Suze Orman on the risks of upgrading to a posh apartment in your 40s

When you reach your 40s, the temptation to upgrade your lifestyle can be strong, especially if you’ve worked hard and saved well. However, according to personal finance expert Suze Orman, a fancier apartment in a great city could be more of a financial burden than a reward – especially if your work situation is unstable.

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In a recent episode of her Women and money podcast, a listener asked a question that many can relate to: She’s in her 40s, probably owns her home, and has saved a significant portion of her net worth in cash. With relatively small expenses and the safety net of living with her parents if necessary, she is considering upgrading to a nicer apartment in the city, using her cash reserves or taking out a small loan. Problem? Her job is unstable and she knows she may have to retire early.

Orman’s answer? A firm “no”.

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Upgrading to a nicer place may seem easy at first, but Orman warns it could lead to more financial stress in the long run. She explains that moving to a fancier apartment means more than just a bigger space. “More spending, more taxes, more everything,” she says. If your job is unstable, you should focus on accumulating cash, not depleting it.

Her co-host KT quickly chimed in, agreeing with Orman’s assessment. “Why would you do that? I would never do this if I had an unstable job and (was) 40 years old,” she said. “I would like to accumulate as much money as possible to feel free.”

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For Orman, the decision is simple: At 40, you should still focus on building wealth. “These are your cumulative years,” she reminds listeners. She suggests investing in your future rather than spending money on a luxury apartment. The more you can save and invest now, the better off you’ll be when it’s time to retire.

Orman also stated that the listener’s logic is flawed when it comes to interest and cash reserves. The listener mentioned that by liquidating her assets and placing them in a bank with 3% interest, she could generate enough income to cover twice her parents’ monthly expenses. However, Orman warns that assuming a constant 3% interest rate is risky.

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“How do you know what the interest rates will be?” she asks. Orman says that if this listener had made a similar decision in 2007, before the financial crisis, she could have faced significant losses.

So what’s the solution for someone yearning for a more vibrant, city-centric lifestyle? Orman suggests enjoying the best of both worlds without making a financial commitment that could backfire.

“If you want a more elegant lifestyle, go there for the weekend and come back,” she advises. Renting a place for short visits allows you to experience the excitement of the city without the long-term financial strain of owning an expensive apartment in the city center.

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Orman’s advice is this: Prioritize financial security, especially when you’re in an uncertain job situation. “At 40, if you lose your job, you have another job,” she says. But until you’re in a more stable position, stick with the home you own, keep saving and investing, and leave the luxury upgrades for another time.

Are you in a similar position and thinking of upgrading your home to enjoy a better lifestyle? Then you might consider talking to a financial advisor. They can help you navigate your finances and determine the best route that aligns with your long-term financial goals.

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This article More Expenses, More Taxes, More Everything: Suze Orman on the Risks of Upgrading to a Fancy Apartment in Your 40s originally appeared on Benzinga.com

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