Dave Ramsey says you’ll never get rich from a savings account, but you should have one anyway

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Should I take Ramsey’s advice and open a savings account?

Key Point

• Savings accounts have very low returns, but Dave Ramsey says you need one anyway.
• He says a savings account is like insurance without the bureaucracy.

Like most people you have a limited amount of money. Also, there are many things you can do with your hard-earned cash. For example, you may invest in a brokerage firm and get a generous return that will help you build your wealth.

When trying to decide where to go with your money, financial expert Dave Ramsey suggests that you should keep at least some of it in your savings account. It’s likely to be “pretty low,” according to the financial guru.

Ramsey says you should have a savings account, even if you can’t make much money with it

Above Ramsay Solutions On his blog, Ramsey makes it clear that everyone should have a savings account. However, he warned that these accounts have a downside. “You will never get rich from them,” he warned.

But Ramsay said you shouldn’t be disappointed by the fact that savings accounts don’t make a lot of money. The account you provide is not impressive.

“A savings account is not an investment,” explained Ramsey. “It’s a cushion for when life hits you unfairly. Think of it like an extra insurance policy – minus all the bureaucracy.”

You see, Ramsey believes you need a savings account to “save until you spend it,” and this type of account is great for emergency funds as well as saving for larger purchases you plan to make relatively soon. It is said to be a good place to put both of your money.

He suggests opening a savings account in addition to a checking account. That way you can keep this money separate from the cash you have to spend.

Is Ramsey correct?

Ramsey is absolutely right that opening a savings account will not make you wealthy. It gradually loses its value over time.

He’s also right that you should open a savings account, which is true. Savings accounts don’t offer generous returns, but they do offer an easily accessible location without the risk of losing cash. A savings account is also great if you need access to money for emergencies or for purchases you plan to make in about 2-5 years.

You don’t want to tie up money you might need soon in a complicated investment that creates potential for loss. Otherwise, you may run out of the cash you need. You will also have to sell your investment at the wrong time, which increases your chances of incurring a large loss. A savings account does not carry this type of risk. You can deposit money, earn a small amount of interest, and withdraw it whenever you want.

You probably don’t want to save more money than you need, but you definitely have cash in this account, so if you don’t already have a savings account of your own, open one ASAP.