What Economic Uncertainty Means for Your Finances
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Support for KQED Podcasts comes from Sutter Health. From checkups to colds to complex conditions, Sutter's pediatricians and family medicine doctors provide expert care for kids and peace of mind for parents. Learn more at SutterHealth.org. Support for KQED Podcasts come from Berkeley Rep, presenting Aves, an intriguing new play about memory, forgiveness, and unexpected transformation.

playing May 2nd through June 8th. More info at berkeleyrep.org. From KQED. From KQED in San Francisco, I'm Grace Wan in for Alexis Madrigal. As Trump's trade war rattles stocks and bonds, trillions of dollars have been lost in the market. American consumer confidence has dipped to an all-time low, and Trump's tariffs promise to raise prices on goods from groceries to cars.

The economic whirlwind has left many Americans wondering how to plan financially. We'll talk about the personal impacts of the financial crisis and hear from you. How are you feeling about the state of the economy? Is it affecting your money or life choices? That's all coming up next after this news.

Welcome to Forum. I'm Grace Wan, in for Alexis Madrigal. The economy is foremost in many Americans' minds these days. Trump's tariff regime will slap a 10% levy on imports from almost all countries. That threatens to raise prices on items ranging from ice cream to iPhones. The

The whipsaw movements in the stock and bond markets have investors on edge and consumers wondering what is happening. Take this Saturday Night Live skit, which aired over the weekend. Well, the Trump tariffs have caused T-bill sell-offs, which have rocked the bond markets. Are you worried about that? I'm not, and I'll tell you why. Because I don't know what that is.

That was Saturday Night Live host Jon Hamm muddling his way through the economy. If you're feeling the same way, happily, we have some experts to help us understand how Trump's moves are affecting personal pocketbooks. We're joined by Susanna Snyder, managing editor for Money at U.S. News and a certified financial planner. Welcome to Forum, Susanna.

Thank you for having me. We also have Jessica Roy. She's a personal finance columnist with the San Francisco Chronicle. Welcome, Jessica. Good morning. Great to be here. Thanks for being here. And finally, we have Ramit Sati, a personal finance expert and author of the New York Times bestseller, I Will Teach You to Be Rich. He's also a host of the podcast with the same title and a Netflix series, How to Get Rich, and also a proud Stanford grad. Welcome to Forum, Ramit. Thanks for having me.

Susanna, I wanted to start with you. The rollout of Trump's tariff plan on what he called Liberation Day has been chaotic. Why has the stock market responded so erratically? Right. Well, I

I will say there is just so much uncertainty going on right now. And this is one of those moments where you really see what's going on in D.C., on Capitol Hill, in the White House, really impacting people's wallets, their pocketbooks, their retirement accounts. So, I mean, these market gyrations are a lot to ride as an individual investor.

But and I'll probably say this a lot during this hour, the fundamentals of investing and good personal finance still haven't changed. Well, that's good to know. I mean, when you look back at this, at previous economic crises, for example, the 2008 banking crisis that helped bring Barack Obama to office and the COVID shutdown crisis, is this moment on par with those or is this different? Right.

This actually reminds me a lot of two other times in my reporting and editing life in the personal finance sphere. The beginning of the COVID-19 pandemic, which was similar in just how unexpected it felt. We were reporting a lot on stimulus checks, on expanded unemployment benefits. It really reminded people how the political is personal. And then, yes, again, the financial crisis and what that really meant for people's

economic safety and retirement accounts. I'd say if you are practicing the fundamentals of personal finance, of diversified retirement portfolios, we should sort of be anticipating ups and downs. I know this feels sort of unprecedented and unexpected in a lot of ways, and I'm sympathetic to that. But

well-diversified portfolio, a good savings account, all of these things that we tell people to do, even in sort of calm times, should also apply to this moment and apply to those previous moments as well. Rameen, you noted that Trump's tariff regime is going to hit lower and middle-class Americans the hardest from a financial pocketbook perspective. How will that happen and why is that happening? Well, household goods that

every American uses are often imported from China. That's where many things are made. And because the wealthy can afford the estimated $4,000 that these tariffs will now cost American households, that's not that big of a deal for them. However, for poor and middle class Americans, that really hits them hard. And that's one of the reasons that this entire unnecessary tariff war

is so outrageous. There's no reason for it. The stock market was doing great, historic unemployment, and for no apparent reason, Trump decided to levy tariffs across the world. This causes a lot of pain. Household goods become more expensive. Companies retrench as they are already doing. When companies retrench, they then lay people off. That is a very bad thing for the economy.

When you say retrenched, you mean, I mean, you're talking about layoffs. You mean just not producing as many things as they would produce? I mean, what do you mean by that? Companies are very responsive. They don't like uncertainty. I know I'm a CEO. First thing CEOs do is they look around, they say, uh-oh, we don't like uncertainty. We are going to stop, for example, that new plan to build a factory.

