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Learning How to Save
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Learning How to Save

By Dave Ramsey
Author, The Total Money Makeover – Don't let your money control you. Take back the reigns with smart tips from financial counselor Dave Ramsey.

How Much Is Enough?

Dear Dave,

In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range?

– Amanda

Dear Amanda,

Lots of times in a marriage you’ll have a situation where one person wants to save more, while the other is excited to move on toward investing. Technically, neither is wrong, so the emergency fund really deals with someone’s own personal level of peace. Remember Murphy’s Law, and how it says that says if something can go wrong it will go wrong? Your emergency fund is Murphy Repellant. Some people just want to make sure he doesn’t knock on the door, while others want to make sure he stays in the next county!

There are always practical considerations you can use to determine the amount of your emergency fund. If you both have very stable jobs, you’ll probably be okay saving up three or four months of expenses. But if just one of you works outside the home, or if one is self-employed or on commission, leaning toward the six month side is probably a good idea. Plus, you can always compromise. Start out with three months, but add a little every once in a while until you reach a point where you’re both comfortable!


Finding the Deal

Dear Dave,

You mentioned on your show that you once bought a truck below wholesale price. Do you have any tips for finding a good deal on a used car?


Dear Anonymous,

When it comes to things like this, I just go on a big treasure hunt. I don’t really care where I buy something, because the best deals will sometimes pop up in the most unlikely places. The rule to remember when buying big ticket items is this: He who has the most patience and the most information wins.

If you do a little research and don’t get car fever, you can find some pretty sweet deals. I’m all about good deals, so the patience part of the equation wasn’t a big thing for me. I did a lot of digging around while I was looking, and in the process became an expert on certain types of trucks in particular areas. It’s really hard to get burned if you have a little patience, and plenty of good, solid information!


Keeping the Money from People with Shady Intentions

Dear Dave,

My nephew was recently left a large sum of money from a life insurance policy after his mother died. She did not have a will. His father, who has been out of the picture for some time, is about to be granted custody, and he’s been asking lots of suspicious questions about the money. We don’t trust his motives. How can we help make sure the money is protected?


Dear Anonymous,

You need to talk to a lawyer, and take this matter to probate court immediately. Tell the judge about the situation and your concerns. Ask him to put your nephew’s money into a trust through a bank or other third party. Otherwise, as his guardian, there’s a good chance the father will be granted control of the money.

I’m not big on bank trust departments, but I am big on keeping shady people from taking money away from kids!


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Dave SaysDave Ramsey is a nationally-syndicated radio talk show host and author of the New York Times bestselling books, Financial Peace Revisited and The Total Money Makeover. His life-changing advice in the area of personal finance helps people get out of debt, stay out of debt and build wealth that will last a lifetime and beyond.

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