Finance Expert Warns Trump Tariffs Make Saving Crucial: He’ll ‘Light A Fire Through The Global Economy’

Personal finance expert Ramit Sethi is sharing his tips and advice for investors in the wake of tariffs from President Donald Trump weighing on the markets and the minds of Americans.

The author, best known for the book “I Will Teach You to Be Rich,” recently said that increasing savings is one of the most important things people can do given the current macroeconomic concerns.

“I have an aggressive recommendation that I’m making, and that is to focus on assembling a 12-month emergency fund,” Sethi said, as reported by Buzzfeed.

Sethi said Trump has no plan when it comes to tariffs and the decisions made by the president could “light a fire through the global economy.

“There is no economic justification, which is why virtually no economist will back what he did,” Sethi said.

Boosting Savings: In his interview, Sethi provides a five-step plan on increasing savings.

1. Look at discretionary spending: lower the amount spent on “the fun stuff” like going out, travel, drinks and put that money into savings.

2. Pause and stretch expenses: major expenses, such as moving, a home renovation, or buying a car, should likely be paused or stretched out to help boost short-term savings.

3. Decrease payments on low-interest debt: overpaying on a mortgage is one example of money that could be better used in an emergency fund given the current macroeconomic environment, Sethi said.

4. Decrease 401k contributions: this one is listed only as if necessary and to make sure that contributions are still made in large enough percentages to get any potential company match. Sethi said to make sure not to eliminate contributing to the retirement account, but decreasing the amount may make sense now.

5. Decrease payments on high-interest debt: one of the last resorts if needed to boost savings would be to stop paying large amounts against high-interest debt, like a credit card. Sethi said this is only an option if necessary to get money into savings.

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Why It’s Important: The personal finance expert explained that people typically approach extra income in two ways: some prioritize paying off debt, while others focus on boosting their savings.

Sethi said people are taught to avoid debt, but there are other options.

“There’s a different way to look at it. If you have low-interest debt in usual times, mathematically, you can pay the minimum and maybe invest any extra money you have, because you can probably make more investing than you would paying off a 3% mortgage or student loan,” Sethi said.