Suze Orman Has This Excellent Advice on Building Emergency Savings

It pays to take it to heart.

If you're someone who listens to Suze Orman's podcast (and if you're not, you should be), you may have picked up on certain themes. One common piece of advice Orman likes to give is to take a long-term approach to investing. Another is to minimize debt because it has the potential to drag you down. But if there's one thing Orman is really passionate about, it's emergency savings.

Orman insists that it's important to not only have money in savings, but have enough to cover eight to 12 months' worth of essential living expenses. That way, if you lose your job or get stuck with a massive bill you weren't anticipating, you won't immediately be driven into debt as your only means of coping with that situation.

But many people struggle to build savings because the bulk of their income is eaten up by bills. This especially applies lately, what with inflation being sky high.

If you're having a hard time building savings, it pays to take Orman's advice on changing your spending mindset. It could be your ticket to more financial security -- and the savings you need to sleep better at night.

Live below your means but within your needs

In elementary school, many of us learn the difference between needs and wants. But then somehow, we forget that as adults within the context of spending money.

If you want to build savings, Orman insists that it could boil down to a crash course in needs versus wants. If you train yourself to recognize the difference between the two, and you pledge to only spend money on needs until your savings are in a better place, then you may be surprised at how much progress you're able to make.

As an example, Orman says, you need to feed yourself -- there's no question about it. But that doesn't mean you need to go out to a restaurant every time you're hungry. You may want to do that because it's fun and it means you don't have to cook, but all you really need to nourish yourself is a trip to the grocery store.

It's that very mindset that could make building savings so much easier. When Orman says to live below your means, that doesn't imply that you should deny yourself complete meals or a clean apartment just to pump extra money into your savings account. But what it does mean is that you should rent a smaller $1,000 apartment if a $1,500 space will make it impossible to save money month after month.

Similarly, you might need a car to get to work in a reasonable fashion -- meaning, to not have to spend hours each day navigating public transportation. It's okay to spend some money on a car, even if public transportation is cheaper. But that doesn't mean you should get a car that comes with a $450 monthly payment. Instead, buy a less-expensive car that will cost you $300 a month, and bank the rest.

It's all about priorities

Ultimately, building savings and meeting other financial goals often comes down to setting priorities. You may love the idea of a yearly resort vacation. But if spending $3,000 a year on one makes it so you can't save for retirement, you might end up cash-strapped and unhappy in your post-work life. And so you may have to change your mindset and prioritize your later-in-life comfort over near-term gratification.

Similarly, if you're having a hard time building emergency savings, think about whether the different purchases you make are needs versus wants, and spend less on the latter category. Once you have a complete emergency fund, you can go back to restaurant meals, concerts, and the other enjoyable things you spend your money on. But for a period of time, you may need to make some sacrifices to build yourself the safety net you need.