HERE ARE THREE

Here are three reasons why I think an emergency savings account is the dumbest thing you can do with your money. I'm Tyler, I'm a former financial advisor, portfolio manager, and I make financial content for free so that you don't have to pay for it. Number one, according to a 2022 report by the Federal Reserve, 64% of Americans experienced no major unexpected expenses in the previous year. The remaining 36% reported costs under $1,000. Big whoop, put it on a credit card. Number two, the majority of you that emergency savings in a savings account earning the national average of 0.47% with inflation averaging just over 3% annually. You do in fact have an emergency on your hands and a half money per year. Number three, but wait, there's more. Not only are you losing this money to inflation, you're also getting hit with additional taxes. No, your high-yield savings account is not earning you 4%. It's earning you 1% post-inflation and 0% post-tax. Square one or square zero. But if after all that, you still want an emergency fund, open a Roth IRA, invest 5% in risk-free assets, shelter yourself completely from taxes and sleep better at night knowing that you can take back your contributions at any time, penalty and tax-free. You know, just in case of an emergency.