Suze Orman says now is the time for boomers, Gen X to tell their adult kids ‘I am no longer your bank account’ and focus on their retirement nest egg — here’s how (From Yahoo! Finance) [3 Articles]
~ Monday, June 19, 2023 Blog Post ~
By Bethan Moorcraft, June 17, 2023
There comes a time in life when you must shut down the bank of mom and dad and force your grown children to find their own financial footing, according to money maven Suze Orman.
If you’re a Gen Xer or baby boomer rolling towards retirement, now’s the time to prioritize you, Orman told Moneywise, so you can more easily live out your golden years in comfort.
It’s not down to you to cover your adult kids’ bills — and yet nearly 50% of American parents do, according to a new study by Savings.com.
Not only are almost half of U.S. parents forking out money, but the average financial support for household necessities like groceries, cellphones and rent or mortgage payments is more than $1,400 per month.
Orman encourages aging parents to get a clear message across to their kids:
“I am no longer your bank account! I’m getting to the point where I need my money to be able to support myself. You are old enough now to go out and figure it out. So don’t come to me for money.”
And that isn’t Orman’s only tip that can help you get on solid financial ground before you retire.
Don’t neglect your retirement accounts
Having that undoubtedly tricky conversation with your kids could save you a lot of stress, but it isn’t the only way to ensure a relaxing retirement.
Orman believes “the key ingredient to any financial freedom recipe is compounding.”
If you start early and you invest your savings through tax-friendly vehicles like a 401(k), a traditional individual retirement account (IRA), or a Roth IRA you can grow a big pile of cash for retirement.
However, the realities of retirement planning have grown more complicated as Americans navigate inflation, financial crises, fears of bank failures and other challenges.
When you’re in the final stretch of your career and retirement is just a few years away, you have to make a few big financial decisions, according to Orman.
“The more expenses you have, the more debt you have, the more income you need when you finally retire,” she explains. “How do you get that income? By having a lot of money in your retirement accounts or investment accounts.”
Take a hard look at your expenses
Many people have difficulty saving for their retirement because their cost of living is too high and they don’t have much left over after paying bills.
That’s when you should tell your kids: “We are no longer your bank account,” Orman stresses. “That is what the line should be if you don’t have enough money.”
“Obviously, if you have more than enough money, you should still tell your kids that so they understand the responsibility and what it takes to make money,” she adds.
If your children have flown the nest and you no longer need your large family home, Orman says you should “downsize now.”
If you can downsize in the years before you stop working, this will reduce the mortgage and maintenance payments that eat up so much of the family budget, and allow you to put more of your income towards your retirement.
“If you know you’re going to stay in your home for the rest of your life — if you’re lucky enough to own a home today — then make it your number one priority to have the mortgage paid off by the time you retire,” says Orman.
And that’s not the only cost you should have under control. Lifestyle choices like regularly buying a new car when your lease is up can be an unnecessary drain on your finances.
“Stop buying a car every three years, when you could just take care of your car and let it go 10 years, 12 years or longer,” says the money maven.
You should also look for other small ways to save money such as paying for multiple streaming and cable services, premium mobile phone plans, and eating at restaurants or ordering in several times a week.
“Cut your expenses now,” she adds.
“Stop spending money you don’t have to impress people you don’t even know or like.”
If you can cut down on your monthly spending, you’ll have more money left over to invest and put towards your retirement savings.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source:
https://finance.yahoo.com/news/suze-orman-says-now-time-123000680.html
Article #2: Suze Orman: This is the one thing you should do right now to retire a millionaire [From CNBC]
By Caroline Moss, July 21, 2017
You’ve heard it before but Suze Orman is telling you once again: Start investing right now.
The former CNBC host and personal finance maven barely had to think when asked about smart things 20-somethings should be doing with their cash to ensure they’ll have enough later in life.
At Miami’s eMerge conference in June, Orman told CNBC Make It that having a comfortable retirement at 65 is all about using compounding interest now.
“You invest money and your money makes money, and the money you made with the money that you had makes money, and everything compounds,” she said.
Orman explained that if you, as a 25-year-old, put $100 each month into a Roth IRA, you could have one million dollars by retirement. But if you wait ten years to start investing, you’ll end up with only $300,000. Waiting means blowing hundreds of thousands of dollars you could have made by letting that money sit and accumulate interest.
In November 2016, a GOBankingRates survey showed that 69 percent of Americans have less than $1,000 in their savings account while 34 percent have nothing saved at all. Many experts guess this is because people so often live beyond their means.
Orman made a name for herself serving up tough love to people who wanted to go on lavish vacations but admitted they still hadn’t paid off their credit card bills.
The trick, she says, is to find the same kind of pleasure you get from spending when you save.
“I am a seriously wealthy woman,” she told CNBC Make It, “and [I] get such joy when we go to the grocery store and say, ‘Look, because I have this coupon we saved two dollars and fifty cents!’”
Source:
https://www.cnbc.com/2017/07/20/suze-orman-reveals-how-you-can-retire-a-millionaire.html
Article #3: 6 Things Suze Orman Says You Should Do with Your Money [From Go Banking Rates]
By Paul Sisolak, November 17, 2015
As an author, award-winning TV show host and public speaker, Suze Orman’s advice when it comes to debt, saving money, investing and lending has helped millions of Americans gain a better handle on their finances. With a direct approach and practical advice that gets to the heart of the matter, Orman is one of today’s most popular and respected financial experts.
