Interesting Image

What’s the Point of Saving When Cash Earns So Little?

Q: Does it make sense to keep putting cash in savings accounts which pay next to nothing?

A: Yes!!! Money you won’t need in the next 3-5 years should be in the market, where it can earn a lot more. But it’s important to set aside cash, even small amounts, on a regular basis. Even better if it’s in a higher yield online account like Ally or Capital One.

Here are 3 reasons why savings is smart, even when interest rates are rock-bottom. 

Reason #1— Peace of Mind. Unexpected emergencies are inevitable. Your cat needs surgery. You need a root canal. Your kids need new shoes. Without ready cash, you’ll turn to plastic.  But if those bills go unpaid, the sky-high interest will keep ratcheting up, wreaking havoc on your credit rating, not to mention your serenity.

Reason #2— Protection. Of course, if you have a brokerage account, you could always sell stock to cover your costs. But what if the market is tanking, forcing you to take a big loss?  Or worse, your only recourse, other than debt, is to borrow from your retirement fund, incurring fines and penalties, ruining  your plans to retire and endangering your future security.

Reason #3—Guilt-free Pleasures. Once travel restrictions are eased, you’d give anything for a week at a spa. There’s a pair of boots you’ve been coveting forever.  On your next anniversary, you’d love to splurge on a romantic dinner at an upscale restaurant.  These are often called guilty pleasures. But sufficient savings will erase any trace of guilt, leaving you with purely pleasurable experiences.

It’s true. Savings accounts may not make you wealthy. But they sure can increase your sense of well-being. And that, in itself, is worth a hell of a lot.

Are you continuing to save? Leave me a comment below.

How would you like to be able to ask Barbara questions like the one in today’s blog—anytime you want? Well, you can! Join The Wealth Connection today! Learn More!

Comments & Feedback

  • Karen McCall

    Hi Barbara,

    I love your blog. I agree 100%. You’ve made it so clear about why people need to save. I encourage people to think of the cash account as revolving savings. Savings that you use for nonmonthly expenses and all of the items you listed in your blog. It’s a great way to prevent going into debt as well as not selling off their investments.

    I love your clear, concise approach.

    Big hugs to you!

    • barbara huson

      Thanks Karen! It’s sooooooo GREAT to hear from you. By the way, you’re also in my next book, coming out Jan. 12,2021. Just wanted you to know!!!

  • Lisa


    I think everyone should have 3-4 months in cash savings as their first investment! I know in the US, almost everything can be purchased on credit card, however I don’t think rent or mortgages can unless you can quickly receive welfare. Is that right? I’ve dug into my cash savings a lot during these times.

    Warmly ,

    • barbara huson

      You’re not alone in digging into your savings these days. But isn’t that what savings is for, Lisa…to carry us over difficult times without having to go into debt. Aren’t you glad you had that money socked away????

  • Eva

    Oh yes, I do keep saving! (almost forgot, thx for the reminder!). It is harder now because I have much less income in this situation. Very soon I may be happy that I did save before, because I’ll need to use that to pay my everyday life.

    • barbara huson

      I love that you almost forgot that you’re continuing to save…that must mean you do it automatically. Good for you!!! And you discovered why savings is so important…you never know when tough times are going to strike. That’s the beauty of consistent savings–peace of mind!!!! Thanks for your comment, Lisa.

Use The Form Below to Share Your Feedback And Opinion

Meet Barbara Huson

When a devastating financial crisis rocked her world, Barbara Huson knew she had to get smart about money… and she did. Now, she wants to empower every women to take charge of their money and take charge of their lives! She’s doing just that with her best-selling books, life changing retreats and private financial coaching.

Top Back To Top
Site Design Rebecca Pollock
Site Development Alchemy + Aim