, it’s not necessarily a bad thing. A healthy level of fear can be a fantastic motivator. I don’t want anyone constantly living their lives in fear, but that added push—that sense of urgency—can make you work harder to get out of debt and move on the Baby Step 3 as quickly as possible!
Dave
Baby Step for weddings?
Dear Dave,
We recently started following your plan, and it has made a huge difference in our financial outlook and our marriage. When it comes to the Baby Steps, when do you recommend setting aside money for a wedding? We have a daughter, and we want to be able to do as much as possible for her when the time comes.
Jim
Dear Jim,
That’s a good question. There’s not really a Baby Step specifically for weddings. In my mind, it should probably come after Baby Step 5—setting aside a college fund for your kids.
Maybe part of this is the dad in me, but in prioritizing these things I think a good education is more important than a big wedding. Don’t get me wrong, a wedding is a wonderful event and cause for lots of joy and celebration. But it’s also a one-day event. Plenty of people have inexpensive, beautiful weddings and enjoy long, wonderful lives together!
Dave
*Dave Ramsey is CEO of Ramsey Solutions. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.