Then they take it further. If we're going to stop a plan for a new factory, we're going to stop hiring. And then the next step after that is we're going to begin laying people off. We're starting to see small pockets of that happening. Nobody knows exactly what will happen in the economy, but I would not be surprised if those layoffs start to become larger and larger. Well, Ramit, we were seeing layoffs here in the Bay Area even before this. Is that part of the same trend?

Who knows? It's very difficult. The economy is so vast, you can't connect any one thing to another. However, we can say companies don't like uncertainty. And in my opinion, speaking to lots and lots of people, what they do with their personal finances, households are much slower

to become conservative with their money. Companies see it, they move immediately. Households are much slower, which is often quite dangerous. Jessica Roy, personal finance columnist for the San Francisco Chronicle. As we heard in that SNL clip, the market for treasury bills, also called T-bills, has been hit hard. Tell us what T-bills are and why that market matters to the average consumer.

So typically when we see the stock market a little jittery, we see more strength in the bond market, but we haven't seen that. And there are a few different potential explanations for that. But the kind of top line explanation is investors really aren't sure what's going on. Investors are not feeling a lot of faith in the American economy right now.

they aren't feeling a lot of faith in what's going to happen next and that it's going to be a good thing. So it's a bad sign. Well, you know, the New York Times notes that when life turns scary, quote, people take refuge in American government bonds. And that goes across the not just in the United States, but across the world. So that truism seems to be a little bit under stress. What are the implications, Jessica, for the U.S. dollar when Treasury bonds aren't as popular? Yeah.

Well, we've already seen a little bit of a slip of a weakening of the U.S. dollar against a lot of foreign currencies. I mean, that's bad for anybody who's planning a foreign vacation this year, certainly. They're probably in trouble for a number of reasons. But, you know, we...

People want to have faith in the American government and people want to believe the full faith and credit of the United States is an absolute guarantee. And when we see a little stumble in the bond market like this, that suggests not everybody feels that way anymore. And that could affect America's, if not its actual credit rating, the likelihood of foreign governments, of companies, of their willingness to invest here. I mean, Susanna, people...

say, you know, the stock market isn't the entire economy. I know Donald Trump in the past has used the S&P 500, the Nasdaq as an indicator to how well the government is doing. I mean, do you think that's true? The stock market is not the economy? And maybe we're over indexing on how the stock market is doing in order to take the temperature of what's happening? It's a great question. And you know,

As you get closer to retirement, for example, you tend to move away from stocks and diversify your retirement portfolio into other kinds of holdings. And so, for example, it's easy to see a headline saying the S&P 500 fell by X percentage point and think that that applies to your specific retirement portfolio or investment portfolio for another purpose like a 529 or something like that.

And it might not be the case. You may have a more conservative portfolio that only fell by a percentage point or even less. So I think that's why it's worth, again, thinking about those fundamentals of personal finance and the fact that if you are maybe a few years out from retirement or even in retirement, you may not be seeing your personal financial accounts falling by the same amount as

But those headlines are still scary and they can still make you feel very, very panicky. So that's why it's worth taking a step back and thinking to yourself, okay,

Is this really impacting me the way it seems like it is? I mean, Rameen, I'm curious, you know, when you think about, you know, your personal portfolio, are there specific issues as or economic indicators that me as a regular person, you know, who just has a 401k account that I should be paying attention to? I mean, is that the Dow Jones or unemployment numbers or the price of my latte at Starbucks? Like, what should I be thinking about?

You know, one of the first things that individual investors should be doing is actually paying less attention to their portfolio on a given day. One of the biggest mistakes that individual investors make is they tinker. They see scary charts on the front page of the newspaper and they log into their account, almost like they're picking a scab on their skin. The only problem is they're not just picking a scab. A lot of times what individual investors then do is they get scared, they panic, and they sell.

And that decision, born out of fear, can often cost individual investors millions of dollars. It's one of the worst possible things that somebody can do. And it's made in panic. It's made in fear. And we saw the exact same thing happening in 01, 08, even 2020. You mean that people are looking and just being reactive? Yeah.

Correct, because it's scary, especially the older you get. You see your personal wealth and a big red chart and you go, I have to stop this pain. I don't understand what's going on, but it does not feel good.

One of the best things they can do is to slow down, not log into your account because logging in probably it's kind of like going to a casino at three 30 in the morning. No good can come of it. Better to slow down and understand what's going on before you take a rash action.

Well, you're making me feel better about my own financial policy, which is, yeah, I'm not looking right now. So I don't want to be the person at the casino at 3 o'clock in the morning. We're talking about your financial concerns right now, and we've got an all-star panel. We have Jessica Roy, personal financial columnist with the San Francisco Chronicle. We've got Ramit Sethi. He's a personal finance expert and host of I Will Teach You to Be Rich. It's a podcast and Netflix series.

