Develop the Savings Muscle
Samantha in Nashville is 20 years old and wants to feel more like an adult. She wants to buy a house with cash someday. Dave advises Samantha to follow the Baby Steps and develop her savings muscle.
QUESTION: Samantha in Nashville is 20 years old and wants to feel more like an adult. She and her boyfriend live together, and she wants to buy a house with cash someday. Dave advises Samantha to walk right up the Baby Steps and tells her to develop her savings muscle.
ANSWER: The way you solve this is to do a written budget, a written plan before the month begins. Every single month you do a different one and say this is what I’m going to make this month and this is what I’m going to spend it on. Put your income on the top of the page and give every dollar an assignment on paper. Every dollar has a name beside it on paper. Before the month begins, your income is already spent.
Some of that will be going to a savings account. Your first goal is to get through school with no more debt. Your second goal is to pay off the debt that you have. Your third goal is to build an emergency fund of three to six months of expenses.
Right now you don’t need a big savings account. The bank is not going to pay you any interest to amount to anything. It’s a joke. The big deal here is that you need to develop your savings muscle because you’ve never used that muscle. That’s what you’re talking about indirectly here.
Your first goal should be $1,000 saved in a savings account in your name only. Out of your budget, you need to put aside money to do that as quickly as you possibly can. The next goal is to make sure you’re budgeting so that you don’t get any further in debt to finish school. Your next goal is to pay off the debt that you do have. Those things give you something to work on for a while.