Financial author Suze Orman
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For years, the rates paid out on savings accounts were abysmal, but we are finally seeing rates going up. Indeed, the Fed has now raised rates numerous times this year, and that’s helped boost rates on savings accounts and certificates of deposit (CDs), as MarketWatch Picks recently reported. (See the best rates you can get on savings accounts here.)
“The top-yielding savings accounts have hit 2% and CDs can pull in 2.5% on a 1-year CD or as more than 3% on maturities of three years and longer. At the pace rates are rising, these high water marks will be quickly surpassed,” Greg McBride, chief financial analyst at Bankrate, recently told Picks.
But even as that’s happening, Americans haven’t saved enough. Pros say most of us need somewhere between 3-9 months of expenses socked away in a savings account (preferably a high-yield one) for emergencies. And yet 56% of Americans can’t cover an unexpected $1,000 bill with savings, according to a survey from Bankrate. So we decided to give you all a little savings inspo — from none other than best-selling author and finance guru Suze Orman.
“If you can manage to boost your savings, please don’t delay. The risk that we may be sliding into a recession in the coming months has risen along with the latest move by the Federal Reserve.” – July 21, 2022
“You know I am all for investing money you won’t need for decades in low-cost stock index mutual funds or exchange-traded funds. Over the long-term, stocks tend to produce higher returns than bonds or cash. But I’m also a huge fan of safe savings. There is no substitute for the security of knowing you have money in the bank that will not lose value in a bear market. That can be your emergency fund, or money you plan to use in the next few years for a home down payment. Or just because you will sleep better, live a better life, knowing you have money in the bank.” – August 16, 2018
“We all need to be building up our financial defenses in case a recession hits. The worst thing you can do right now is overspending on vacations and fun times this summer, leaving you vulnerable if a recession does hit.” – June 16, 2022
“The more you have saved in your emergency fund, the better prepared you will be to deal with whatever the economy throws our way in the coming months.” – July 21, 2022
“Remember my law of emergency savings: what’s most important is to have cash you can tap. What you earn on that is a secondary concern.” – March 31, 2022
“Boost your savings rate by 1 percentage point every year. That’s at a minimum. Even better is to boost it that much every six months.” – January 20, 2022
“Make it automatic. The best way to avoid future regret is to make your savings automatic. If you have a workplace retirement plan, congrats, you have automated savings. Each paycheck some of your money is being deposited into your retirement account.” – July 15, 2021
“I want you to reconsider how much you are aiming to set aside in your emergency savings fund. I have long said the goal should be 8 months. My new advice is that you want to have savings that can cover 12 months of your living costs.” – December 24, 2020
For anyone considering starting their own business, Orman says, “Build up savings first. Launching a business requires 110% of your attention and energy. You literally can’t afford to be distracted by worrying about how you will pay your bills in the initial months as you build your business. Having savings that can cover at least one year of living expenses is my general advice. I would encourage would-be entrepreneurs to try and start with even a few more months of savings.” – May 26, 2022
“If you can’t boost your savings right now, that’s okay. Just put it on your short list of goals you intend to tackle when you have some extra cash flow.” – July 21, 2022