And finally, we're joined by Susanna Snyder. She's the managing editor for Money at U.S. News. And of course, we want to hear from you. How are you feeling about the economy? What are your biggest financial concerns right now? And how are you managing the uncertainty? Are you doing anything differently in response to tariffs, inflation, or market fluctuations? You can give us a call now at 866-

733-6786. That's 866-733-6786. Or email your comments and questions to forum at kqed.org. You can find us on social media, Blue Sky, Instagram, we're at KQED Forum, or join our Discord community. I'm Grace Wan, in for Alexis Magical. More Forum after the break.

Support for KQED Podcasts comes from Sutter Health. From checkups to colds to complex conditions, Sutter's pediatricians and family medicine doctors provide expert care for kids and peace of mind for parents. Learn more at SutterHealth.org. Support for KQED Podcasts come from Berkeley Rep, presenting Aves, an intriguing new play about memory, forgiveness, and unexpected transformation.

playing May 2nd through June 8th. More info at berkeleyrep.org. Welcome back to Forum. I'm Grace Wan, in for Alexis Madrigal. We're talking about your financial concerns in light of the whipsaw motions of the stock market in this economy, and we're joined by an all-star panel. We've got Susanna Snyder, Managing Editor for Money at U.S. News, Ramit Sethi, he's a personal finance expert and host of I Will Teach You to Be Rich, that's a podcast and Netflix series,

And we have Jessica Roy. She's a personal finance columnist at the San Francisco Chronicle. We're also taking your questions and your calls. How are you feeling about the economy? And what are your biggest financial concerns right now? You can give us a call, 866-733-6786. That's 866-733-6786. Or email your comments and questions to forum at kqed.org or find us on social media. You know where.

Jessica, I wanted to ask you about inflation. The talk of inflation dominated the presidential election cycle. It seems to have taken a little bit of a backseat with all the other economic news. Where are we now on inflation and how should inflation be informing our personal decisions on finances?

Yeah, the most recent report on inflation said that it actually cooled off a little bit more for March. So that's a positive thing. However, tariffs are inherently inflationary. You know, when the prices for businesses to operate in the United States go up, they pass those costs onto consumers. That's just how it goes. And also when you look at how the labor market tightens when we cracked down on immigration, which has been another focus of Trump's, that's another thing that's inflationary when there are fewer workers. Their wages have to rise for them to be willing to work different jobs. So

Right now, inflation has cooled a little bit. We haven't gotten to deflation. I don't think consumers should be expecting prices to be coming down. They are not rising as fast. But if you look to the next three months, the next six months, I think it's pretty fair to assume prices will rise if the tariffs and immigration crackdowns continue. And where do you think we'll be with wages? The same?

You know, that's a great question. As Ramit said, a lot of companies act fast when we see economic uncertainty and when we see these kind of the stock market volatility. It remains to be seen, I think, especially for a lot of like Bay Area tech workers. Are those salaries going to go up? I don't think we've seen movement in that direction.

Remy, when it comes to retirement, I mean, some people rely on pensions, others have 401ks or 403bs, other kinds of savings account. It's a wide variety of options. I mean, just give us a little bit of background on what retirement options are available and why there is such a variety. Well, the most common type of retirement account is a 401k. Then we have Roth IRAs, traditional IRAs, and many other accounts.

you know in short there's a variety of options given to individuals business owners small business owners etc so simply the same as why are there a lot of different cars because there's a lot of different needs and the important thing when it comes to retirement especially at a time like this slow down before making any big decisions don't sell all your stocks and remember that if

It makes sense to understand how these accounts work. I say that because the majority of people I talk to have never read a single book on personal finance. 50% of the people I talk to don't even know their own household income.

That's a shocking statistic. I hear it every week on my podcast. And so we have to understand that when it comes to our understanding of money, it's quite low. We hear words like 401k, Roth IRA. If you live and breathe this, it's normal. But for the everyday person, they don't understand the mechanism the same way that I don't understand how my car works. It just works.

Right. Well, you know, a lot of what is coming out of the Trump administration is, well, you know, stocks dip down, but then they came back up. You know, we had this really huge run last week. But that run up in the stocks doesn't necessarily reflect that every company who went down also went up, does it, Rameet?

No, of course not. But in general, most individual investors should not be picking individual stocks. There's this misconception that investing is sitting around with 14 monitors in the dark picking stocks based on PE ratios. That's not really how savvy investors work. Investing is much more like watching paint dry. You pick a very diversified, typically an index fund, which is very inexpensive, but

you set it up to automatically invest and then you let it cook like a Thanksgiving turkey for the next 40 years. That's actually quite sophisticated. But it's not as sexy as watching people trading stuff on TV. Well, it sounds like a very dry turkey, I have to say, Renit. But,

But Susanna, what about people who do want to do something who just just can't sit there on their hands and do nothing? I mean, is the advice just don't open your laptop? I think that's great advice. Really, if you need to just not look, don't look.

