Mar 20, 2024
Suze Orman isn’t so sure it’s all sunshine and rainbows for the American people despite a steady job market and seemingly robust economy.
“It seems like we’re doing alright,” Orman told Mika Brzezinski of MSNBC's Morning Joe, while at the Forbes 30/50 Summit in Abu Dhabi in early March. The finance personality pointed to the flourishing stock market and strong GDP and low unemployment figures.
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But Orman emphasized there’s a difference between the overall economy and people’s “individual economy” — especially in the face of higher grocery store prices and borrowing costs.
“I think people are not doing OK,” she said. “When you look at the overall — which I’m not sure means a lot — it looks pretty good. But when you look at people’s individual situation, in my opinion, they’re still struggling.”
Orman says many folks can’t afford the things they need
Orman, who previously sounded the alarm over a looming financial “pandemic” late last year, says even though inflation might be slowing down compared to previous years, she’s still worried about folks who don’t have money.
Inflation actually ticked up to 3.2% in February, driven by higher rents and gas prices. According to Zillow, the median rent for all property types in the U.S. as of March 20 was $2,050, a $50 increase from the previous month.
Meanwhile, the Federal Reserve has indicated it’s in no rush to cut the federal funds rate just yet, which means borrowing costs will remain high for the time being.
“People still don’t have the money they need to afford the things that they need,” Orman said, noting a large portion of Americans lack the funds to cover a $400 emergency expense.
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To make matters worse, she explained, if these people are faced with an unexpected expense, like a pricey car repair, they could be forced to foot the bill with their credit cards, triggering a “cycle of debt” if they can’t pay off their balances in full and on time.
With interest rates so high, relying on credit cards or loans to cover big expenses can exacerbate an already bad financial situation.
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How to give yourself some cushioning
Orman has long spoken about the importance of building an emergency fund in preparation for tough financial times. Many experts recommend a fund with three to six months' worth of expenses.
You can also consider growing funds in a high-yield savings account. The average regular savings account has an interest rate of less than 1%, while, a high-yield savings account could come with a rate of 5% or more..
Orman believes the stock market offers a direct path to building wealth, even during times of high inflation. She also advises people to cut down on non-essential purchases and put spare cash into a Roth IRA to grow their retirement savings for the future.
And for folks low on cash or who are relatively new to investing, there are still easy ways to tiptoe into the stock market, such as putting your leftover change from everyday purchases into a smart investment portfolio.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
