Suze Orman’s 2 Finance Rules to Follow (and 2 to Rethink)
Personal finance expert Suze Orman has been helping people manage their money for years, offering advice on debt reduction and the emotional aspects of finances. While Orman’s rules may not apply to everyone, there are some valuable insights that most people can benefit from. Here are four of her rules, with two that are generally good advice and two that may require some reconsideration.
One of the rules that Orman strongly advocates for is the importance of having an emergency fund. She suggests setting aside enough money to cover your monthly expenses in case of unexpected events such as job loss or medical emergencies. Financial advisors typically recommend having three to six months’ worth of expenses saved in a liquid account like a high-yield savings account. However, the amount you need may vary depending on your circumstances.
Maintaining a solid credit score is another rule that Orman emphasizes. Your credit score can affect your ability to secure loans and the interest rates you’ll be offered. Orman advises prioritizing your credit score and suggests ways to improve it, such as checking your credit report for errors, paying bills on time, and diversifying the types of credit you have.
On the other hand, there are two rules from Orman that you may want to rethink. One of these is her recommendation to avoid leasing a car. While Orman argues that leasing a car is a waste of money since you’ll never own the vehicle, leasing can have its advantages for some individuals. Leasing allows you to drive a higher-priced car than you might be able to afford outright and eliminates the hassle of selling the car later on. However, there are risks involved, such as depreciation and early termination fees.
Orman also advises relying on debit cards over credit cards to avoid accumulating credit card debt. While it’s important to be mindful of your spending and avoid debt, using a credit card responsibly can have its benefits. Credit cards often come with rewards programs that can save you money on everyday expenses like travel, groceries, and gas. Additionally, using a credit card can help you build credit and offer better protection in case of fraud compared to debit cards.
In conclusion, Suze Orman’s financial advice can be valuable, but it’s essential to consider your individual circumstances and financial goals when deciding which rules to follow. By understanding the reasoning behind Orman’s recommendations and evaluating how they align with your financial situation, you can make informed decisions to improve your financial well-being.