There are things I think that people can do that even they would do in the best of times that are still good financial housekeeping. So, you know, they can think about, um,

If maybe they aren't, for example, saving anything in an emergency savings fund, this might be a good time to start thinking about that. There's actually data that shows that even if you don't have three to six months worth of savings in an account, even a few hundred dollars can really make you financially more resilient, more able to weather financial storms. So there are certainly things you can do. I also think just in general, you know, think about kind of

Again, good financial housekeeping investment strategies you would do even at good times. And if you haven't done those, maybe it will make you feel better to kind of think about taking some of those steps, whatever they are, investing more or just, you know, speaking to your financial advisor if you have one. Think through those kind of easy, not really big steps.

before you do anything massive, before you cash out of your retirement fund and buy gold bricks and put it in a crawl space under your house. What are the little things that maybe you've been meaning to do that you haven't done yet that will make you feel like you're taking control? I think that's fair, but we want to stay away from big, panicked, hard-to-reverse actions right now. Jessica, how does that change if you are closer to retirement versus farther away? I mean, I can imagine that somebody in their 30s

would be weathering this a little bit differently than somebody who's 65 and thinking about retiring next year. For example, Christine on Blue Sky writes, I'm retiring in December and I've moved most of my money to a stable account. Will that be okay? We don't know what kind of account she's moved it into, but just this idea of like retirement is upon me versus retirement is 40 years away.

Absolutely. So the kind of traditional retirement advice, the financial advice as you approach retirement age is that you are diversifying your holdings over time. And so you go from having a lot more money in the stock market to a more diversified portfolio that has money in those bonds that we talked about and in cash and a high-yield savings account. So ideally, if you are nearing retirement, you have already been in that process of diversifying. If you haven't, if you have decided, I'm going to ride it out with the market, you're going to have to do it.

Like everybody else said, don't make any big financial moves right now. Don't panic and sell off everything, but make a plan over the next six months, over the next year to be slowly approaching those diversification goals. I think if you are right at retirement or if you are retired right now, you know, the people I've spoken to for stories about this, people who are retirement experts say their policy is the same. Don't sell. Don't touch your depreciated equity. You know, you haven't lost any money until you sell. Right?

And so if you're retired or if you are living off of those savings already, now is the time to be pulling from bonds. Now is the time to be pulling from cash. I think if you do need your money in the stock market for living expenses, pull just those minimal living expenses and don't touch the rest. Let's go to the phones. Phil in San Francisco. Welcome to Forum.

Hi, thanks so much for having me. I just wanted to call and give you guys a little insight, one or two notes. I know sort of stock market is that immediate reaction, but I wanted to suppose that the larger impact of families, touching most American families, is probably more like two to three months out. The reason I say this, I work for a company that, man,

in China where this little insight was, you know, stopped all containers because we're not going to spend that kind of money on tariffs to bring them in. And the result, I think, broadly speaking, and I've talked to a lot of other folks doing a similar thing, holding that, it's more likely to impact

two to three months out. I think you're more likely then to see the empty shelves, increased prices, those kinds of things much, much more likely to have a heavier impact on the economy than just everyday ups and downs. Oh, thanks for that comment, Phil. I mean, Rumi, when we think about what might happen in three to four months, I mean, is your advice any different? You know what? It is. I think that all the panelists, all of us are

being very cautious in suggesting not making any rash decisions. I think that's really good advice. However, I do want to say that for only the second time in 21 years, I am now recommending

a 12-month emergency fund. And I'd like to talk about why. The only other time I recommended such an aggressive large emergency fund was during COVID, which really should suggest how seriously I see the chaos in the markets. And this is not about market timing. I'm not a market timer. I don't believe in trying to time the market. I believe everybody should continue investing regularly and automatically. But

I agree with the gentleman that we don't know what's going to happen. It could get much worse. Like I said, companies retrench. They stop hiring. Those things take a little bit of time to show up. And if you can't hit a 12-month emergency fund, most cannot.

start with a six. If you can't hit six, hit three. But I can tell you that having lived through multiple severe downturns in the market, you do not want to be caught being laid off, perhaps having a mortgage, a family to support or other obligations, and suddenly wondering what I'm going to do. In other words, make tough decisions now before the world forces you to do it. I mean, that's prudent advice. But for so many people in the Bay Area, it's really expensive to live here. A

I think a lot of people are paycheck to paycheck. I mean, the idea of even having one month of emergency rainy day funds seems very difficult. I mean, do you have any advice on how to get there if, you know, you really are relying on paycheck to paycheck to get by? I do. First, I'd like to push back on the notion that most Americans live paycheck to paycheck. The data simply doesn't show that. The data shows that most Americans have 50%.

the median American has three months of cash in their checking and savings account and an median net worth of $193,000. So first, important to know what the data says. Second, we got to first look at our discretionary spending. So that spending, whether it be eating out,

whether it be planning to take a trip, that is something I would immediately either reduce or eliminate. Put that money directly towards savings. Then you have other options. You can extend certain purchases. Instead of doing something every three months, do it every four. That can generate hundreds of dollars per year. Then we have the options of reducing contributions to certain investment accounts. I personally would not love it,

But, for example, reducing a 401k down just to get the match while building up an emergency fund, that is certainly an option. Again, we don't want to always optimize for pure investment returns. We want to keep investing. We don't want to time the market. But we want to make sure we have a large enough emergency fund that if something happens, we are safe. Let's go to Pat in Sacramento. Pat, welcome to Forum. Hi, thanks. Hi.

