3 Money Rules Women Can Follow To Break Paycheck-to-Paycheck Cycle
Personal finance expert and "Women & Money" podcast host Suze Orman believes women have more control over their finances than they might think. However, in an previous interview with CNBC, she made a shocking claim.
"Now, I know that a lot of you think, 'I'm living paycheck to paycheck, I never do anything' [...] I am willing to bet every single one of you that there's something you do with money that you should not be doing," she explained to anchor Kristina Partsinevelos.
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From there, Orman recommended women go through every single penny they spend to identify where their finances are going. Once your spending is under control, follow Orman's top strategies for securing your financial future.
1. Live Below Means
According to Orman, the most important thing for women to understand is, "You have got to live a life below your means but within your needs."
Think of "means" as wants -- dinners out, splurge purchases and other non-essentials. Living below your means is the best way to prepare your finances for unexpected emergencies like an illness, accident or job loss. It'll also help you eliminate credit card debt and get a grip on your money -- both essential goals, according to Orman.
2. Distinguish Needs From Wants
To live within your needs, you must identify what those needs are. Orman defined them as essential purchases such as medicine, groceries and gas for your car.
"Every time you go to spend money, you ask yourself the question, 'Is this a want, or is this a need?' If it's a want, do not buy it," advised Orman.
3. Make Saving as Enjoyable as Spending
It's scary living paycheck to paycheck and feeling like you won't have enough money for retirement. This, in turn, can make it even harder to save. One of the best ways to overcome that fear is to automate savings by putting a set amount -- say $50 or $100 -- into a Roth individual retirement account every month. You can open the account through a discount brokerage.
"Within the Roth IRA, put [your money] in a high-yield savings account," Orman advised. "Why? Any money you originally put into a Roth IRA you can take out without any taxes or penalties, regardless of your age or how long the money has been in there. You can always withdraw your money if an emergency happens, but in the meantime, you'll have developed a savings habit.
"Once you start to automate savings and you love savings as much as you love spending, I'm telling you, you will not be living paycheck to paycheck," she said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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