Suze Orman says ‘the worst thing you can do’ is spend too much: here are 8 things she thinks you shouldn’t be doing while a recession looms

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Suze Orman says ‘the worst thing you can do’ is spend too much: here are 8 things she thinks you shouldn’t be doing while a recession looms

Bestselling personal finance author and TV personality Suze Orman has been inspiring Americans for decades to make better money moves and avoid major financial mistakes.

She’s been as busy as ever since the pandemic hit, offering consumers advice on how to weather tough economic times as day-to-day costs and interest rates soar.

Orman recently sat down with MoneyWise to talk about the importance of emergency savings, especially with rising interest rates and a recession on the horizon.

With inflation continuing to put pressure on Americans to tighten their belts, he also previously warned his readers to exercise some restraint when it comes to spending.

In a June blog post, Orman says he can understand the urge to live it up after the relative confinement of the past two years.

“The worst thing you can do right now is overspend…leaving yourself vulnerable in a recession.”

Here are eight of her most fundamental tips on how to save — and spend — your money.

WATCH NOW: Complete Q&A with SecureSave’s Suze Orman and Devin Miller

Not to be missed

1. Don’t rent a car

In the words of Suze Orman, “You should never, ever, ever rent a car.”

If you lease, you’ll sink your money into several years of car payments and be left empty-handed when the lease term is up.

Financing is a better option, but Orman says if it’s going to take more than three years to pay off the car, then it’s out of your price range.

Buying a used car is another way to go. Models that are only a few years old will have excellent safety specifications and the same audio-visual technology as a new car, at a fraction of the price.

2. Don’t let spending get out of control

Even people who normally spend responsibly lose their senses completely when special deals, tax refunds or bonuses arrive. Orman blames a lack of planning and self-control, especially when it comes to gift giving.

“Challenge yourself not to buy any gifts with a credit card…you’re much more likely to only buy what you can afford,” says Orman. He says that holiday credit card debt, in particular, can last much longer than the recipient will remember your gift.

Also, friends and family would be ashamed if they found out their gifts are beyond your means. “Time and love are the most precious possessions you can share,” writes Orman.

When shopping, especially online, look up prices and use tools to avoid overpaying for items on your list.

WATCH NOW: Suze Orman warns cash-strapped Americans not to touch their 401(k)

3. Don’t skimp on car insurance

Auto insurance policies include three key areas of coverage: for personal injury liability per person, for total liability for personal injury, and for property damage caused. The minimum coverage amounts in many states are $25,000, $50,000, and $25,000, respectively.

Orman doesn’t think that’s enough. “It will be a financial disaster to pay out of pocket for serious injury, loss of wages, rehabilitation and the like for the other driver (and his passengers) if you cause an accident,” he claims on his website.

WalletHub conducted a study stating that the minimum monthly coverage amount costs an average of $60 American. It makes sense to shop around to find the best policy possible.

Increasing your deductibles can also lead to significant savings.

4. Don’t go without life insurance

About 4 in 10 adults don’t have life insurance, according to industry research group LIMRA.

Orman says that for parents in particular, life insurance is a product you can’t afford to be without. It provides peace of mind, because it will protect your family if something happens to you and you are suddenly out of the picture.

And it’s cheap: A healthy 40-year-old woman could pay less than $35 a month for a 20-year policy with a $500,000 death benefit. Orman recommends purchasing “term” life insurance, which means the premiums never change.

“Come on moms. (And dads),” says the personal finance guru, on his site. “You can’t tell me less than a dollar a day is too much to ensure your family is safe no matter what.”

Read more: Top 10 Investment Apps for “Once-Once” Opportunities (Even If You’re a Newbie)

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

There’s no better way to kickstart your savings than by playing the game of want versus want.

Next time you’re ready to buy something, ask yourself if you he really needs it. Is it a necessity, like medication, food from the supermarket, or a solid pair of shoes for work?

Or just something about you want – like another drink at the bar, fast food again for dinner, or a second pair of knee-high boots?

“If it’s a want, walk away. If it’s a need, then buy it,” writes Orman. “Try this for six months and you’ll be shocked how easy it is and how much money you’ll save.”

In a 2019 podcast episode, Orman said that mindset is an important part of knowing when to spend and when to save.

“You must derive as much pleasure from saving as from spending.”

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

6. Don’t stay in a job you hate

Suze Orman says surveys show two-thirds of workers aren’t really interested in their jobs. And if you’re in that group, you’re selling yourself short.

“Staying at a job you don’t like is disrespectful to yourself and your loved ones,” says Orman on his website. “There is no way you can tell me that it doesn’t negatively impact your relationships.”

But quitting may not be the answer. Before you start looking for a new opportunity, see if the job you have can be changed to address whatever is making you unhappy.

Just never frame it that way when meeting with the boss or HR. Instead, tell management you’d like to talk about how your work could be “optimized” so you can be more productive.

7. Not taking a tax refund

“If you’re getting a tax refund, you’re making one of the biggest mistakes out there,” says Suze Orman.

How come? Because essentially you were withheld too much of your tax pay and effectively gave the government an interest-free loan. When you were owed $2,400 in repayment, you allowed yourself to receive $200 a month throughout the year.

But polls have shown that Americans love their tax refunds and eagerly plan how they will use the money each year.

Orman does not hold back. In the past, he’s called a tax refund “the biggest waste of money you’ll ever get.”

WATCH NOW: Suze Orman talks about the future of Social Security

8. Don’t waste money on coffee

Your daily stop to grab a cup of dark roast or a cappuccino is a habit you need to break, says the money expert. It’s a “want” not a “need” and it’s costing you a lot of money.

“You’re peeing $1 million down the drain drinking that coffee,” Orman once told CNBC (making coffee drinkers across America spit).

Here’s the math: If you spend $100 a month, that’s money that could instead grow in a Roth IRA — to about $1 million after 40 years, assuming a 12 percent rate of return.

But do you love those fancy store-bought coffees? Get over it. “Every single penny counts” when you’re saving for your future, says Suze Orman.

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

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