Suze Orman Says ‘Live Below Your Means, but Within Your Needs’: 3 Ways To Stick To This Rule
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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If there’s one piece of advice money expert Suze Orman would want everyone to follow, it’s “live below your means, but within your needs.” Orman said that this is the key to financial freedom.
“This is not advice for the rest of 2024 or for the next year or decade,” she wrote in a recent blog post. “It is advice that if followed can bring peace, strength and gratitude for an entire life.”
While this advice is simple, sticking to it can be challenging. Here are a few practical tips Orman recommended if you want to follow this rule.
Keep Housing Costs in Check
Housing is typically your largest expense, so finding ways to cut this cost can help you live below your means — especially when you are just starting out in your career and may be living on an entry-level salary.
“Maybe it’s living with roommates or considering a different part of town that is less expensive or outside of town where it is even less expensive,” Orman wrote. “Or maybe moving in with family for a stretch so you can build up your savings and get a sense of what it takes to support yourself.”
Reevaluate Your Car Costs
Having a car can also be a big budget-buster — and you may not actually need one.
“A car is another great opportunity to focus on ‘within your needs,'” Orman wrote. “For starters, do you really need a car? Run the numbers. If public transportation is viable and you would only use a car for infrequent weekend getaways, buying could be a lot more expensive than renting from time to time, once you factor in the cost of insurance and maintenance.”
If you do need a car, don’t spend more than you need to.
“The cheapest car that meets your needs is to be the goal,” Orman wrote. “Do not pay one second’s attention to what you are told you can ‘afford’ to borrow for a car. Every dollar you don’t have to borrow is a dollar — plus interest! — that you can put toward other financial goals.”
Avoid Using ‘Buy Now, Pay Later’ Plans
“Buy now, pay later” payment plans have become ubiquitous, and Americans have been utilizing these plans for both large and small purchases. But Orman cautioned against this.
“A big warning sign you are not living within your needs is if you are using a buy now, pay later (BNPL) payment plan to buy wants, not needs,” Orman wrote. “I know it’s tempting to be able to pay over four or more installments rather than one big upfront payment. But ask yourself if BNPL is a crutch that lets you spend above your means. Please stand in your truth, and make it a goal to never use BNPL for wants.”
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