Feeling financially stuck? Renowned expert Suze Orman offers straightforward advice to build lasting wealth. She believes taking control of your money is the ultimate power. If you're ready to escape financial stress and achieve security, these five fundamental rules are your essential guide.
1. Conquer Your Credit Card Debt (It's a Wealth Trap!)
It is important to live within your means, and for Orman, the first step was to attack your credit card debt aggressively. Credit cards have devastatingly high interest rates, often close to 22%, and steadily drag your finances down. Orman recommends simply calling your credit issuer and working with them to reduce your interest rate or looking for a balance transfer opportunity with zero interest for a period of time. If you can rid yourself of this high-interest debt, you will be free for your money to grow, work for you, and not work against you.
2. Build a Rock-Solid Emergency Fund (Your Financial Lifeline!)
Orman always talked about keeping an emergency fund healthy. Aim to save three to twelve months of your expenses. An emergency fund is crucial to your financial habit because it allows you to ride out unexpected hardship, like job loss or medical emergency, without resorting to high interest debt and sometimes prevents you from achieving long-term goals.
3. Create an Ironclad Action Plan (Know Your Money's Mission!)
Orman firmly believes in a clear, actionable financial roadmap. Begin by prioritizing credit card debt repayment and improving your FICO scores. Next, meticulously separate all expenses into “wants” and “needs.” Orman insists on being disciplined about eliminating “wants” if you lack sufficient savings or carry substantial debt, ensuring your spending aligns with your financial objectives.
4. Automate Your Savings (The “Set It and Forget It” Path to Wealth!)
Consistency is key to saving, and Orman champions automation. Setting up automatic transfers from your checking to savings or investment accounts ensures you're consistently “paying yourself first.” It doesn't matter how much, just that you do it regularly. This “set it and forget it” approach removes temptation and systematically builds your wealth.
5. Open a Roth Account (Unlock Tax-Free Retirement Income!)
Finally, Orman strongly advocates for Roth accounts, especially for young adults, even suggesting parents open them for their children. Beyond real estate, investing in retirement accounts is a top money move. Contribute the maximum possible: by putting after-tax dollars in now, your money grows completely tax-free, and qualified withdrawals in retirement are also tax-free, leading to substantial lifetime savings.
By diligently applying these five fundamental money rules, you can seize control of your finances, build a robust foundation, and confidently pave the way for a secure and prosperous future.
