Business

Suze Orman has 3 time-tested ways to financially prepare you for the next emergency amid the 2023 recession


'For 40 years, I've been trying to change people's minds.': Suze Orman has 3 time-tested ways to financially prepare you for the next emergency amid a recession economy in 2023

‘For 40 years, I’ve been trying to change people’s minds.’: Suze Orman has 3 time-tested ways to financially prepare you for the next emergency amid a recession economy in 2023

The word recession is still on economists’ lips as we head into 2023. The latest GDP report shows the US economy recovered 2.6% in the third quarter after shrinking in the first quarter and second quarter of this year

Even so, experts are saying there is a 70% chance the US will slip into a recession by 2023, according to a report. Bloomberg’s December Survey.

Personal finance expert Suze Orman joined the chorus on a September episode of her Women & Money podcast, predicting a recession “early 2023”.

She recently sat down with Moneywise to talk about the risks of not being prepared for a financial emergency.

On the plus side, Orman has suggestions for proactive ways to prepare for a recession in the new year.

WATCH NOW: Full 30-minute Q&A with Suze Orman and Devin Miller of SecureSave on the importance of an emergency savings account

Do not miss

Suppose you are unemployed

The job market looks good right now. According to the latest report from the Bureau of Labor Statistics, the US economy added 263,000 jobs in November.

Moreover, the unemployment rate is holding steady at 3.7%.

But Orman warns against complacency.

“If there is a recession, you should believe that the very companies that are hiring today will find ways to cut their payrolls,” she wrote. “I think the best gift you can give yourself right now is to imagine that you’ve been fired.”

In December 1969, the unemployment rate in the US was at an equally low 3.5%, but was soon followed by an 11-month recession.

When you are fired, the pay will stop coming. So Orman recommends building an emergency fund before the next crisis hits.

But many people don’t think about saving until something happens — like losing their job.

“For the past 40 years, I’ve been trying to change people’s minds,” Orman said in an interview. recent interview with Moneywise.

“Usually, people have to bottom out before they make a change.”

So how many months of financial buffer do you need?

Orman suggests having enough savings to cover your expenses for a year. If that seems like a far-fetched goal, just focus on saving as much as possible – once a month.

Get rid of your credit card debt

Credit cards are a great invention — for the companies that give you credit cards.

For people with outstanding balances on their credit cards, debt can add up significantly during a recession.

Reason? High interest rate.

Read more: 10 best investment apps for ‘thousand-year-old’ opportunities (even if you’re a beginner)

The average credit card interest rate in the US today is 22.91%, according to Lendingtree. At that rate, the compounding factor can cause any outstanding credit card balance to grow to dangerous levels very quickly.

Orman notes that carrying credit card debt right now is “too much of a hassle” because interest rates are going up.

She’s not the only expert who believes you should Get rid of credit card debt completely.

Legendary investor Warren Buffett has also warned about the dangers of carrying outstanding credit card balances.

“If I owed any money at 18% interest, the first thing I would do with the money I had was pay it off,” Buffett said in 2020. “You can’t go through life borrowing money at that rate. that interest rate and get better.”

Don’t spend it all

In an economy with low unemployment and wages expected to grow 4.6% next year, it would be easy to assume that people are putting money into their savings.

But not so.

According to a recent report from LendingClub, 6 out of 10 Americans enough to live from salary to salary.

Inflation is one reason people have a hard time saving – nearly everything is getting more expensive.

In a recent interview with Moneywise, Orman emphasized the importance of have an emergency fund set aside.

“It’s unlikely that by next April, the Fed funds rate could be very close to 5%, which means interest rates on credit cards could go that high,” Orman said.

By spending less than you earn, you can accumulate emergency savings faster. And by adopting a more frugal lifestyle, you can reduce your cost of living — so the same level of finances can last longer in the event you lose your job.

WATCH NOW: Suze Orman tells a cautionary tale of what happens when you can’t cover your next financial emergency

What to read next?

This article is for information only and should not be construed as advice. It is provided without warranty of any kind.

news7f

News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button