My amusement with Suze Orman started when she first visited the Philippines in 2012. I was lucky to be up close and personal with her as I was part of the events team. As a token, she gave me a copy of her book, Women and Money. The title says it all. The book aims to empower women financially. Why focus on women? Because apparently, in this time and age, studies reveal that most women are still incapable of handling their finances wisely. This sad truth cause these women bad debts and bad relationships. Not that money is the secret of every woman’s happiness but it plays an important role in our lives, admit it or not.
I dare say that Suze Orman and I agree on the following:
1. You should have at least two bank accounts under your name.
One account is used to pay your monthly bills, the other for your savings. This kind of setup will enable you to allot money to pay your bills and to pay yourself. You can make arrangements with your employer to auto-credit a certain percent of your salary to your savings account. Remember, paying yourself is always first. You don’t work hard for credit card companies or for your landlord. You work for yourself.
2. Your savings account should be at least eight months of your living expenses.
This is because life is full of uncertainties. If you get axed from your job or you decide that things just don’t work out for you and your boss, you are not forced to stay because once you leave, it’s dooms day for you and the mountain of bills you need to pay. Same goes for a wife who couldn’t leave a philandering husband because she is financially dependent on him. It’s a completely different story if you have your own money stashed in your savings account. It will cover your bills once you decide to pack your bags and leave your boss or your partner.
The first time I heard about this money advice, it was just a 6-month rule. Whether it is 6 or 8 months, the key here is keep as much as you can for your security.
3. Live below your means.
Right, it isn’t live within your means but below your means. Living within your means is making ends meet. Living below your means is saving. Cut your eat outs and have two or three pack lunch days. Try public transport once or twice a week to save gas and parking fees. It also helps to list down your daily expenses. This is tedious to some but there are mobile apps that will make this easy for you. Personally, I use Tohl and I set it to remind me to encode my expenses every night.
4. Mind your credit cards.
Being a responsible credit card user takes a lot of discipline. I learned that there are two kinds of credit card users: revolvers, the ones that only pay the minimum amount required and full payers, they pay off the entire credit balance. We should all aim to be tagged as full payers because it has perks too. Like, it gives your good credit standing and banks waive your annual fees. Revolvers, on the other hand, are exposed to high interest rates given by the bank for not fully paying their balance. In her book, Suze Orman illustrated examples that are eye openers and horror stories of how much money revolvers lose each month.
I know it’s a big word. I’m scared of it too but I learned that there are reputable institutions that are willing you teach you and help you do this. These institutions usually ask you to take client suitability tests. This is just to measure your risk profile. I have low risk profile so I usually go for time deposits and bonds. When I am in the mood, I try money market but it just doesn’t fit me well. As bankers say, you don’t put your eggs in one basket. Agree. Minimize risk exposure by not putting all your savings in an investment/placement. Just in case, this investment does not yield the expected return, you still have some of your savings left for you.
I like how Women and Money provided a step-by-step plan on “saving yourself” from financial doom. I enjoy how it encouraged me to be more in control in every aspect of life. Kindly note though that there are some items and/or situations (i.e. IRA, FICO) that are focused/limited to USA, where it was published. I am sure though that you can easily relate this to its equivalent in your country.
Orman, through this book, showed us what steps to take. The next most important question is, when are you going to take the first step?