Suze Orman’s 2 Financial Rules to Follow (and 2 to Rethink)
Personal finance expert Suze Orman has years of experience guiding people on how to make the most of their money. She focuses on debt reduction and the emotional side of money, and you may be able to improve your finances by tapping into her resources.
Like many personal finance gurus, not every rule Orman advocates will make sense to you. Here are four of his rules – two that make sense to most people, and two that you might want to reconsider.
2 rules to follow
1. Make sure you have an emergency fund
Orman is a big fan of setting up an emergency fund that can cover your monthly expenses in case the unexpected happens, such as losing your job or facing unexpected medical debt.
Financial advisors generally recommend having enough money in a liquid account, such as a high-yield savings account, to cover your expenses for three to six months. But it depends on your circumstances: If you have unexpected income streams or frequently run into medical or veterinary expenses, you may want to save more.
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2. Maintain strong credit
Orman suggests prioritizing your credit score, which can affect how likely you are to be approved for a loan and how much you’ll have to pay in interest. A high credit score makes it easier to get good terms on loans such as personal loans and car loans.
FICO scores (commonly used credit scores) of 670 to 739 are generally considered good, while 740 to 799 are considered excellent and 800 to 850, excellent. Checking your credit report for errors, paying debts on time, having a mix of credit types and getting a credit card are all ways to improve your credit score.
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2 rules you might want to rethink
As the name suggests, personal finance. It is important to consider whether the following Orman rules make sense to you.
1. Avoid renting a car
A house is probably the most expensive thing you buy, but a car might be the second most expensive. Orman recommends never leasing a car as it requires you to make monthly payments for a car you won’t own. He told CNN 2023 was “a waste of money.”
Like most financial decisions, it’s not a black or white thing. Renting a car may make sense for some people. The advantages include that you can drive a car worth more than you could otherwise afford, and that you won’t have to go through the trouble of resale. But on the other hand, you’re pouring money into something that’s depreciating and you’re risking the cost if you want to get out of the lease early.
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2. Rely on a deductible, not a loan
Orman suggests keeping your credit card usage to a minimum to avoid credit card debt. He says to rely on debit cards, and only use a credit card for one or two recurring charges that you can put on automatic payments.
The idea is that you want to avoid credit card debt, which comes with high interest rates. But if you can pay off your credit card in full every month, there are benefits to using credit. Rewards programs that come with credit cards can help you save on travel, groceries and gas, for example. Also, using a credit card helps you build credit, and they often offer better protection if someone gets hold of your card than debit cards, since they aren’t directly linked to your account.
