Suze Orman: Everyone Needs an Emergency Savings Account
The best time to build an emergency savings fund is right now, according to personal finance expert Suze Orman.
In an interview with CNBC, Orman said having an emergency savings account is “absolutely vital.” In another interview, the bestselling author and wealth advisor said, “The one thing that every single person needs is an emergency savings account. I’ve been saying that for over 40 years now, and it’s been getting to be more and more of a problem.”
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Orman continues to stress that building emergency savings is an urgent necessity, especially as economic uncertainty rises. Here’s why the financial guru says everyone needs an emergency savings account.
Emergency Funds Provide Crucial Financial Protection
Orman has long preached the vital importance of saving for emergencies. But with today’s rocky economy, having a cash cushion is more essential than ever. As Orman explained, “We’re living in a very precarious time right now.”
With savings drained, debt burdens growing and costs inflating rapidly, Americans without emergency reserves have reason to worry.
An emergency fund serves as indispensable financial protection when the unexpected occurs. Having 3-6 months’ worth of living expenses set aside can keep you afloat during periods of income loss, accidents, illnesses or other disruptions. Orman warns that people without adequate emergency savings funds “have got to be scared to death.”
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Savings Buys Time and Options During Crises
Financial advisor Laurie Itkin agrees that emergency savings have become urgently important, given steep inflation and waves of layoffs. Those without cash reserves may have no choice but to put regular expenses on high-interest credit cards if paychecks suddenly cease. Carrying high-rate debt destroys finances.
Even small, regular monthly contributions to a high-yield savings account can build emergency funds over time. As Orman advised, “All you need is $5, $10 or $20 a week.”
These savings can provide vital breathing room to handle costs if you face a crisis like job loss or disability.
Special Savings for Natural Disaster Preparedness
For regions prone to natural disasters like hurricanes or floods, Joe DeBello, vice president of retirement at OneDigital, recommends designating special savings just for weather emergencies. When Hurricane Ian devastated Florida recently, many tapped retirement funds to cover destruction costs.
Per DeBello, calculate your full living costs including insurance deductibles, food, shelter, clothing, gas and other essentials. Determine a monthly savings goal that’s feasible for you to set aside in a dedicated emergency disaster account. Even modest savings here can prevent desperate reliance on retirement withdrawals or high-interest debt.
Heed Orman’s Longstanding Advice and Prioritize Savings
All financial experts align with Orman that establishing emergency savings must be an urgent top priority.
Orman stressed, “I don’t care if you have credit card debt, I don’t care if you have student loan debt — I don’t care what debt you have. You have to have that emergency [savings] account.”
Building even a small starter emergency fund creates stability, options and peace of mind. Take Orman’s over-40-years-strong advice to heart: Emergency savings funds are a non-negotiable necessity in every financial plan.
Heather Taylor contributed to the reporting for this article.
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