In a 2015 episode of “The Suze Orman Show,” Orman reminded viewers of her “Forever Nevers” — critical money mistakes that you should never make. To complement that list, here are six tips from Orman to help keep your finances in check.
1. Get the Big Picture of Your Financial Situation
“It’s impossible to map out a route to your destination if you don’t know where you’re starting from,” Orman told O, The Oprah Magazine. To know where you’re headed, you’ll need to get a panoramic view of your finances, what Orman calls a “before” snapshot to shape the “after.”
“You’ve heard me say this a million times, but I want you to open every single financial statement — bank, credit card, mortgage, 401k, brokerage account — and take a look,” she wrote. “Only when you have everything in front of you can you set priorities about what to do next.”
Once you’ve gotten an overview of your finances — what’s good, what’s bad, what needs improving — then you can start prioritizing and developing a plan to meet your unique needs.
2. Track Your Spending
It’s not always the big purchases that can cause your budget to fail. Orman suggested taking a good look at every single expense you have to see where you might be overspending or losing money on unnecessary purchases.
“You know the big-ticket expenses in your life, but all of the smaller spending can also be a killer,” Orman said. “Take a look at your monthly outflow, and I guarantee you will have a few ‘Yikes, I had no idea’ moments.”
One way to gauge your spending is to collect all of your checking account and credit card statements, plus receipts, and put them into an expense tracker. With the tracker, you can modify your spending and see what can you eliminate and where you can save.
3. Strategically Pay Off Your Credit Card Debt
You might think that paying down your credit card balance little by little is making a dent in your debt. But you might be going in circles if the money you’re forking over each month to your provider is going toward your interest, not your principal. Orman wrote about a more strategic way to eliminate debt from your life without having to forgo your credit card use.
“See if you can qualify for a balance transfer card that offers a low or 0 percent introductory interest rate for the first six to 12 months,” she said. “If you can get a good deal, move your high-rate debt to that new card. Do not use the card for any new charges, and push yourself hard to pay off the balance as soon as possible. If you don’t qualify, no worries. Always pay the minimum due on each card, on time, every month.”
Orman is similar to Dave Ramsey in her advice to start by paying off the most expensive debt first and work your way down from there until you’re debt free if you’re juggling multiple forms of debt at once.
4. Take Stock of Your Investment Goals
One of Orman’s “Forever Nevers” is warning against investing in variable annuities, as insurance-derived products have fees that might reduce your earnings. Orman is also averse to investing money in long-term accounts if you need your money quickly; and savings, certificates of deposit or money market accounts don’t give back yields high enough to sustain your finances for the far future.
Orman warns that if most of your invested money is sitting in a mostly liquid, cash-based account, it won’t be earning enough interest to beat the rate of inflation — leaving you with little to show for it. Orman’s solution is to instead buy stocks.
“To fulfill a long-term investment goal, like funding your retirement, consider buying stocks,” she wrote. “The more distant your financial target, the longer inflation will gnaw at the purchasing power of your money. What you can get for $100 today will cost nearly $200 in 20 years if inflation averages 3.5 percent.”
5. Fortify Your Emergency Fund
Opinions vary on how much your emergency fund should be. It depends on many factors, like how many months you want to cover and how much you want to have in your reserve. Orman has her own dollar figure she said everyone should aim for.
“By now, I am sure you have started saving,” she said. “The next step is to keep at it until you have at least eight months’ worth of living expenses.”
To do this, you’ll need to start saving more money. To free up more cash to tuck into your emergency savings, Orman recommended cutting back on your monthly spending by about 10 percent; you can save an additional 10 percent, she said, by shopping around for lower insurance rates. You might also want to consider contributing more to your employer-sponsored 401k or switching to a Roth IRA for better, more tax-advantaged savings potential.
6. Buy — Don’t Lease
Many people think the benefits of leasing a car outweigh buying one new. For one, it’s cheaper because a lease is not a loan and has no interest rate attached to it. If you lease a used or certified pre-owned car, you could save money because the vehicle has already gone through its biggest period of depreciation in value by the time you take the wheel. Nonetheless, Orman advised against leasing a car, unless you want to be making payments forever.
“If the lessees are rolling into a new contract every three years … they’re going to be making monthly payments indefinitely,” Orman wrote. “If you’re shopping for new wheels … don’t lease.” In fact, she said to go for a shorter, 36-month loan, even if longer terms or other financing deals are offered. Otherwise, you’ll be stuck paying more interest for a longer period of time, and that’s money you could have saved or invested elsewhere.
“Borrow the smallest amount of money possible and pay it back as soon as you can,” Orman said. It’s another financial step to take that can keep you and your money growing for a long time to come.
Tailor these tips to work for your own financial situation so that you’ll be on your way to managing your money like an expert. By being proactive with your money, you’ve already avoided committing what might be the biggest money mistake of all.
Sources:
https://www.gobankingrates.com/category/saving-money/savings-advice/
https://www.gobankingrates.com/saving-money/budgeting/6-things-suze-orman-says-should-do-money/