What's your question, Pat, and how are you feeling about the economy? Scared to death. You know, I'm 73, and my parents lived through the Depression, and this is reminding me of some of the same historical actions that led to that. I also wanted to ask you to be sure and address those of us who are not wealthy, who have spent, you know, my whole life

earning money, putting it into the 401k to live on until I die and to pass along to my children. And I feel like I'm watching it disappear. And it's my whole life. I mean, that's so tough. Jessica, what do you have to say to Pat?

Yeah, I agree. I think it's absolutely terrifying to be making eye contact with a 401k balance right now. I would really recommend what the other panelists said, which is try not to look at it right now. And just remember, if you have not sold, you have not lost any money yet. You know, we talked a little bit about how is this stock market sell-off alike and different from past ones. And the big difference here is, you know, with COVID, with 9-11, with what we saw in the markets then,

Those weren't things where someone could snap their fingers and make those things go away. And this one is. And we've already seen Trump reverse course. And so I think we really don't know what's going to happen. But...

All of this damage is self-inflicted and it all could go away pretty easily. And I think right now I totally understand where Pat's coming from. And it's so, so difficult to see politicians in Washington making these choices that affect, you know, real people who've worked hard their entire life to save this money. I would try to leave it alone as much as possible right now and ride this out.

Right. Liz writes, fear, anxiety, sleepless nights. Yes, I've experienced all of this. Apparently, I have chromatophobia, a specific phobia characterized by a marked fear or anxiety about spending money, even when one has sufficient funds. I check my portfolio once or twice a day. I've lost 25% of my stocks.

I'm shocked at the price of groceries. And Amy writes, the economic uncertainty is having a direct impact on my family. We are retired, but not on fixed income. We have money for discretionary spending, but we've canceled remodels, updating two bathrooms and are cutting back day to day discretionary spending for now. We also have an expensive, quote, once in a lifetime trip planned to the Galapagos later this year and are considering canceling it.

I mean, Rami, there's a lot of big ticket items that people are thinking about or were thinking about that they are now shelving. Is that a smart idea or should people just go forward with the plans that they had? It's very smart. It's very smart. Now, there are exceptions. If you have a sizable emergency fund in my recommendation, 12 months, although it's your money, it's up to you.

If you have that, if you feel secure in your job and you have planned for a Galapagos vacation, then perhaps you should take it.

I heard from a reader just last night who asked about delaying major purchases and she asked about IVF, which is obviously time sensitive. That's a really difficult decision to make. So we talked about some of the pros and cons and sometimes you have to make decisions that the spreadsheet doesn't agree with, but life is not lived in a spreadsheet.

However, with all that said, I think that cutting back on discretionary items such as a renovation are probably a very smart move right now. Susanna, what about buying a house? I mean, is now a good time to buy a house?

When it comes to specific purchases, but especially a house, that's a tough one because ultimately a house is a place to live, not just a financial decision. So that is going to be potentially about going to the spreadsheet, looking at your savings, looking at whether or not this works for you and your personal situation. I will say major renovations, unless there's like a gaping hole in the side of your house,

definitely might be something to think about holding off on until we have a better sense of what is happening and whether or not you're going to need those savings. Yeah. And Jessica, I mean, you're based here in San Francisco. What are you hearing about the housing market? Is it hot? I mean, are people trying to invest right now and buying a home or are people holding back?

I think the housing market is horrible right now. Supply is just so, so tight right now. I mean, I think the majority of Americans have a mortgage that's under 4% right now. And rates have been 6.5%, 7-ish for months and months and months. And even when the Fed has cut rates, mortgage lenders have not been cutting their rates at the same pace. So yeah, so most people, if you don't have to move, most people are not moving right now. And so it's tough. There's very little on the market.

And then, you know, the monthly payment is going to be way, way, way more expensive than it was five years ago, two years ago, three years ago. So basically stay put. Well, we're talking about how the economy is impacting your pocketbook. We're joined by Ramit Sethi. He's a personal finance expert and host of I Will Teach You to Be Rich. It's a podcast and Netflix series. We also have Susanna Snyder, managing editor for Money at U.S. News, and Jessica Roy, a personal finance columnist for San Francisco Chronicle.

who was recently featured on the Netflix show that John Mulaney hosts. Fascinating and funny. And we want to hear from you. How are you feeling about the economy and what are your biggest financial concerns right now? You can give us a call at 866-733-6786.

