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
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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. He has authored seven best-selling
books, including The Total Money Makeover. The Dave Ramsey Show is heard by
more than 16 million listeners each week on 600 radio stations and multiple digital
platforms. Follow Dave on the web at daveramsey.com and on Twitter at
@DaveRamsey.
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