It was a terrific start to the first Financial Peace University class for 2018 and was kicked off with the Super Saving lesson. We learned about the importance of saving money, where, when and how to save, and the wonders of compound interest. A wonderful example of saving and investing is the Ben and Arthur saving model. In here we learned how two teenagers will retire as millionaires with different fortunes based on when they started, and how much they put in.
This lesson also introduces the 7 baby steps, of which saving is baby step 1 and also baby step 3. Huh? Yes, there are two distinct savings events when you are working the Dave Ramsey principals for getting out of debt and growing wealth.
Baby Step 1 – Save $1000 for a starter emergency fund
Baby Step 2 – Run the debt snowball paying off debts smallest balance to largest balance. Details for how this works in a later blog.
Baby Step 3 – Build on the starter emergency fund by saving 3 – 6 months worth of expenses in a money market account. This is not an investment, its insurance: insurance against Mr. Murphy and family. Therefore we do not worry about earning big interest on this – it just sits there near to hand and only used for a major financial emergency.