That's 866-733-6786. Or you can email your comments and questions to forum at kqed.org. And you can find us on social media, Blue Sky, Instagram. We're at KQED Forum. And we also have a Discord community. So join us there. We're interested in hearing your questions, your concerns about the economy and your own pocketbook. I'm Grace Wan, in for Alexis Magical. More Forum after this break.

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Welcome back to Forum. I'm Grace Wan, in for Alexis Madrigal, and we're talking about the impacts of the economy on your finances, what you're thinking and what you're concerned about. We're joined by three professional personal finance experts. That's Jessica Roy, Ramit Sethi, and Susanna Snyder. And we're hearing from you about your feelings about the economy, your biggest financial concerns, and how you're managing the uncertainty.

Are there things that you're putting off? Are there discretionary spending items that you've taken off the table? Are you shifting your stock portfolio? You can give us a call now, 866-733-6786. That's 866-733-6786. Or email your comments and questions to forum at kqed.org.

Rameen, I mean, you're not a prognosticator, but there's a lot of conversation in finance right now about the possibility of a recession. I mean, for people who don't know exactly what that is, can you explain what it is and whether we're looking at one down the pike? Can't. Can't predict it. Won't even do it. It's pointless to try to predict what's going to happen.

there's just simply no point. We don't predict which stocks are going to go up and down. We don't predict if a recession is going to happen or not. And we only actually know

looking backwards. So in my opinion, there's no point in trying to predict it. There is a point in trying to get the fundamentals of our personal finances right. Make sure we have our savings rate, our investment rate, make sure that we have proper asset allocation, a phrase that many people are not familiar with, but it's actually worth hundreds of thousands of dollars to the everyday American. Those things matter. Predicting what's going to happen does not. Yeah.

Well, let's go back to what is a recession for people who may not understand what that is. What is a recession, Rameet?

Well, a recession is when we have a sustained downturn in the economy. I think we define it as two consecutive quarters of GDP decline. Of course, like I said, we only know that looking backwards. So if someone says, are we in a recession right now? It's actually impossible to know until we get the numbers, which won't happen for several months from now. Jessica, do you have anything to add to that?

I would say, you know, I think when people think of recession, obviously what comes to mind is the Great Recession. But there was a reason we called that the Great Recession. That was a particularly bad one. You know, we had a small recession in 2020. Again, as Ramit said, you only can see what they were looking backward. And that one we bounced back from pretty quickly. But

Even if we are going to enter another recession, which many economists say is likely at this point, it might not be on par with 2009. Let's go to the phones. Rodney from Milpitas. Welcome to Forum.

Hi. How do I feel about the economy right now? I feel like I'm on roller skates. I feel like I can fall down any time. But my question is, is that what's the best case scenario? And I have a follow-up. What's the best case scenario right now? What's the worst case scenario? I think all in all, people in general right now would love to hear that across anybody has any influence on, you know, ideas, I should say, on that. What's your comment on that? I have a follow-up.

Well, let's start with best case and worst case scenarios. I mean, Susanna, can we can we predict anything? It's hard to predict the future. You know, I think one of the pitfalls of trying to predict future.

what's going to happen and therefore, you know, change your investing strategy or anything like that is like, we don't know. I don't even know that the Trump administration really knows what's going to be happening in three months or three years. So it's just really, really difficult to,

to predict and i think the best and worst things are things that you can control yourself and again that's how you respond to what is happening right now it's about implementing the fundamentals of personal finance having that robust savings account appropriate portfolio diversification strong credit a budget all of that if you can kind of get through this moment with those fundamentals intact

That to me is a personal best case scenario. If you panic and regret how you panicked after the fact, that would be a kind of personal worst case scenario. But unfortunately,

I don't even think Trump knows what's going to happen. I mean, I'm curious. I mean, we've talked about previous crises. And is there anything that we've learned from them from a personal finance point of view about how to weather those storms? I mean, they weren't that far off. I mean, 2008 was less than 20 years ago. I mean, are there any learnings that you've accumulated from those previous crises? Yeah.

Well, you know, the financial industry is pretty good at taking lessons and documenting them. But I will tell you that the major lesson is that most individual investors don't learn. And that's really profound. There's some great research showing that, you know, the average index fund will get you something like 7% in real returns over the long term. That's after inflation. But the average individual investor receives about half of that.

like less than three and a half percent. Why? Because in times like this, they tend to panic and sell. Now this is a lesson we've learned decades ago. You'll hear every person in the personal finance world saying, "Don't panic, don't log in every day, et cetera." And I'm glad that we have a series of really great panelists here today who are saying the exact same advice. It's great advice.

