There are many reasons people struggle with saving money. Many factors that we are sometimes are unaware of. In this article we will discuss some of these reasons. 11 reasons you are struggling to save money 1.Cost of living It would be an injustice to talk about saving money without acknowledging the cost of living. The inflation rate keeps rising which means prices are hiking while our income remains the same. High costs of living, such as housing, healthcare, and education, leave little room for saving after meeting essential needs. 2. You don't Budget (or stick to it) A budget is to your finances what water is to your body. You might survive a day or two without it but in a long term you will feel the effects. Without a clear budget, it's challenging to track income, expenses, and savings. Overspending becomes common, making it difficult to save 3. You live beyond your means Spending more than you earn will leave you with nothing to save. Spending more than w...
Dave Ramsey and Suze Orman are THE personal finance gurus. Over the years they have gained popularity through success stories of people who followed their methods and achieved financial freedom.
In this article, we will discuss Dave Ramsey's 7 baby steps to financial freedom and Suze Orman's 9 Steps to financial freedom. We will compare and contrast the two guidelines.
Dave Ramsey's 7 Baby Steps
1. Save $1000 on your starter emergency fund
The starter emergency fund is designed to give you a cushion of comfort as you tackle your finances. It eases you into the world of saving and financial discipline.
2. Pay off all debt using the debt snowball
In this step, you must focus on paying off your consumer debt. This includes your car, student loans, credit card, etc. Your mortgage should not be included at this stage.
3. Save 3-6 months of expenses in a fully funded emergency fund
Now that you have paid off your debt and have leftover money, it is time to build a sustainable emergency fund. One that will cover you in the case of a huge life-altering experience such as losing your job, health issues, and unexpected relocation.
In this fund, you will put money that can cover your monthly expenses. Preferably for a year but 3 to 6 months is a good start.
4. Invest 15% of your income into a retirement fund
Planning for your future and retirement is personal finance 101. You need to invest in your retirement fund and secure a better future for yourself. Retirement offers security in that should anything happen to your job/business or health, you will have money to live off on.
5. Save for your children's college
Student loans are the easiest way into long-term debt. Saving your kids from getting into debt before they can even earn a healthy income is the best gift in this economy.
6. Pay off your home early
Create a plan for paying off your home early. You can pay off more than the minimum payments which will decrease interest on your mortgage. Paying off your home fast will lead to less liability and more assets.
7. Build wealth and give to the less fortunate
Creating wealth for yourself and your kids is the ultimate goal of financial freedom. To know that you are financially secure and can live your life freely is tremendous. In this last step, Dave encourages people to invest more and build generational wealth.
He also encourages people to give to the less fortunate. To be blessed is to be a blessing to others. Sharing is caring.
Suze Orman's 9 steps to financial freedom
1. Seeing how your past holds the key to your financial future
2. Facing your fears and creating new truths
3. Being honest with yourself
No one knows your financial situation better than you. You live it every day. Be honest with yourself about where you are financially. And accept your situation as it is. This will lead you to make honest decisions that will greatly help your finances.
4. Being responsible to those you love
Being responsible to those you love means securing their future. Create a will and build generational wealth. Have a college fund for your kids.
5. Being respectful to yourself and your money
Respecting your money means being responsible for it.
6. Trust yourself more than you trust others
In creating wealth, there is something such as too much information and too many experts. And like in most fields, they rarely ever agree. Suze Orman encourages you to trust yourself and your judgment when it comes to investment. Choose what will work for you and stick to it.
7. Being able to receive all that is meant to be yours
Growing from a life of scarcity can make it difficult to receive abundance. Most people, Suze Orman included, have voiced out the guilt that comes with growing wealth. Feeling like you don't deserve it.
To build wealth, you have to be able to receive wealth. Accept opportunities given to you and work with what you have.
8. Understanding the ebb and flow of the money cycle
The value of money rise and decline. There are seasons for attaining wealth and seasons for maintaining. You need to recognise each season and understand that there are some losses to made incurred along the way.
9. Recognising true wealth
According to Suze Orman, money cannot replace the importance of having good relationships with your family and friends.
When you're grey and old your wealth will not be how much you have in your checking account but who do you have by your side. It will be the memories and the lives you touched that will be counted. True wealth is health, family, friends, and a life well lived.