44% of workers worry about layoff, job loss
Despite collective optimism around the current job market, 44% of workers are worried about a layoff or job loss, according to CNBC’s All-America Workforce Survey. Some 84% are worried about a recession.
Economists are starting to raise their outlook for the likelihood of a recession. On Monday, Goldman Sachs said it now forecasts a 30% chance of that happening within the next year, down from 15% previously.
Meanwhile, 68% of CFOs responding to the CNBC CFO Council survey believe a recession will occur in the first half of 2023.
Inflation has not yet slowed, although many had hoped it would. Consumer prices rose 8.6% in May, the biggest increase since 1981.
For now, the job market is still hot and many career experts believe job seekers have the upper hand.
Emergency fund offers ‘freedom’ between jobs
However, if you decide to quit your job, having an emergency fund for eight to 12 months is imperative, said Orman, host of the “Women and Money” podcast. The savings will also protect you in the event of a downturn.
“If you lose your job, if you want to quit your job, it gives you the freedom to keep paying your bills while you think about what you want to do with your life,” she said.
Orman’s goal of eight to 12 months is at the high end. Many financial experts, such as certified financial planner Ted Jenkin, CEO of Atlanta-based Oxygen Financial, told CNBC that the ideal number is at least three to six months of emergency savings.
Yet many Americans are falling short of even that goal, according to a new Bankrate survey.
Nearly one in four saved nothing at all, the lowest level the personal finance website has seen in its 12 years of surveying. Some 27% have enough to cover six months or more of expenses. The rest falls between the two.
To grow your savings, start skipping the little things you don’t need, like going out to dinner. Treat your emergency fund like a bill you have to pay each month, and even consider automatically depositing a portion of your paycheck into a savings or money market account.
Try to only use credit cards if you pay the bill in full each month and put any bonuses, such as bonuses or tax refunds, into the emergency fund.
Once this money is set aside, you can afford a period of unemployment. However, while a layoff is out of your control, stepping away should be a very prudent decision, Orman said.
“It’s really important that if you do something, do it with intelligence and a lot of thought,” she said.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.