5 Savings Myths Debunked From Financial Experts (+ Their Best Tips!)

Your mother probably told you to save for a rainy day. That's good advice. When it comes to savings, though, there are plenty of myths and misconceptions.

Knowing what's truth and what's fiction can mean all the difference in your financial health. 

A common misconception for people in debt is that they shouldn't start saving until they pay off their balances. "The truth is, you need to save to become debt-free," says Andrea Woroch, a money-saving and budget expert.

Although paying off debt is an important goal and necessary for reaching financial freedom, saving money at the same time is critical.

Rethink your budget. See where you cut out extras like streaming services and other nonessentials, and put that money in savings instead. You can also review monthly bills and negotiate rates with current providers; cancel unused subscriptions. "Tracking your daily and monthly spending can help you identify unnecessary spending and impulse purchases," she adds.

If this still doesn't give you much breathing room to save, think about how you can make some extra cash to put toward savings. 

Yes, you need to sock away dollars for retirement, but you also want to be able to handle any financial crisis that crops up. You need an emergency fund.

"If you get into a car accident, need immediate medical care, or lose your job, your savings will serve as a cushion, allowing you to pay the bill or get through the tough financial time without taking on more debt. Otherwise, you will need to borrow money or use a credit card, and that starts a vicious debt cycle," says Woroch.

When creating your emergency fund, aim to set aside three to six months of living expenses in a separate account. If this goal seems impossible, start somewhere—anywhere.

What you don't want to do is keep your savings with your everyday spending money. "Open a separate account and discipline yourself to not touch it," says Telisa Shead, Amegy Bank's private banking director.

A high-yield savings account is generally a much better option for stashing money away that you don't plan to invest or put in a retirement account. 

"They offer substantially higher interest rates than traditional savings accounts—typically around 4% in today's environment (and constantly changing), compared to less than 1% in a traditional account," says Mark Henry, founder and CEO of Alloy Wealth Management. 

You may be thinking that you want to have retirement savings such that you can withdraw 4% of your money a year. Years ago, financial advisers often used to support a 4% annual-withdrawal rate, but that advice isn't so great today.

"For one thing, bond yields are lower now than they were years ago, which means many retirees don't see enough growth in their portfolios to support a 4% annual withdrawal rate. Additionally, Americans are living longer, so you'll need your savings to last longer than your parents or grandparents did," says Henry.

It's never too early to start saving for retirement. "Time is your BFF when saving for retirement. Take advantage of compounding interest. The earlier you start, the better off you'll be in the long run," says certified financial planner Shinobu Hindert, author of Investing Is Your Superpower.

It's easy to fall into a mindset trap that you don't have enough money to save or that you can wait until you're older. Start small. Make it easy on yourself.