'Now is not the time': Suze Orman warns these 4 financial blunders will set you back in a big way — here's how to 'be strong' with your money

Moneywise
'Now is not the time': Suze Orman warns these 4 financial blunders will set you back in a big way — here's how to 'be strong' with your money
'Now is not the time': Suze Orman warns these 4 financial blunders will set you back in a big way — here's how to 'be strong' with your money

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Best-selling personal finance author and TV personality Suze Orman has been inspiring Americans for decades to make better money moves and avoid serious financial mistakes.

With inflation still forcing Americans to tighten their belts, she recently warned her readers of the need to exercise some restraint when it comes to spending.

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"Please be extra strong right now, and scour your spending to find ways you can reduce your costs," she wrote in a post for Money Monday with Suze Orman from last year.

"I have been warning you that we may be headed into a recession sooner than later."

Here are four of her no-nonsense tips for how to manage your money through hard times.

Don’t spend on things you don’t really need

Last year, Orman wrote: "Now is not the time to stretch to buy things that aren’t 100% necessary if you’re still working on building up your savings or paying off your debt."

There’s no better way to kick-start your savings than by playing the need vs. want game.

The next time you're about to buy something, ask yourself whether you really need it. Is it a necessity, or is it just something that would be nice to have at this exact moment?

If you’re not ready to eliminate all of your “want” purchases, the least you can do is spend a bit smarter — that means optimizing your savings and avoiding debt.

Climbing out of debt can be much easier when you consolidate under one lower rate. With Credible*, you can speed up the process and even save money.

Credible makes it easy to streamline your debt repayment at an affordable rate. Their online marketplace of vetted lenders provides personalized debt consolidation loan offers based on your needs, allowing you to pay off your debt more efficiently at a fixed rate without juggling multiple bills.*

All you need to do is provide some information about yourself*, and Credible will present you with a list of loan options to start tackling your debt.

Don’t take a tax refund

"If you’re getting a tax refund, you are making one of the biggest mistakes out there," Suze Orman told CNBC in 2019.

Why? Because you've essentially had too much of your pay withheld for taxes — and have effectively given the government an interest-free loan.

If you do end up getting a refund this year, you’ll want to use it wisely.

"There is no smarter move than working on your emergency savings account if you’ve yet to accumulate up to a year’s worth of living expenses," Suze Orman wrote on her blog in March. And a tax refund can be your kick-off point for doing just that.

Just make sure that you park your emergency fund in a high-interest account that will allow your savings to grow over time. Your current bank may not offer the best interest rates, so it’s a good idea to seek out other options. Check out our list of the best high-yield savings accounts* that offer a much higher rate than the national average of 0.58% APY.

Read more: Retire richer — why people who work with a financial advisor retire with an extra $1.3 million

Don’t skimp on insurance

Car insurance policies include three key areas of coverage: for bodily injury liability per person, for total bodily injury liability, and for property damage you cause. Minimum coverage amounts in many states are, respectively, $25,000, $50,000 and $25,000. Orman doesn’t think that’s nearly enough.

According to data from Forbes, the national average cost for car insurance in 2023 was $2,118 per year. However, by spending just a few minutes shopping around for rates online, you can potentially reduce your yearly car insurance costs by hundreds of dollars.

Using an online marketplace like BestMoney.com, you can shop around for the best auto insurance rates in your area. After answering a few questions, they’ll compile a list of the auto insurance rates for your unique needs.

And while you’re at it, online marketplace SmartFinancial offers home insurance rates* so you can make sure you’re not overpaying for that either.

Getting suitable home and auto insurance isn’t the only coverage you should consider — life insurance protects your loved ones in case the worst happens.

If you’re looking for a policy that will last a lifetime, with a locked-in premium and a cash value that can be tapped into while the policyholder is still alive, a whole life insurance policy from Mutual of Omaha* is the right fit for you. With coverage amounts ranging from $2,000 to $25,000 (in WA, $5,000 to $25,000), you can rest assured that your family will always be ready to cover any end-of-life expenses.

It only takes five minutes to fill out an online application* with your personal and beneficiary information. Once you register, not only will you be guaranteed coverage, but your benefits will never be reduced due to age or health. Plus, no medical exams or health questionnaires are needed to join.

Don’t waste money on coffee

According to Orman, your daily stop to pick up a cup of dark roast or a cappuccino is a habit you need to break. It's a "want," not a "need," and it's costing you a ton of money.

"You are peeing $1 million down the drain as you are drinking that coffee," Orman once told CNBC (causing coffee drinkers across America to do a spit take).

Here's the math on that: If you're spending $100 a month, that's money that could grow instead in a Roth IRA — to roughly $1 million after 40 years, assuming a 12% rate of return.

"Every single penny counts" when you're saving for your future," she says.

And there are much better ways to optimize those seemingly trivial coins. For example, rather than sliding your spare change over to a barista every day, invest it using an app called Acorns.*

Once you’ve linked the Acorns app to your bank account, it will automatically round up every purchase you make to the nearest dollar and invest those extra cents* in a diversified portfolio tailored to your financial goals.

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

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