Yahoo Finance Rachel Cruze: 5 Steps To Achieve Financial Security
Gaining financial security is crucial to living a life without money stress. Money expert Rachel Cruze explained that “financial security” means being able to afford your expenses each month while also investing for retirement, saving for emergencies, and having extra money to spend — budgeting, saving, and investing are the name of the game.
Also: Can You Realistically Follow Dave Ramsey’s 8% Retirement Rule?
Read More: 7 Common Debt Scenarios That Could Impact Your Retirement — and How To Handle Them
You might be wondering how you can do the same. Luckily, there are several tips and tricks to get you there. Here are five surefire ways to get you on track toward a financially secure life, according to Rachel Cruze:
Wealthy people know the best money secrets. Learn how to copy them.
Live on Less than You Make
If you live on less money than you make, you’ll always find yourself with extra financial breathing room. Developing a mindset of contentment, in that you accept the means you have, combined with mindful budgeting can allow you to start living below your means.
Learn: How Much Does the Average Middle-Class Person Have in Savings?
Ditch your Credit Cards
Many people rely on credit cards as their emergency fund. However, this is a huge mistake that can sink you deep into debt. Earning cashback and airline miles is great, but you have to spend a lot of money to earn those rewards. You could be tempted to spend more just to get extra rewards.
Pay off Your Debt
When you don’t have debt, you have your whole income to use for yourself. Being debt-free means having financial autonomy. Be sure to budget, cut out unnecessary expenses like your morning coffee runs and unused streaming services, and increase your income with a side hustle.
Build up an Emergency Fund
Ramsey Solutions indicated that 19% of people with credit cards keep them around to help cover emergencies. However, credit cards should never be used as an emergency fund. Building and maintaining a healthy cash emergency fund is crucial so you have a pool of money to pull from for life’s unexpected surprises. Start with $1,000 and work your way up to saving three to six months of expenses in a high-yield savings account.
Invest at Least 15% of your Income Toward your Retirement
As a general rule of thumb, be sure to save at least 15% of your income toward retirement. Take advantage of an employer-sponsored 401(k) plan or contribute to a Roth IRA. The earlier you start saving, the more money you’ll have once you reach retirement age, thanks to the magic of compound interest.
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