Financial Expert Rachel Cruze Fell Into This Money Trap — Here Are Her 4 Tips To Avoid It
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Crystal Mayer
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Ashleigh Ray
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Financial expert Rachel Cruze is renowned for her solid money advice. As the daughter of Dave Ramsey, she speaks often of having received financial tips throughout her life. She is the author of multiple books and hosts a number of money-related podcasts, including The Rachel Cruze Show.
On a recent podcast entitled “90s Money Rules, Contentment and My Budget Must-Haves” she talks about what it was like to grow up as a Ramsey kid in the ’90s and what money principles are still applicable in today’s world. She also speaks about the four things you need in your budget and, finally, the money trap she fell into and how to avoid it.
As she noted, the money trap she fell into was comparison. She explains that even though she was applying the money principles she had been taught since she was a kid, she couldn’t help but compare herself to others. Luckily, she also walks through ways to avoid this and other money traps. Here are her 4 tips to avoid it.
Be Intentional About Contentment
At the beginning of the episode, Cruze speaks in detail about growing up during the 90’s and listening to her father’s money advice. She goes through a number of ’90 money principles that still work today, including the envelope system (cash stuffing), sinking funds, investing 15% of your paycheck into retirement and living a debt-free life.
While applying these principles is important, she notes that it can be difficult not to fall into the trap of comparison no matter where you are on your money journey. She explains that trying to keep up with others can negatively impact your finances. So, she advocates being intentional about contentment and that while the emotional part of money is real, it is important to “love your life, not theirs.”
Focus on Giving and Practice Gratitude
Ramsey’s daughter also speaks about avoiding the money trap by focusing on giving and practicing gratitude. She says that by recognizing what you have instead of what others have, you can prioritize your money goals.
For instance, you do not know how someone paid for the vacation that they are posting about on Instagram. You do not know their financial situation, such as whether they saved for the getaway or went into debt to achieve it. Therefore, you should follow your money journey and not someone else’s.
Establish Your Budget
Throughout the podcast episode, Cruze talks about establishing a budget, beginning with determining your needs vs your wants. She explains that there are four categories of needs in your budget: food, shelter, utilities and transportation. Beyond these expenses, everything else is considered a want.
The money expert says that you should look at your checking account and go line by line to determine what you are spending money on. Then, you can cut out the things that are not part of your needs. By reducing your discretionary spending, you can follow the steps to live within your means and pay off your debt. This can all help you to be more content with where you are on your money journey.
Follow the Ramsey Baby Steps
Finally, she speaks multiple times about the importance of following Dave Ramsey’s 7 Baby Steps. The first step is to save $1,000 for a starter emergency fund. The next step involves paying off your debt using the snowball method. Once you have paid off your debt, you can work on step three, which involves saving three to six months of expenses so that you have a fully funded emergency fund.
Next, you will want to focus on investing 15% of your gross income in retirement. Step five is about saving for your children’s futures. The money expert recommends starting a 529 college savings plan or an Education Savings Account (ESA). Once you are living debt-free and have saved for your child’s college, you can work to pay off your home. Finally, by step seven, you should have enough money to build your wealth and give to others.
As soon as you are willing to admit your problem, you can work towards a more stable financial future for yourself and your family. By focusing on these steps, being intentional about contentment, focusing on what you have, and not comparing your situation to others, you can achieve your financial goals in no time.
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