Yesterday, stimulus checks finally began clearing in many Americans’ bank accounts, and if you don’t already have a plan for your money, financial expert Suze Orman has some advice for you.
Last Thursday, President Biden signed the $1.9 trillion American Rescue Plan into law, sending direct payments to approximately 85% of American households. Typically, stimulus checks are issued with the notion that they’ll be spent immediately, putting more money back into the economy.
However, Suze Orman, host of the “Women & Money” podcast, is urging anyone receiving a stimulus to prepare for another emergency. “I don’t think you can have too much of an emergency fund,” Orman told CNBC on Wednesday.
Orman admitted she formerly believed that building up an eight-month emergency fund was key. But after the financial implications of the past year, she no longer thinks eight months is enough.
“It’s been approximately one year since the pandemic started — 12 months. And really, it’s still going on. There are millions of you that still don’t have your jobs back, especially women. We really took the hit. So, it’s 12 months minimum is what I think you need.”
That doesn’t mean you shouldn’t pay down your bills, if you’re behind. But Orman doesn’t recommend putting all of your money towards bills, if you can help it.
“Continue to pay the minimum on your credit card…and just play it safe until your job has returned, things are back to normal, financially speaking, in your life,” Orman told CNBC. “The key to your freedom is having that security, that emergency fund. Keep it right there, do not spend it and don’t you dare use it to invest in the stock market.”
If you’re receiving a stimulus and you have not been financially impacted by the pandemic, Orman does not recommend investing or saving this money. Instead, as she suggested in a February post on her SuzeOrman blog, “If ever there was a time to Put. People. First — it is now, my friends.”
“If you still have your job, if you already have a good-sized emergency fund and you’re saving for retirement, I am asking you to consider giving your stimulus money to those who are in need,” Orman wrote.
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This article originally appeared on GOBankingRates.com: Suze Orman: Don’t Spend or Invest Your Stimulus — Do This Instead