Suze Orman: This is the Key to Reducing Financial Anxiety
Written by
Paige Cerulli
Edited by
T. Woods
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If you feel stressed about money, you’re not alone. Fidelity’s Women’s History Month 2024 Survey, released in March, found that financial anxiety levels are consistently high among women regardless of their household income.
There’s hope, though; the survey also found that women who took financial action in the past six months experienced less stress than women who didn’t.
Suze Orman, one of GOBankingRate’ Money’s Most Influential Women, responded to the survey and shared a key tip to help reduce financial anxiety.
Build Your Financial Savings
“I am not surprised that more than 80% of women recently surveyed by Fidelity who had no emergency savings said they live with financial stress,” Orman explained. “But here’s what made me smile: women who have managed to save up enough money to cover three months of living expenses were far less likely to be carrying around high levels of stress.”
Orman said that she ideally wants individuals to have at least one year’s worth of living expenses saved up, which can help you to navigate major financial setbacks. However, she thinks that a goal to save up three months of expenses is a fantastic option for individuals who have no emergency savings.
How to Calculate Your Three-Month Savings Account
Orman explained that the first step to building up your three-month emergency savings is to sit down and determine your monthly essential costs. Add up all of the costs of your rent or mortgage, food, utilities and essential insurance premiums like your health, home insurance and car insurance.
Once you have that total cost for one month, multiply it by three. That number is your savings goal.
Next, Orman recommended dividing the sum by 12 months. This figure helps you determine how much you would need to save each month to reach your savings goal during the course of a year. For example, if you need $8,500 in living expenses for three months, you would need to save $708.34 per month to build up your savings in a year.
If it doesn’t seem possible to set aside that much money per month, you can take more time. Divide your total savings needed by 24 to see what you would need to save monthly to build up your savings over a two-year period.
How to Start Building Your Three-Month Savings Account
“Once you decide how much you are going to save, I want you to commit to an automatic deposit into a federally insured bank or credit union savings account,” Orman explained. Look for a monthly, biweekly, or weekly transfer option that is automated and that doesn’t incur any fees.
Most importantly, log into your savings account once a month to review the balance. “And then give yourself credit for what you have already achieved: every month your account grows, it builds financial security,” said Orman. “And that’s going to help make life less stressful.”
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