In this episode, we unpack why having the right amount of cash in savings is essential—but why holding on to too much can quietly hurt your financial future. While an emergency fund provides short-term stability and peace of mind, excess cash loses value every year to inflation. By contrasting the short-term safety of savings with the long-term growth of investments, the conversation highlights the importance of balance. Practical frameworks like the “barbell model” and simple steps for gradually investing extra funds show how to move beyond just saving to start building lasting financial security.

Key takeaways:

1. Aim for an emergency fund with at least 3–6 months of expenses (or more if self-employed) in an FDIC-insured savings account.
2. Cash is great in the short term—but lousy in the long term. Inflation erodes buying power over time, making cash unreliable for long-term goals.
3. Though volatile in the short term, stocks and other investments historically outpace inflation over long periods.
4. The barbell model: balance the stability of cash with the growth potential of investments to create financial strength.
5. Start small and stay consistent—invest extra cash gradually, automate contributions, and avoid moving the goalposts on your savings target.

Links:
Sign up for weekly Office Hours
Send me a question to be answered on a future episode
Sign up for the Keep It Easy newsletter