Savings
Section 1
Saving money is one of the best things an individual can do to be prepared for
the future. As Dave Ramsey said in the video, emergencies can and will happen to
you. You always have to be prepared for them and the best way to do that is to save
your money. In this video, he specifically describes 7 baby steps to help people have
a plan on how to save their money.
The first baby step is to create a beginner emergency fund by putting $1,000
somewhere safe and somewhere where you can’t get to it. If a person makes less
than $20,000 a year, then the emergency amount can be $500. This fund will be
strictly for emergencies only. Dave Ramsey describes it as the easiest and hardest
baby step. It is the easiest because it is only a small amount of money. It is the
hardest because you have to decide for yourself if you want to take these steps and
change your behavior to be a better person. The main two goals for college students
is to stay out of debt and stay in school.
The second baby step is the debt snowball. In order to do this, one has to list
their debts smallest to largest and pay off the minimum amount due for each one. As
you pay off each one, you will have more money to spend on the next one that needs
to be completed. Dave Ramsey says that the first two baby steps need to be
completed while still in school.
The third baby step and onwards are for when the college student has
graduated. The third baby step is to start with the $500 or $1,000 from baby step
one and keep piling on the cash. The next step is to set aside 15% of your income for
retirement such as 401k plans and mutual funds. The fifth step of the plan is to start
college savings for your kids. The sixth step is to pay off your home as early as you
can preferably with only cash. The last and final step is to build your wealth and give
it away to the less fortunate.
Dave Ramsey also mentions that money is amoral. It doesn’t have morals
meaning that it’s not good or bad. It only functions when a human touches it. Only
you can decide what you want to do with your money.
Section 2:
In this video, Dave Ramsey talks about the three basic reasons we save
money. These reasons are key reasons on why people should save their money
instead of spending it all. The first reason is emergencies. Nobody can know when
