With the threat of a recession looming, more financial experts are sharing how to prepare
At the end of June, the S&P 500 Index had its worst six-month start to a year in more than 40 years.
The future may be uncertain, but Americans are less confident in the economy due to supply chain shortages and stock market fluctuations.
There are steps to take now to prepare for a recession. S&P had its worst half in half a century. According to a June survey from Bankrate, more than half of Americans are now worried about their emergency savings, up from 4% in 2020.
Almost one-quarter of Americans have no emergency fund and nearly one-third have less than three months of expenses in savings.
Cash has been less attractive over the past few years because of rock- bottom returns. There is a value in the peace of mind that comes from savings.
Financial advisors say that you need to have a certain amount of cash savings in your career.
The recommended amount of savings for dual-income families is three to six months of living expenses. The family can keep up with expenses even if one earner loses their job.
It is possible for households with a single earner to boost savings to six to nine months of expenses.
Some advisors say it's better to have higher cash reserves to provide more options and flexibility in case of a job layoff for both single earner and dual earner households. Finding a new job can take a long time because of the recession and high unemployment.
Catherine Valega suggests keeping expenses in cash for at least 12 to 24 months.
Suze Orman, a personal finance expert and best-selling author, told CNBC she pushes for 12 to 12 months of expenses. She said that if you lose your job, you can keep paying your bills while you figure out what to do with your life.
Entrepreneurs and small business owners should set aside a year's worth of business expenses.
He said that many of their business owner clients were spared from shutting down because of the Pandemic.
Some people are uncomfortable having that much money ‘on the sideline’ and not earning anything, especially right now when stocks look to be providing a great buying opportunity.
It may be difficult for some retirees to sell large amounts of cash because of high inflation and low interest. One to three years of expenses is recommended by experts.
Making your money last in retirement is dependent upon having a sufficient cash buffer.
A mistake that could drain your retirement balances faster is having enough cash on hand.
The amount of cash to keep on hand depends on a number of factors.
If your monthly expenses are $5,000 a month, you may need less cash than you would if you received a pension and Social Security check.
The risk of selling when the stock market is down is mitigated by this.
There is a bit of flexibility in the amount. Money is a very emotional topic and some clients stray from his savings recommendations.
He said that some people are not comfortable with having a lot of money on the sideline.
Others used to be cautious, but now feel worried about the market and want to save more.
All Rights Reserved © 2024
