Suze Orman’s 3 key financial tips for 2022

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It is worth taking them to heart.

Key points

  • Today’s economic conditions are difficult on many levels.
  • Financial expert Suze Orman has some solid advice on how to navigate these difficult times.
  • Reducing your expenses and redesigning your emergency fund could go a long way to improving your financial situation.

Two years ago, the US economy was clearly in bad shape. Unemployment was rampant, small businesses were shuttered across the country and stocks were trying to pull themselves out of a recent plunge.

Fast forward to the present, and things look a little different. Not only are jobs plentiful, but many companies are desperate to hire, so much so that they are offering higher wages to workers in an attempt to lure them in.

But while the unemployment rate is considerably lower today than it was two years ago, many Americans find themselves in a comparable financial situation where they are struggling to meet their bills. Now, instead of being held back by unemployment, consumers are struggling to manage the rising cost of living. And while we’ve seen decent wage growth since the pandemic began, at this point even workers whose incomes have increased are not able to keep up with inflation.

The problem is currently compounded by a months-long period of market volatility and a recent sharp drop that briefly sent the S&P 500 index into bearish territory, marking a 20% decline. The S&P 500 is generally considered an indicator of the stock market as a whole. And these days, that can be summed up as “not good.”

Not only are stocks falling as the cost of living rises, but many financial experts are warning that a recession is imminent. And financial guru Suze Orman agrees. In a recent podcastOrman said she expects a recession to hit later this year or early 2023. And in light of that, here are three key money moves she would advise everyone to make right now.

1. Reduce your expenses

Many people are dipping into their savings and racking up costly debt to keep up with inflation. But it’s a decision that could do a lot of damage to consumers in the event of a recession.

During a recession, layoffs can be commonplace, so you need as much savings as possible to fend for yourself in the event of a job loss. As such, the last thing you should be doing right now is dipping into your savings to cover your bills. Instead, Orman says now is the time to cut spending to conserve funds. Look at your expenses and figure out which ones you can spend less on, even if it means making short-term sacrifices.

2. Rethink your emergency fund

Many people have emergency savings to deal with unexpected bills or times of financial upheaval, such as a layoff. Orman says having up to a year of living expenses in the bank is a smart move. But you may have originally calculated your emergency fund based on what your bills were costing you a year ago.

Since the cost of living has gone up so much right now, a recalculation might be in order. And based on that, you may need to start making an effort to add to your emergency fund in case your personal financial situation gets worse in the short term.

3. Find a high-yield savings account to store your accumulated money

It’s never a good idea to invest money that you might need in a few years. And your emergency fund falls into this category.

Still, it pays to earn as much interest on your money as possible, so to that end, Orman says to do your research and find a savings account that offers you a generous rate on your money. Even though savings account rates aren’t very attractive these days, there are are some better options out there

We are going through difficult economic times, despite the fact that unemployment rates are low. And because we don’t know how soon a recession will hit, it’s best to do everything possible to be prepared. It’s wise to take Orman’s advice to heart and rethink your spending, shore up your savings, and find a good home for your money. This should give you more peace of mind at a time when the threat of a recession looms.

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