In a world brimming with services to simplify our lives — from eating out to ordering an Uber — the allure of convenience is always present. However, as financial expert Suze Orman revealed, such conveniences can often become budget-busters, leading to a phenomenon known as lifestyle creep.
Orman revealed a “stupid” money mistake she once made that put her in a financial bind. Here’s what happened and how you can avoid making the same misstep.
Suze Orman Warns Against Choosing The Easy Route
During an appearance on CNBC‘s Power Lunch, Orman candidly addressed how seemingly minor expenditures, like Starbucks lattes, can accumulate over time, leading to significant financial strain. “It adds up big time,” she remarked, underscoring the importance of financial prudence.
Orman urged the audience to stop doing what’s easy. Choosing the easy route can slowly chip away at your nest egg. Orman says the easy way will eventually make your life harder.
Suze Orman’s ‘Stupid’ Money Mistake
Orman delved into her personal financial history to illustrate the repercussions of unwise spending. Recalling a time when she attempted to impress a wealthy partner, she shared, “I didn’t have money yet, so I went out and I leased a car.”
The car, a 750iL BMW, came with hefty lease payments of around 800 dollars a month, a decision Orman labeled as “the most stupid thing I’ve ever done with money.” Orman admitted she didn’t even like the person she was trying to impress, making the financial setback even more regrettable.
Resist Lifestyle Creep
Orman emphasized the peril of lifestyle creep — the gradual increase in spending as one’s income rises, often to maintain a more affluent image. She cautioned, “Stop buying things and spending money you don’t have to impress people you don’t know or like.” Falling into this trap, she advised, could jeopardize your ability to save for crucial future investments like retirement or a down payment on a home.
Be Mindful of Financial Choices
Orman’s insights serve as a reminder to evaluate daily financial choices and their alignment with your long-term goals. Ask yourself a few questions. For example, are you eating out every night? Are you leasing a car beyond your means? Are you purchasing lavish items to impress others? While certain splurges may be justified, it’s vital to discern which expenditures are genuinely enhancing your life and which can be reallocated for future benefits.
The Bottom Line
Orman’s revelations underscore the importance of financial awareness and the avoidance of lifestyle creep. By keeping an eye on daily spending habits and prioritizing your long-term financial well-being, you can avoid financial pitfalls and build a secure future. The journey toward financial health begins with assessing what truly brings value to your life and making informed decisions that keep your money safe.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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