01/29/2023
The difference between saving and investing:
A savings account is for money you'll use within the next 5 years.
If you're prepared to leave the money alone for more than 5 years, you can invest it.
Remember that this also depends on which Baby Step you're on. Choosing between saving money and investing money comes AFTER you've completed the first few Baby Steps.
If you're just getting started with Baby Step 1, you don't need to invest yet, even if you wish you could. The priority at the beginning of your Baby Step journey should be to get your $1,000 starter emergency fund saved so you can knock out debt in Baby Step 2.
If you have FINISHED paying off debt and have your full 3-6 months of expenses saved for Baby Step 3, you can then move on to Baby Step 4. This is where you invest 15% of your income toward retirement. Baby Steps 4, 5, and 6 are done at the same time, but in order. Once you've put 15% of your income toward retirement investing, you can decide how much you want to also put toward Baby Step 5, which is saving for your kids' college (this is an optional step). Then, you put extra money toward paying off your home early for Baby Step 6. During this more stable time in your financial journey, you're able to make decisions about saving vs. investing. You've freed yourself up to do some extra saving in sinking funds for things you'll need within the next few years, and once your home is paid off, you can make some fun investing decisions for your long-term goals.
Take things one step at a time. This plan works, and you CAN do it.
