In today’s “Financially Savvy Female” column, we chat with Rachel Cruze — personal finance expert, author of “Know Yourself, Know Your Money” and host of “The Rachel Cruze Show” — about her own financial obstacles, the best financial advice she received and the money moves every woman must make.
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What is the biggest obstacle you face when it comes to financial success?
Comparison is probably the biggest struggle for me. It’s so hard to avoid these days because you don’t have to live next door to the Joneses to see their new car — we carry them around in our back pockets. But we’re comparing our real lives to someone else’s highlight reel. Comparison will steal your joy and your paycheck.
One of the best ways to overcome this is to unfollow accounts on social media that tempt you to shop. Out of sight, out of mind — you need to put some blinders on and focus on your own goals in life. Money is the tool to help you achieve them, and it’s hard to win with money when you’re spending it based on someone else’s values.
What is the best piece of advice you received along your financial journey?
Don’t do debt. Period! Debt will keep you paying for your past when you should be focused on your present and future. Our culture has normalized debt, but 78% of Americans live paycheck to paycheck. Not to mention that 40% of people can’t cover a $400 emergency with cash. Being “normal” is not setting you up for financial freedom. Look, money flows two ways. If you’re spending more than you make, you’ll continue to repeat the cycle of debt. Start living below your means and cut down on expenses. It’s a simple concept, but it’s not the norm these days. Start budgeting your money and saving up for purchases that you would normally swipe a credit card to purchase. Practice delayed gratification!
If you had to boil your financial advice down to the three money moves every woman must make, what would they be?
1. Create a monthly zero-based budget. This is where your income minus expenses equals zero. You’re telling every dollar where to go. A budget is your plan for your money. If you don’t tell your money where to go, you’ll wonder where it went. I love the free budgeting app EveryDollar because it helps me stay on track.
2. Quit comparison. Comparison is a dead-end road that leads to debt. Stop shopping swipe-up links and trying to keep up with people you follow on Instagram. This leads to you living a life they might enjoy instead of a life that you love! If this is a struggle for you, consider taking a break from social media for a while or setting time limits.
3. If you have debt, work the debt snowball. We are all multi-taskers these days, and the same is often true with money. You’re trying to save for a home, invest into your 401(k) and work your way out of debt. You’re doing too many things with your money. If you have debt, it’s time to get rid of it. Start by building a $1,000 starter emergency fund and pause investing and saving beyond that. Once you have that established, list your debts smallest to largest, regardless of interest rate. Attack the smallest debt, and then once that one is paid, attack the next one. Repeat this process until you’re debt-free. Then it’s time to build a fully-funded three- to six-month emergency fund. Imagine what life would be like to be debt-free and have cash in the bank for the unexpected! Then you’re free to invest 15% of your income into retirement. Once you get focused and intentional with your money, you’ll see progress!
Jaime Catmull contributed to the reporting for this article.
GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.
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