Thinking of making a major purchase right now? You might want to hit pause. Entrepreneur, bestselling author and media personality Ramit Sethi said it could cost you more than you realize.
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In a recent Instagram post, Sethi advised holding off on any major new discretionary purchases at the moment — such as moving, going on vacation or buying a car or house — to better adapt to today’s economic environment.
Here are several key reasons why pressing pause could be the smartest financial move you make this year, according to Sethi.
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Make the Tough Call Before You Have To
When there’s uncertainty in the market, Sethi noted that most households are not good at adapting to economic uncertainty. They continue to spend the same amount and wait until the world forces them to make difficult financial choices, Sethi said.
“Don’t wait for the world to force you to make tough, bad decisions,” he explained. “Make the tough decisions yourself.”
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Plan for What Could Go Wrong
“You need to build a life where things don’t have to work perfectly in order for you to survive and thrive,” Sethi said. You could lose your job or that car purchase could end up costing you more than what you budgeted for.
“You need to still be able to survive if these things happen, and sometimes that means just waiting,” he added.
You Should Build Your Emergency Fund Instead
“This is one of the fastest and easiest ways that you can build up a fat emergency fund that will protect you,” Sethi explained.
According to a survey by U.S. News & World Report, two in five (42%) of Americans don’t have an emergency fund, and as many as 40% said they couldn’t cover a $1,000 emergency expense with cash or savings. However, a 2024 survey by Vanguard found that having at least $2,000 in emergency savings improves overall financial well-being.
Most experts recommend at least three to six months’ worth of living expenses saved in an emergency fund to help cover unexpected events like job loss, medical emergencies or major repairs without going into debt.
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Source
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Ramit Sethi (Instagram)
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U.S. News & World Report, “Survey: 42% of Americans Don’t Have an Emergency Fund“
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Vanguard, “Emergency savings may hold key to financial well-being“
This article originally appeared on GOBankingRates.com: 3 Reasons Not To Make a Major Purchase Right Now, According to Ramit Sethi
