We all dream of being financially free, but most of us don't know where to start or don't believe it's truly possible. Well, I'm here to tell you it is! To find out how we can all become the masters of our own financial destiny, we caught up with personal finance expert Suze Orman.
Suze is on a one-woman-mission to help liberate women from their financial bondage and live the life of their dreams.
Think you can't get money smart? Think again! Suze breaks down the 5 essential steps to financial freedom. Get out your pen and paper ladies; your bank account is never going to look the same again!
Money is your paper ticket to freedom
Before you change your spending and saving habits it's essential you rethink what money really means. For many of us it might be a new car, a new pair of shoes or even a vacation. Suze offers a wake-up call: "Money is the freedom to LEAVE any situation that you no longer want to be in."
It could be an abusive relationship or simply an unfulfilling one. It could be a job that you don't want to stay in. No matter what aspect of your life, having money means you have the power to do what you want when you want. Excited? Let's get started…
Step 1: Take control
It's time to look inwardly instead of externally for your ticket to financial freedom. Stand tall and say out loud:
- I WANT to be the financial powerhouse I was MEANT to be
- I WANT to be the master of my own financial freedom.
- I WANT to be in control of my own life.
- The first step is taking responsibility for your financial destiny.
Step 2: Reality check!
It's time to start getting honest with your money; how much is REALLY coming in and how much is REALLY going out?
Suze says that from her experience most people come up between $1,000-$1,500 short each month. And while it's often confounding to look at the cold hard figures, it's only by doing a complete and honest audit of your current financial situation that you can begin your journey toward financial freedom.
Step 3: Debt = bondage
If you don't have financial freedom in your life, chances are you do have credit card debt. Suze warns us that debt is bondage and will always prevent you from achieving financial freedom. Before you start building your wealth or assets, it's essential you pay off your credit card debt as soon as possible. Start with paying off the debt that charges the highest interest rates first and funnel all of your extra income into getting yourself in the clear.
If you are tempted to use a credit card, try a pre-paid debit card instead, like the one Suze Orman created called the Approved Card. It works by pre-loading money from your own account, so you only ever spend what you have and never spend money you don't have.
Step 4: Protect your future
Most of us are so busy trying to make money in the moment, we don't think about our financial future or about protecting our loved ones. Suze recommends you have the following "must-have documents" in place:
- A will
- A living revocable trust
- An advance directive
- A durable power of attorney for healthcare
Step 5: You + me = three
When you're in a relationship, Suze says it's essential to have three accounts.
Two individual accounts -- since you came into the relationship as independent people with financial histories
-- and a joint account for shared expenses.
If you and your partner's earnings are different, find a way to make the contribution to the joint account proportionate to your respective incomes.
Finally, don't put it off! There is no better time to start taking responsibility for your financial freedom. As my mother always says, "easy now, hard later" or "hard now, easy later"…the choice is yours.