The problem is that people are not robots. They get scared, maybe they're not listening today, they hear something from their neighbor, they log in, they get scared, they sell. So the lessons are quite straightforward.

focus on the long term, have a clear diversification strategy. But what's really important is in times of chaos, those rules and guidelines become even more important. So if you're hearing us say things that sound like you've heard it 50 times before, there's a reason for that. It's really important. And this isn't a joke. It can be worth hundreds of thousands or even millions of dollars to

to your own individual finances. So I would really encourage all of us to take it seriously and follow those guidelines. Let's hear from Rochelle in Oakland. Rochelle, welcome to Forum.

Hi, I'm lucky. I'm one of those retirees who is not heavily dependent on Social Security, but a lot of people are. And I don't want to start any kind of a panic. I just heard a little bird say, actually it was something on the Internet, you know, Elon Musk and his little friends are in, Doge, they are in the Social Security office and

And they are trying... What I heard is that everyone knows that the Social Security system, the computer system, is extremely complex, and it's been in need of revision for quite a while. The estimate is it would take about five years to revise the computer language, and he thinks he can do it in four months. I heard this from supposedly a Social Security employee...

talked to Forbes magazine and said, be prepared perhaps not to receive a social security check for a few months. Has anyone else heard that rumor? Well, it does sound like a rumor, and it sounds like something that we don't really know about. But I mean, Jessica, should people be concerned, or what should people who are on social security do to safeguard, to make sure that

You know, their payments are going through. I mean, I think the Republicans have assured people that they're not touching Social Security. But are there any best practices when it comes to your Social Security check?

Yeah, you know, right now we've heard from a ton of readers who have had trouble, you know, accessing the system, logging in. They have, you know, Elon Musk and Doge have talked about closing down phone support for Social Security. And so they're telling people to go to the field offices, but all the field offices, you know, are understaffed and saying now you have to make an appointment. So I totally understand why people are worried. Most people are still receiving their checks. And I think if you're listening to this and your check is still coming regularly, you

don't go into the office, don't raise any concerns right now. A lot of people are still receiving their checks. It is true that Elon Musk and Doge have talked about, oh, it's going to take us three, four months to overhaul this whole computer system. And realistically, that is a huge, huge monumental task that is something you would look at in years, not months. So I think it's fair to be concerned. But right now, I think...

As long as people are still getting their check, as long as things are still going smoothly there, I don't think people have anything to worry about in the immediate future. Well, here's some listener questions. Suzanne writes, I'm concerned about the future of our government. Do your guests recommend investing in foreign currency in case the dollar is destabilized or economy collapses? I'm worried that all my savings are in the stock market and that my home could lose value quickly. Susanna, any advice about foreign currency investment?

Specifically, it's hard to talk to one person's portfolio, but again, a well-diversified portfolio may have exposure to global and foreign funds. And that is certainly a part of looking at a holistic retirement portfolio. So I'd say something that might be worth it if somebody is close to retirement or near retirement, if you work with a financial advisor, it can be really helpful to sometimes have a second person

pair of eyes and a second pair of ears when you feel like you are panicking or not understanding if your investments are giving you sort of the appropriate

uh risk profile for where you are in life and what else you are holding um you know we always recommend a fiduciary maybe somebody who's a cfp i think at a time like this where you might feel like you want to press the panic button it's also good to talk to the professionals in your life if you use them and see if you can get some clarity into how something like that might balance your portfolio and a cfp is a certified financial planner is that right suzanna

That's correct, a certified financial planner. And something that CFPs do is they commit to being a fiduciary and basically representing your best interests, not just sort of providing things in order to get a commission. So that can be sort of a helpful differentiation.

We have two questions here regarding people's pensions. Christina on Blue Sky writes, what about CalPERS? Will this hurt our retirement benefits? And Jenny writes, I'm 67 and retired with two pensions, University of California and City and County of San Francisco, as well as my Social Security. Can you address how this affects pensions?

Rameet, I mean, a lot of people do have pensions and they've invested into this program and probably don't have as much ability to do anything in terms of making investment decisions. So what if you do have pensions? Same advice? You know what? I'm going to defer to Jessica and Susanna, who I think probably have more experience in dealing with pensions than I do. Yeah, Jessica, go ahead.

Sure. So, pardon me, I'm not an expert on any of these individual pension plans, and a lot of it is really going to be plan-specific plans.

But the kind of big picture is you really can't choose how they're invested. Usually, and again, you would have to look at the specific wording of your contract with your pension. Usually the benefits are guaranteed at a certain rate and you will certainly get lots and lots of notice if those are going to change. But yeah, most people, you can't really change how your pension is invested. Let's go back to the phones. Stephen from Napa, welcome to Forum.

Hi, good morning. I think one of the biggest issues is that Americans need to be better educated about their personal finances. And if one of the greatest things my financial advisor says to me is when I ask him a certain question is, I don't know. That is invaluable because they're not all geniuses.

Very few of them are. So get better educated with your personal finances. And if somebody tells you they're going to make you rich, don't touch them with a barge pole. Well, I think that's I think, Stephen, you're singing Raymeet's song, which is get familiar with your personal finances and maybe get some help on that. Yeah.

