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by Emma Newbery | Published on Aug. 23, 2022
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Covering your financial bases can make you powerful.
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Suze Orman is one of the best-known figures in personal finance. She's a bestselling author, and her popular Women & Money podcast has attracted millions of fans with its guidance on both money and life. She's a two-time Emmy Award winner and presented CNBC's The Suze Orman Show for over a decade.
But how to sum up all of that wisdom? One compelling piece of advice is to put yourself in a position of financial power. Orman said in an interview with Yahoo Finance, "What makes you powerful is when you don't have debt, you have an emergency fund, you are able to do what you want to do."
One reason people enjoy Orman's podcasts, books, and blogs is that she talks about the way money underpins other life decisions. As she put it, "It's not just about money, it's about who you are, and how you can become anything and everything you are meant to be."
Covering your financial bases may not sound like super exciting life advice. However, Orman advocates paying down debt and building up savings because those solid foundations are what enables people to be confident and go for what they want. "Go for it in a way that you're not afraid to ask for what you're worth," she said. "And be powerful in that."
Orman and debt
When you have high interest debt, such as credit card debt, interest payments will consume large chunks of your paycheck. Plus, some of your decisions will be driven by the need to make money to service that debt. Right now, with a potential recession on the horizon and rising interest rates, Orman warns that carrying debt is a recipe for trouble.
If you're not sure where to start in paying down debt, get a piece of paper and work out how much you owe, and what interest rates you are paying on each debt. Then you can decide how best to pay it off. For example, Orman advocates tackling the debt with the highest interest rate first, called the roll-down method. Another approach might be to tackle the debt with the smallest balance so that you get the psychological win of paying it off (the snowball method).
More important than the method you choose is the commitment to put every spare dollar toward your debt payments. Make yourself a budget and be ruthless about your needs versus your wants. There are some great budgeting apps out there that can help you get to grips with your monthly ingoings and outgoings. Try to focus on your end goal of being debt free and the freedom and power that comes with it.
One of Orman's most oft-repeated pieces of advice is to save up an emergency fund to cushion you against unexpected financial disasters. That could be a job loss or a medical crisis, and is all the more important in the current economic climate. Put your emergency fund in a separate savings account that's easy to access if you need it.
Many financial gurus recommend building up enough emergency savings to cover three to six months of living costs. Orman goes even further — she encourages her followers to try to put 12 months worth of costs aside. As she explains in a recent blog, "The more you have saved in your emergency fund, the better prepared you will be to deal with whatever the economy throws our way in the coming months."
Orman is so passionate about the importance of emergency funds that she co-founded a project called SecureSave. It's a workplace savings program whereby employers match their employees' contributions to their emergency savings.
The thread that runs through much of Suze Orman's advice is this: The true goal of money is security. Building long-term wealth and putting yourself in a strong financial position takes effort. But if you can pay down your debt and put together a solid emergency fund, you can sleep easier at night. The knowledge that you'll be able to deal with whatever cards life deals you next is a powerful thing.
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Emma owns the English-language newspaper The Bogota Post. She began her editorial career at a financial website in the U.K. over 20 years ago and has been contributing to The Ascent since 2019.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
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