Suze Orman: 6 Brutally Honest Money Tips To Follow
Written by
Nicole Spector
Edited by
Molly Sullivan
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Financial guru, author, motivational speaker, financial advisor and self-made millionaire Suze Orman is a go-to expert in the personal finance space. Part of what helps her stand apart from her peers is the way she lays her thoughts and advice out. She’s 100% no-nonsense and tells it like it is, or, rather, how it is from her knowledgeable, experienced perspective.
You might describe Orman’s communication style as blunt and assertive — and all the more power to her for that. Sharing financial wisdom shouldn’t be done in a walking-on-eggshells manner. It’s just too important. Let’s consider six of Orman’s tips that are particularly brutally honest. Follow them now to build wealth and secure financial freedom.
Have a Substantial Emergency Fund
Many financial experts recommend having a three-to-six-month emergency fund available at all times. Orman is more aggressive. She recommends having at least eight months of money at the ready to cover unexpected costs.
“Every family should have an emergency savings account that can cover at least eight months of living expenses,” Orman wrote in a post on Oprah.com. “And I also want every woman to have her own personal savings account that could support her for at least three months.”
Opt for Debit Cards Over Credit Cards
You probably know by now that credit cards are dangerous tools. You shouldn’t avoid them 100% (they’re important to have for your credit score), but you should use them as seldom as possible and only if you’re sure you can cover the balance in full every month.
Like many financial experts who have seen the damage credit cards can do far too many times, Orman recommends opting for cash or debit cards over credit cards.
“There is no more expensive form of bondage than spending more than you have and paying interest of 15% or more on your credit card,” Orman wrote in a blog post.
Make Getting Out of Credit Card Debt Your No. 1 Priority
Back to the issue of credit card debt. If you’re carrying any, you need to prioritize eliminating it. How you do this depends on how much debt you have and how possible — or impossible — it is to pay it off.
“I generally encourage people to make good on debts when they have enough money to repay them,” Orman told Oprah.com. “But once a delinquency has been reported to a collection agency, paying it off won’t help your FICO score.
“The damage has already been done, and the blemish will remain on your credit report for seven years. At this point, I’d recommend that you negotiate with the debt collector so you can repay a smaller amount and keep more of your savings.”
Set Up Automatic Deposits Into Savings
Saving money is a must, and to do it regularly, Orman advises you set up automatic deposits from your checking account into your savings account.
“It can be $10 a month, $200, or $1,000. That’s up to you, and each account can have a different contribution amount,” Orman wrote in a blog post.
“All I insist is that you make this automatic. That is a proven way to stay committed to a savings goal. Having money zapped from your checking account into your savings accounts is free too. The set it and forget it approach is how you will reach your savings goals.”
Save for Retirement as Though You’ll Live To Be Incredibly Old
The average life span in the U.S. is 77 1/2 years — but, of course, some people live to be far older. Save and invest for retirement as though you’ll be among those blessed with super longevity.
“You know that I have long recommended that you base your retirement planning on living to at least 90; to be even safer planning to age 95 is even smarter,” Orman wrote in a blog post.
“Anyone who makes it to age 65 basically has a 50-50 chance of still being alive in his or her mid 80s. And living into your 90s is not nearly as rare as you may think.”
Be Patient With Your Investments
If you’re an investor (and hopefully you are), you’ve surely heard this before: Be patient; compound interest doesn’t accumulate overnight. Investing is a long-haul game. Play it wisely and calmly.
“All you really need to do is check your account once a year to see if you need to make any changes to bring your overall allocation back to your target,” Orman wrote in a blog post.
“For instance, if your goal is to have 60% in stocks and 40% in bonds, but after a strong period of stock market performance your mix is now 70/30, you might want to either sell some stocks and reinvest that in bonds, or maybe direct all your upcoming contributions into bonds to bring your mix in line.”
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