Money Management

You should have your emergency fund in a high-yield savings account. Keep reading to learn why you shouldn’t invest emergency savings. 

Having emergency savings in the bank is a cornerstone of personal finance. You should have three to six months of living expenses saved in an emergency fund. Doing so could be the ticket to staying out of credit card debt and avoiding a whole lot of financial stress if you’re faced with any unexpected expenses.

Since the average consumer unit spends $72,967 per year, according to the Bureau of Labor Statistics, having six months of living expenses saved could mean you need as much as $36,483.50 set aside in case of emergencies.

That’s a lot of money, so you may be tempted to try to invest it or do something strategic with it in order to maximize your return on investment. You should not do that. In fact, there is only one place where your emergency fund should be. Here’s what it is.

This is where your emergency fund needs to go

Your emergency fund should be in a high-yield savings account. It belongs there for a few reasons:

You can’t lose the money. If you pick an FDIC-insured savings account, your funds are safe, up to FDIC insurance limits. There’s no risk you will end up with less than you need when an emergency strikes.You can take the money out when you need it. You don’t have to agree to leave your funds invested for a certain period of time as you would if you chose a certificate of deposit (CD). You also don’t have to worry about whether you’ll end up taking your money out at a bad time, as you would if you put it into the stock market.You can still earn a reasonable rate of return. A high-yield savings account typically offers a better rate than a regular savings account or a checking account. So even though you usually won’t earn as much as you would if you put your money into the stock market, you can ensure you aren’t losing a lot of ground due to inflation.You won’t be as tempted to spend the money. If you kept your emergency fund in a checking account, it might be too easy to spend. By keeping it in a dedicated savings account, you’ll know you should keep your hands off it unless or until an emergency situation strikes.

If you’ve worked hard to save money for emergencies, you don’t want the funds to be lost or inaccessible when the time comes. Putting them in savings is the best way to avoid that issue.

Emergency money is not money to be invested

Although it may seem disappointing to miss out on the higher returns you could get if you invested in the stock market or even in a CD, the reality is that’s not the purpose of your emergency fund.

When you save money for emergencies, you’re investing in your peace of mind. You’re taking steps to ensure you can avoid costly debt or other financial issues. That’s more important than getting the highest possible return on these particular dollars. Your emergency fund can help keep your overall financial situation stable so you can afford to invest money in other ways, so let it serve its purpose by putting it into savings.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Want to make the most of your Sam’s Club membership? Try these five tricks in 2024 to maximize your savings. 

If you’re a Sam’s Club shopper, you probably already know that there are many bargains to be had at the warehouse club. But there are more ways to save at Sam’s beyond just getting a good deal on groceries and bulk toilet paper.

Try out these five shopping hacks in 2024 to maximize the value of your membership, improve your financial situation, and save as much as you can.

1. Understand what the price tags mean

If you take a look at the lower left corner of the price tags at Sam’s Club, you can get a lot of information about the item for sale. Specifically, you’ll see a letter after the item’s serial number but before the bar code. You should know what these letters mean. Here’s how the code works:

“N” means the item is a store staple that will remain in stock. You don’t have to rush to purchase it, since you can expect to pretty much always find it on store shelves.”A” means the item is active so it is unlikely to be removed from the shelves or discounted anytime soon. Buy it if you want it or need it. But don’t worry about stocking up out of fear it will be gone and don’t put off your purchase in hopes it will soon go on sale.”S” means the item is seasonal. If you want the item, buy it before the current holiday ends or before the seasons change and the item is pulled from the shelves.”O” means that the item is a one-time buy. The stock that’s available is all there is going to be and you’ll want to grab as many of the items as you need, since you can’t count on getting it again in the future.

By understanding how these codes work, you can decide when you need to act quickly to purchase something you want and when you have time.

2. Check out the Instant Savings book before shopping

Before any visit to Sam’s Club, check out the Instant Savings book to find out about the best deals on offer. These deals run for a limited time only, so you’ll want to snag them before they’re gone if you see something you like. You don’t even need to clip any coupons to take advantage of the special bargains, but you do need to be aware of them to get them during the time the flash sale is running.

3. Take advantage of Scan & Go

The lines at Sam’s Club can get pretty long, especially if you’re shopping on a weekend. That’s why taking advantage of Sam’s Scan & Go feature is a great time-saving hack.

You’ll need your Sam’s Club app to use Scan & Go. Once you’ve got the app and are in the store, just open it up and scan each product’s barcode as you add it to your cart (or use the “Find an Item” option in the app if the item doesn’t have a barcode). You’ll be able to pay right in the app, skip the checkout counter, and just show your digital receipt as you’re leaving.

4. Visit the Freeosk machine for free samples

Getting free samples is one of the best perks of shopping at Sam’s, and many stores now offer a novel new way to get them. You can visit the Freeosk, which is a machine that gives you free stuff to try out. Many Sam’s Clubs have them, and you can just visit the machine and scan your membership card to get a sample of a wide variety of different items.

5. Take advantage of discounted gift card offers

Finally, if you want to take your savings beyond Sam’s Club itself, check out the discounted gift cards the warehouse club offers. There’s a huge selection of cards at reduced prices, including a $75 Disney gift card for $71.98 and a $50.00 Chuck E Cheese gift card for just $37.50 as of December 2023.

And keep in mind, you don’t have to just use gift cards as gifts for others — they can help you save on your own purchases, too. If you are shopping with a retailer that has discounted gift cards at Sam’s Club, stop in or check out the Sam’s Club website. You can get digital delivery for most cards and use them right away to pay less.

Trying out these hacks can go a long way toward helping you free up more cash for your savings account, so give them a go at your next Sam’s visit to really make the most of your membership.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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