Do you like the Dave Ramsey Baby Steps or the Crown Money Map? Dave Ramsey created the Baby Steps and Crown Financial Ministries created the Money Map for prioritizing and setting financial goals.
If you’re just joining, this is article #3 in a series about The Baby Steps and Money Map. I invite you to follow along with me as I walk you through both approaches, discuss my observations, hopefully, stimulate your thinking and raise some questions. I’ll round out the series with some summary thoughts.
Baby Step 3 – Money Map Destination 3
What does the Baby Step say?
- 3 to 6 months in savings.
What does the Money Map say?
- Pay off all consumer debt & increase savings to 3 months living expenses.
Observations and Questions
- The Money Map pays off remaining consumer debt in this phase. Remember, in Money Map Destination 2 you saved 1 month’s living expenses before paying off car loans, student loans, etc.
- Both approaches discuss saving up to 3-6 months of living expenses for an emergency fund. This seems to be a standard recommendation from financial experts in books and around the internet. Interestingly, there is a large gap between 3 and 6 months of living expenses. Depending on how much you’re contributing to your savings, 6 months of living expenses might keep you in this phase for a while. Obviously, the more emergency savings you build up the more you reduce the risk of going into debt which is a great thing to consider.
- The Money Map scripture in this phase is Romans 13:8: “Keep out of debt and owe no man anything”.
What are your thoughts on this phase? Are you in favor of 3 to 6 months of living expenses in savings? If so, do you lean on the lower or higher side?
