Suze Orman: 6 Crucial Steps To Take Control of Your Financial Destiny
Written by
Laura Bogart
Edited by
Kristen Mae
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When you hear the word destiny, you probably imagine a knight in a storybook, called forth to protect her kingdom from certain doom. Or perhaps you picture a figure from history who seemed preordained to create a life-changing invention or lead a people. You may think that destiny has little to do with you and your life — including your finances.
What if everyone had a destiny, but it was more in their control than they thought? What if the choices you make every day contribute to the happy ending you deserve? Author and famed financial expert Suze Orman believes that making a few smart money moves can help you forge your own financial destiny and earn your happy ending — which, in your case, might look like a comfortable early retirement.
Her suggestions are easier than you might think — certainly less challenging than fighting a dragon — and you start them today for a brighter tomorrow.
1. Confront Your Fears Around Money
Like any great hero, you have to be willing to confront your fears to meet your destiny. Start your financial journey by examining the memories and mentalities that might have given you an anxious or fearful approach to money.
If your earliest experiences with money are related to scarcity, you might hoard your wealth and be unwilling to take even reasonable risks to grow it. Conversely, if you watched your parents spend recklessly, you might never have learned how to save appropriately.
To Orman, if these early memories and feelings about money go unexamined and unhealed, they’re bound to be repeated, preventing you from achieving your financial goals. Face your emotional barriers head-on to create more positive thoughts and patterns around money.
2. Respect Your Money
In her popular book “The 9 Steps to Financial Freedom,” Orman talks about the concept of respecting your money — and yourself. A major part of this practice involves decluttering your finances by keeping track of every penny in and every penny out.
Her advice even extends to your physical space — yes, keeping your home tidy and clean can help you do the same with your finances. She’s also a strong advocate for developing a budget that helps you stay organized and intentional with your spending.
3. Pay Down Your Debts
If you’re one of the millions of Americans with credit card debt, Orman wants you to get out of it as soon as possible. Her advice? Focus on the interest rates. Start by listing all your credit card balances from the highest interest rate to the lowest. Pay the minimum on all your cards, but throw any extra cash at the one with the highest rate.
Once you’ve wiped out that balance, roll the amount you were paying into the next highest rate, and so on, until you’re debt-free.
This method, known as the “avalanche method,” might not offer the instant gratification of other approaches, but it can save you the most money in the long run and help you conquer debt faster.
4. Have a Savings Action Plan
Orman recommends building an emergency fund with eight months’ worth of expenses — a goal that many might find overwhelming or even impossible. But she wants you to truly challenge yourself to meet this goal. In an interview with Oprah magazine, she laid out how:
“Decide that you can save so much every single month. Whatever that figure is that you decide you can save, I want you to stretch it. I want you to add 20 percent to it,” she said.
It might feel like a stretch at first, but you’ll be amazed at what you can accomplish by consistently pushing those limits. And there is no peace like knowing that if you lose your income or experience a significant unexpected expense, you have the funds to cover it without going into debt.
Orman recommends you make your money work harder by parking it in an FDIC-insured high-yield savings account with the best interest rate you can find. Even a small boost from interest can add up over time and help you hit that eight-month goal faster.
5. Have a Retirement Action Plan
For many, a pleasurable retirement is the ultimate financial destination. Reaching that destination requires prioritizing your 401(k), including taking advantage of any company matches — it’s essentially free money.
But Orman doesn’t stop with just the 401(k). She’s a big fan of Roth IRAs and Roth 401(k)s too. These accounts let your investments grow tax-free, and when it’s time to retire, you can withdraw your money tax-free. If you start early and stick with it, this strategy can pay off in a big way down the road.
If you’re not sure where to start with your retirement accounts or how to fine-tune your plan, Orman recommends connecting with a financial advisor. They can help you come up with a strategy that’s tailored to your unique goals and make sure you’re on the right track to reach them.
6. Plan for Your Legacy
Being a hero means caring for the people you love — even if you’re not there to protect them directly. Orman advises acquiring comprehensive life insurance, long-term care insurance, and developing a thoughtful estate plan to ensure your loved ones are provided for.
Sitting down with a professional trained in estate planning and insurance can help you better understand your options and choose plans that meet your needs.
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
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