Rachel Cruze: 5 Key Steps To Master Your Money
Written by
Ashley Donohoe
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Basic financial literacy is essential for managing your bills, avoiding burdensome debt, saving for upcoming purchases and investing for retirement. However, the 2025 TIAA Institute-GFLEC Personal Finance Index data showed that around half of American adults fell short in this area.
The good news is that learning to master your money doesn’t have to be complicated. In a recent YouTube video, money expert Rachel Cruze focused on five key steps that will make it easier to handle your day-to-day finances, reach your goals and build wealth for the future.
Budget Your Money
“Knowing where your income is going is so important because you’re going to use your income to pay off debt and to invest and to save and give,” said Cruze. “But if your income doesn’t know what it’s doing because there’s no plan, it’s not going to do any of those things.”
Cruze recommended using a zero-based budget every month for this purpose. It’s a simple method that involves allocating all of your income to different categories, including spending, giving, saving and investing.
Ultimately, you should have exactly zero funds remaining after subtracting everything from your income. During the process, you might need to rethink some expenses if you come up short or look for places to direct extra funds.
Live Without Debt
A 2025 FINRA Foundation report showed that 77% of Americans carried one or more common types of debt in 2024, with 38% reporting that they were carrying too much.
While debt is part of life for the majority, Cruze said that it comes at a high cost for borrowers who are giving creditors their hard-earned income and losing cash to interest and fees. Plus, there’s the stress that comes from missing out on opportunities and feeling burdened with debt.
Cruze recommended escaping debt with the debt snowball method, which prioritizes paying off balances from the smallest to largest, not based on their interest rates. While making minimum payments to keep all your debts current, you’ll throw extra money at the target debt until you’ve fully paid it off and then move on to the next one.
Have Savings
According to 2024 Federal Reserve data, 37% of Americans didn’t have enough cash for an emergency expense of $400. To ensure you can handle the unexpected in life without ending up in a crisis or stuck with debt, you’ll need sufficient short-term savings.
“So, you want to start off with a $1,000 emergency fund,” Cruze advised. “Once you are out of debt, bump that up to three to six months of expenses.”
She also recommended using a high-yield savings account for this money. Not only will your money be highly accessible, but it will also earn a competitive return without the risks that come with investments.
Invest for the Future
According to Cruze, investing is a smart next move for those who have emergency savings and no consumer debt. She suggested making retirement plan contributions of 15% of your earnings.
While you can use a traditional 401(k) plan, which may offer a match, it’s worth considering additional options with tax advantages. For example, Cruze discussed how Roth IRAs are useful for potentially large savings through tax-free growth, though that means paying taxes on contributions now.
She outlined a strategy where you contribute enough to get your employer’s full match for your 401(k) account or similar account, max out your Roth IRA and then return to your employer’s account. However, make sure you meet the IRS requirements to contribute to a Roth IRA.
Buy Real Estate When Ready
Owning a house can boost your net worth, give you security and even save you money on taxes. However, financial readiness, including having emergency savings and no other debt, is important to avoid overextending yourself.
If it’s the right time to make this move, Cruze recommended prioritizing your down payment savings over investing. You’ll also want to save up enough money and buy a reasonably priced property that won’t put your finances at risk in the long term.
“Ideally, you would have 20% to put down, but if you’re a first-time homebuyer, you can go down to 5%,” explained Cruze. “And make sure the mortgage that you take out is a 15-year fixed rate and that your payment is no more than 25% of your take-home pay.”
More From GOBankingRates
