If you're trying to get your financial house in order, any number of experts will tell you the same thing: Build up an emergency fund of at least three to six months' worth of living expenses.
But Suze Orman, financial expert and former CNBC television host, thinks otherwise.
"They're idiots," Orman said at the eMerge Americas conference in Miami, Fla., on Monday, answering a question about how much to keep in your emergency fund.
Orman explained that three to six months' worth of expenses isn't enough to feel secure. What if you lose your job and can't find another one for a year? What if you're hit with an out-of-the-blue medical emergency? A million potential scenarios could drain your savings without warning, so it's better to have at least eight to 12 months' worth of living expenses squirrelled away.
"You need to know that you are going to be secure," she says.
Orman went on to paint a picture of darker times, reminding the audience of the financial ruin the Great Recession caused just 10 years ago.
"Go back to 2007… You lost your job, you lost everything, you were working on this tech thing and all the startups went down," she says. "Nobody had any money to invest, nobody wanted to touch anything, nobody wanted to IPO because the markets were going down and you couldn't find anything to do. Think it took you just three months to find another job? Think it took you six months to find another job?"
She goes on: "It's not just about the economy. What if you get sick? What if you're hit by a car? What if something happens crazy in this world? We live in the craziest world I've ever seen in my life right now. And the only way you can take craziness out of that if for you to make yourself secure."
And the only way to ensure that you'd be truly financially secure in times of crisis? A well-padded emergency fund.
"You need as much money in the bank that makes you feel secure," Orman reiterates. "Don't go fooling yourself, 'It's okay, I can charge on a credit card, I can do this.' You should have at least eight months. Not six months, not three months, I'd like to see you have eight months to one year."
If you're not there yet, you're not alone: 69 percent of Americans have less than $1,000 in savings, according to a 2016 GOBankingRates survey. And 34 percent have nothing in the bank at all.
To get your emergency fund started, consider reworking your budget and trying to find areas where you can dedicate more to saving and investing. You want to start putting money away as early as possible to take advantage of compound interest, in which any interest earned accrues interest on itself. That means a little money invested now can end up being a lot of money invested later.
The simplest way to start is to invest in your employer's 401(k) plan, a tax-advantaged retirement savings account. Next, consider alternate retirement savings accounts, such as a Roth IRA, traditional IRA and/or a health savings account.
If you need to make room in your budget, here are a few tips and tricks to help you get started:
- 10 small things to give up if you want to save more money
- 8 tips to save a fortune, from everyday people who are retiring before 45
- 6 smart ways to save your money, according to people who've socked away thousands
- 8 strategies for saving money from a couple that banked $50,000 last year
Don't miss: Suze Orman's No. 1 tip for succeeding at work