You know, when you're talking about getting familiar with your personal finances, Rameed, what do we need to be up on? You know, like, what should I know about what, you know, what's your advice on how much I should know and what I should be focused on? Well, first of all, I agree with the caller. I mean, I know what a book called I Will Teach You to Be Rich sounds like. Trust me. All right. I've been running this business for 21 years. All right. I understand the implication. Everyone's like, what? Yeah.

I wrote this book and I want people to get it from the library or get another book. But the caller is exactly right. The vast majority of people that I talk to who are worried about money, anxious about money, ashamed of their financial situation, have never read a single book about money. These books are freely available at public libraries. I always encourage my readers to go there and get them. So we have to understand the basic language of personal finance.

This is not like understanding how your dishwasher works. Most of us don't care. Just push the button and it runs fine. But you need to understand things like the difference between savings and investing, what diversification and asset allocation means, how your investment should probably get more conservative over time. If we don't understand the basic language of money, then all we are left with is feeling anxious and worried about our personal finances.

Hmm. So the basic language of money includes how much money I have, how much money I make, and kind of understanding the vehicles in which I can invest in to make sure that my savings are working for me. Right, Rami? That's correct. And also one other thing I want to add in couples, because I work with a lot of couples and money, it's often the case that there is one money person in the relationship.

And this is a huge no-no because if that person got hit by a bus tomorrow, the other person is often left helpless and they're often preyed upon by the financial industry. So it's very important that both partners sit down and discuss how much do we have? What does that number actually mean? The big question most people have is, is that enough?

And in order to answer that question, you need to understand the basic terms of personal finance. Well, Ren writes, everyone admits the economy is a wreck and self-inflicted, but no one dares name the guy holding the match. It's Trump. So stop doom scrolling your 401k and start organizing. Agitate, protest, vote, donate, resist. This isn't a market correction. It's a democracy emergency. Stop watching and start fighting. What do you think about that, Jessica?

I think that's challenging. I think I said Trump's name. And I think many, many economic experts who are watching things that are happening would say, you know, Trump is the one who has made these choices and is doing this to the market. But I think, you know, you have a First Amendment right to free speech and to protest as an American. And I recommend everybody who's angry about anything that's happening in the world, get out and let people know about it. Yeah.

So as we end the hour, I'd love to hear from the three of you about what I should be paying attention to. I mean, we talked about maybe closing my 401k, you know, not looking at it every day. But what things should I be aware of? What economic indicators should I pay attention to as the news continues? Suzanne, I'm going to start with you.

Absolutely. So as you said, there is a certain amount of what you should not be paying attention to, maybe closing your laptop when it comes to looking at your 401k, taking a deep breath. I think it is important to look at where you're getting your sources of information. There are a lot of

of really terrifying headlines. They look very, very scary. And I think it is important to think about getting information from legitimate sources, from news sources, confirming news before you act on it. So I would really encourage people to think about that carefully. And then the last part is, as we've talked a bit about here,

Know your own financial stats. Understand your income, your savings, what you're invested in, all of that, your credit score, all of that is very important. And now might be a time to really think about how can I improve any of those personal stats? Can I be taking on a side hustle to earn more money? Can I be diverting more money to a savings account? So those are the big things I would look at right now. And Jessica, what would you be looking at in the next couple of years?

couple months or so? I think I would focus on things that are within your control. You know, you can't control what the stock market is doing, but you can commit to tracking your expenses and holding yourself accountable for where every penny is going and knowing that your spending is aligned with your priorities. You can focus on building up that emergency fund. And if 12 months of expenses is out of reach, if you have $400 in a savings account, you're doing better than something like 40% of Americans. I think like Susanna said, if you can pick up a side hustle, if you can find it does

It doesn't have to be a second full-time job. If you are dog walking, if you are babysitting, if you are tutoring, if you are offering your services in your local Facebook group to make 50 bucks on the weekend helping someone move or something, those are great ways to shore up that mini emergency fund and great ways to plug any holes that are in your budget. So I would really focus on that. Focus on what you can control with your finances right now. And Ramit, in the 30 seconds we have left, what's your advice?

What should I be looking for? - The first number that I would know, my fixed costs, and I would target 50 to 60% of my take-home pay. The next number is my savings rate, what percentage of my take-home pay. Typically, that's five to 10%. At a time like this, I would suggest you boost that number a lot. The third, investments, five to 10%, that depends on age. Of course, the higher, the better. And finally, guilt-free spending. Typically, that's 20 to 35%, which is a lot, but right now, I would cut that number down and divert some of that to savings.

All good advice from Jessica Roy, Ramit Sethi, and Susanna Snyder. Thanks for joining us. I'm Grace Wan, in for Alexis Magical. Stay tuned for another hour of Forum Ahead with guest host Leslie McClurg. Funds for the production of Forum are provided by the John S. and James L. Knight Foundation, the Generosity Foundation, and the Corporation for Public Broadcasting.

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