‘COVID-19 has taught us that anything can happen, the key to security is an emergency fund’: Suze Orman

Suze Orman, The Women & Money Podcast Host, joined Yahoo Finance to discuss the importance of financial planning and saving amid covid-19.

Video Transcript

ADAM SHAPIRO: You've pointed out for years that owning a home is a keystone of wealth. Has that changed because of the pandemic? And if not, houses are more expensive now than ever before. So how do you get in?

SUZE ORMAN: Yeah, owning a home, in my opinion, is not the keystone to wealth. And it's not even wealth anymore, Adam, we want to create. What we want to create now, you have to really ask yourself the question, what is the goal of money? And the goal of money is to make you feel secure, for you to be secure.

And the best way for you to be secure is not necessarily having an asset that you owe money on, and you have to make payments on and things like that, although it could be. The key for you to being secure is seriously and will get you through and what got everybody through the last year was an 8 to 12-month emergency fund.

And that is the most important thing that anybody could have, which is why I created with Alliant Credit Union the ultimate opportunity savings account, where if you just simply invest or save $100 a month for 12 consecutive months, then Alliant, at the end of those 12 months, will give you $100 bonus.

Now I do not get one penny for this. There's no financial thing here. But do you know because interest rates are so low today that you would need $18,000 in a savings account in order to make $100 of interest? So this is a 16.7% return on your money, and all you all have to do is go to MyAlliant.com. No fees to sign up. It won't cost you anything. And get that $100 bonus.

Those are the things that we really have to start doing to make America Main Street again, as you call them. Secure. Give them a place to save. Go to myalliant.com, people, and watch everything there. It's a deal seriously you can't afford to pass up. And it's not going to be available for much longer.

SEANA SMITH: Suze, I'm curious just your thoughts on COVID and some of the lasting effects you think it will have on people and how they save going forward. Have you adjusted your approach at all? Or are you giving-- has your advice, I guess, changed at all over the last 10 months?

SUZE ORMAN: I think what COVID has taught us is that the one simple piece of advice-- you know, Seana, sometimes people can say, why do millions of people follow Suze Orman? Seriously, she's so simple. All she talks about is saving money, getting out of credit card debt, having an 8 to 12-month emergency fund. Why are those things so important? They're important because of COVID. COVID has taught us that anything can happen at any time.

So for me and what I've told everybody, for all the years that I've been doing this, is more relevant than it has ever been. Because now people who never thought that they would be standing in a food line are standing in a food line, only to get there to find out that the food bank has run out of food. So I have not adjusted what I have told people. I do think-- obviously, I've always said dollar cost averaging is the way to go when investing in the stock market.

I do think, as Adam asked briefly about real estate, we need to be careful about real estate now. Prices are at their all-time high. Those people who don't have a lot of money can't afford the down payment on one. And this whole thing that's happening with evictions and moratorium on mortgage payments and things like that scare me. Because when all of a sudden, those forbearances and those ways of not having to pay your bills are gone, and you have to pay up, what happens to those real estate holdings that people have? What's going to go on in the stock market at its all-time high? And I think absolutely, we're going to see it go up another month, two, or three. I would be very careful around April--

ADAM SHAPIRO: Suze.

SUZE ORMAN: --or so when things start to go that way. Yes.

ADAM SHAPIRO: Suze, you've pointed out that kids today actually have it rougher than those of us who were kids in the '80s or '70s and so on and so on. What would you say to a 12-year-old who's-- that situation you just described as a parent, how would you talk to the 12-year-old about financial reality and what's happening right now?

SUZE ORMAN: Yeah, I would talk to them about everything that's going on with joy. And what I mean by joy is don't talk to them as, oh my god, we can't afford this. We can't buy this. No. It's, you now have to talk to them about making intelligent choices, not only with their health. They understand now there's a reason why they have to stay in. There's a reason why they can't play basketball, why they have to do school online.

And you now have to expand that to, this has affected all of us when it comes to money, including mommy and mommy; daddy, daddy; or mommy and daddy; or just if you're a single parent. And engage them, but with an intelligent and positive viewpoint on it, and also to teach them how important a job is, what work does that there is no money because there isn't work. So you can kind of teach them that a job-- they should be happy that their parents get to go to work. They should be happy when a paycheck comes in. And stop complaining about anything, and really teach them to be grateful for everything that they could possibly have at this moment in time.

ADAM SHAPIRO: Suze Orman, we so much appreciate your being here with us. As you all know, Suze is the host of the "Women and Money" podcast and has several books to help guide you through financial stability. Thank you for joining us, and all the best to you, Suze.

SUZE ORMAN: OK, you guys. You take care.