The Baby Steps of Finances are the following: 1. $1000 to start an emergency fund 2. Pay off all debt using the debt snowball 3. 3 to 6 months of expenses in savings 4. Invest 15% of household income into Roth IRAs and pre-tax requirements 5. College funding for children 6. Pay off home early 7. Build wealth and give Explain the three basic reasons for saving money : There are many reasons that you should save money but today I am going to list 3 basic reasons such as the following: 1. Save Money for Emergency Funds- It is important to have an emergency fund set aside to cover unexpected expenses. This could cover an unexpected car repair or a sudden job loss. In addition to your emergency fund you need to make sure you have a plan and good insurance in place to help you survive the unexpected financial events in your life. 2. Save for Retirement- Another important reason to save money is your retirement. The sooner you start saving for retirement, the less you will have to save in the future. You can put your money to work for you. As you continue to contribute overtime you will be earning more interest on the money you have, then you put in each month. 3. Save for Your Education- My last reason to begin saving money is for your future education. Each year more people return to school to earn their masters or doctorate degrees. You may also consider saving for your child's education when the time comes.- Identify the benefits of having a emergency fund. Identify the benefits of having an emergency fund: An emergency fund is essentially money that's been set aside to cover any of life's unexpected events. This money will allow you to live for a few months should you happen to lose your job or if something unexpected comes up that will cost a fair chunk of money to cover. Think of it as an insurance policy. Rather than paying premiums to an insurance company, you're setting aside money for yourself that can be used at a later date. This money can then be accessed quickly and easily if some unfortunate event happens to occur. Demonstrate how compound interest works and understand the impact of annual interest rates. |