The Plan A / Plan B Security Base
Earn and upskill all you want, but build the safe-and-sound base for when life goes wrong.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 72%
Orman's counter to the earn-more-and-invest-in-yourself school: she does not object to it, she objects to it being the whole plan. The mechanism is a two-track split. Plan A is offence — skills, income, career. Plan B is a safe-and-sound base sized at 8 to 12 months of actual obligated expenses, held somewhere immediately accessible and impossible to lose, plus a non-zero ongoing retirement contribution. The sizing is deliberately conservative because the events it insures against — a car accident, breast cancer in your 30s, MS, long covid, a repeat of 2008 with a government too broke to backstop you — remove the income and the ability to rebuild it at the same time. Her test question is blunt: are you secure? Over 50% of Americans, she notes, have under $400 to their name.
Origin
Extracted from Young and Profiting. Orman co-founded SecureSave to help employers build emergency savings accounts for employees, and has served as personal finance educator for the US Army and Army Reserve.
Core principles
- 01The goal of money is for you to be secure, not for you to be rich.
- 02Earning more is Plan A; a safe-and-sound base is Plan B, and you need both.
- 03Recession or no recession, the emergency fund requirement does not change.
- 04Things happen — illness, accidents, long covid — and no amount of skill protects you from them.
- 05Money you may need in a few years must never be exposed to money you can afford to lose.
- 06Rock bottom is where change happens, which is why you build the base before you get there.
How to run it
- 1
Ask whether you are actually secure
Answer the question directly: will a recession hurt you, yes or no? Orman's own answer is no, because she is 100% financially secure regardless of market direction. If yours is yes, that gap is the work.
Pro tip Frame the answer around what would happen if income stopped tomorrow, not around your current salary.
- 2
Total your obligated monthly expenses
Add up what must be paid every month regardless: rent or mortgage, phone, insurance, car payment, student loan payment, and anything else non-negotiable.
Pro tip Use obligated expenses, not lifestyle spending — this is the survival number, not the comfort number.
Watch out Under-counting here quietly under-sizes the whole base.
- 3
Set the target at 8 to 12 months of expenses
Orman's requirement is at least eight months to a year of savings, and she repeats it as 8 to 12 months of expenses. Recession or no recession, the number does not move.
Pro tip If the total looks impossible, her answer is simply that if you just start, you can do this.
Watch out Do not shrink the target to something achievable — shrink the timeline to get there instead.
- 4
Park it somewhere safe, liquid and yielding
Hold the fund in a high-yielding savings account. At the time of recording many were paying 3 to 3.5% and rising with rates — safe and sound, and available the day you need it.
Pro tip Chase yield only within the safe-and-liquid category; the yield is a bonus, not the objective.
Watch out Do not lock the base into a 5- or 10-year treasury note — Orman explicitly warns against locking money up at that horizon.
- 5
Keep Plan A running, but never at 100%
Continue investing in skills and earning. Orman's rule is that you cannot be 100% just spending what you earn — something must go to retirement and something to the emergency account, however small.
Pro tip Treat the retirement contribution and the emergency transfer as fixed bills, not as leftovers.
Watch out Going all-in on earning more is, in her opinion, the biggest mistake — because it assumes nothing goes wrong for twenty years.
In the wild
Hala put the earn-more case to Orman: her guest Alex Hormozi argues you should invest in yourself — skills that let you earn more between 20 and 50 — rather than optimise savings. Orman said she has no problem with it, then drew the line: you cannot spend 100% of what you earn. Things happen — a car accident, an illness, breast cancer in your 30s, MS, long covid — and being the most skilled person alive does not pay rent when you cannot work.
→ Her verdict: do the upskilling, but do something with the extra that is also safe and sound. You have to have a plan A and a plan B.
Asked whether a recession is coming, Orman reframed it around who you are. Roughly 50% of the US population, she said, is already in its own recession — unable to afford food or rent, raiding whatever small retirement account they have, with no emergency savings plan at all. Over 50% of Americans have less than $400 to their name.
→ For her and her wife Katie, a recession changes nothing — markets up or down, they are 100% financially secure. The base, not the forecast, is what determines whether a downturn touches you.
Common mistakes
Treating the emergency fund as recession-contingent
Orman's requirement does not flex with the forecast: recession or no recession, you need 8 to 12 months. Building it only when headlines turn bad means building it when it is hardest.
Going 100% offence on income and skills
Investing everything in earning more assumes twenty uninterrupted years. Illness, accident and long covid all remove the earning and the rebuilding at the same time.
Waiting for rock bottom to change
Orman observes that people do not do the right thing with money until they are desperate — as long as you have an out, you refuse to face the truth. The base has to be built before the out disappears.
Is it for you?
Best for
An earner or entrepreneur whose strategy is entirely offence — more income, more skills — with no defensive layer underneath.
Not ideal for
Someone already sitting on years of expenses in cash whose real problem is under-investment rather than under-saving.
From the transcript
“you should all have at least in my opinion eight months to one year of a savings account you lose your job you get ill…”
“you have to do something with the more that you're making that is also safe and sound in case something goes wrong you have to…”
“you have to understand that the goal of money is for you to be secure”
From the episode
Suze Orman: Take Control of Your Finances Before It’s Too Late!!
Suze Orman