How “Saving is Like an Oak Tree” | Three Bucket System

This is the first week without attending the personal finances for women workshop with Teacher. It was only three weeks long. I knew the day would come, but still I loved hanging with the ladies.

In our penultimate session, we discussed savings strategies. Half of U.S. households don’t have $2,000 in case of emergencies or to cover the deductible on car and health insurance. I bet very few people seriously think about that when they choose the low premium, high deductible plan. I know I hadn’t until this year.

Teacher’s recommended savings strategy includes:

  1. Emergency savings
  2. Savings to Spend 
  3. Long-Term Savings


As a financial advisor, she prefers that her clients to invest debt-free dollars. So she recommends filling up those three buckets first, then look into investment vehicles, like stocks.

“You always want your money to be making money,” she said, so always factor in APY rates and understand the wonder of compound interest (Well, it could work against you in terms of carrying debt.)

I was reading Dave Ramsey’s chapters on savings and investments simultaneously. His advice was the same on Teacher’s three savings buckets and understanding compound interest.

“Saving is like planting an oak tree,” Ramsey said. “You cannot keep pulling it up by the roots to check its progress.”

“Saving is like planting an oak tree. You cannot keep pulling it up by the roots to check its progress.” – Dave Ramsey

If anyone talks to you about a “guaranteed investment,” then RUN”, Teacher warned us. All investment comes with risks; there are no guarantees. That’s why it’s best to use debt-free dollars or the excess you have after filling up your three savings buckets.

Investment is for the long-term, so don’t go into it knowing there’s a possibility you’ll need money in a few months or so, Teacher said.

Then she went on to give the best analogies that I’ve ever heard in my life. She likened bonds to a window with one pane, and mutual funds to multi-pane window. If someone throws a rock into the single-pane window, then you have to replace the whole window. So if all of your money is in the Pepsi stock, then all of your investment goes down. If someone throws a rock into the multi-pane window, then you only need to replace one of them. With mutual funds, you have several investments – maybe Pepsi, Coca Cola, Apple, Facebook, Exxon and Twitter. If one goes down, then you could mitigate the risk with the others. Brilliant explanation!


In the last session, we discussed asset protection a.k.a. insurance. Insurances transfers the risk if something happens to you, Teacher explained. She says your biggest asset is your ability to earn an income.

Can you afford not to have health insurance? The No. 1 cause of bankruptcy is medical reasons.

We went over the major types of insurance:

  1. Health
  2. Life
  3. Auto
  4. Home
  5. Disability
  6. Long-Term Care

I was super sad about this being our last session because we could have talked on and on about all of the nuances involved in insuring your asset. I’m so happy they she provided a great foundation on which to build our knowledge. I hope all four of her pupils leave better than they way we came.

We ended our time together with a group hug. I’m a hugger, not a fighter. Seriously, I love hugs. While we were encircled, I joked and said “Now, put your right foot in…” They giggled.

We left on a high note. We left with hope.

More Resources: Sente Mortgage’s Tips on Savings Buckets

Good Read: The “Three-Bucket System” for Managing Money


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