Suze Orman Warns Against Making These Financial Blunders

When it comes to money, none of us are perfect.

We’ve all spent money on the most ridiculous things.

But if you want to get better with your money, and save for things such as retirement, there are certain blunders to avoid or at least reduce, according to finance coach Suze Orman.

Key Points About This Article 

• If you want to get better with your money and save for things such as retirement, there are certain blunders to avoid or at least reduce, according to finance coach Suze Orman.
• “You are peeing $1 million down the drain as you are drinking that coffee,” Orman once told CNBC. “Every single penny counts when you’re saving for your future.”
• Also, getting money back from the federal and state governments seems great. But it means something is wrong.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Don’t Waste Money on Coffee

“You are peeing $1 million down the drain as you are drinking that coffee,” Orman once told CNBC. “Every single penny counts when you’re saving for your future.”

As we noted on 247WallSt.com, “Right now, the average cup of coffee can cost about $7. If you get coffee once or twice a week, it’s not too bad. But if you’re doing it every day – which many of us do- it’s costing you $210 a month, and $2,520 a year.”

While $2,520 may not sound like a lot, if done over 40 years it’s $100,800 for coffee.

Instead, according to Suze Orman, “$100 a month in a Roth IRA, over 40 years is $1 million. So, you need to think about it as you are peeing $1 million down the drain after you are drinking that coffee. If you just simply used your money to purchase needs versus wants, you would find the money to invest in your retirement account.”

Or, imagine if you go to Subway for lunch every day, and pay out $10 each time you go, even on the weekends. That’s $3,650 a year, or $36,500 every 10 years.  Subway loves that. Your savings, not so much.

Avoid Getting Tax Refunds 

Sure, getting money back from the federal and state governments seems great.

But it means something is wrong. If you’re getting money back, you overspent during the year. “When you get a tax return it means you have effectively given the government an interest-free loan,” says Orman, as quoted by MoneyWise.

At the same time, if you do get money back, “There is no smarter move than working on your emergency savings account if you’ve yet to accumulate up to a year’s worth of living expenses,” Suze Orman added.

Know Your Needs v. Wants 

“For you to have money, you have to learn to live below your means but within your needs. How do you do that? You do that by simply purchasing needs versus wants. What is a need? Need is food that you buy at a grocery store. What is a want? A want is going out to eat at a restaurant and doing it over and over again.”

If you want to build wealth, there are some big steps you can take

Once you take those steps to cut out blunders, you want to build wealth.

We can do that with several key steps.

One, try to increase your income with dividend stocks, for example. You can even take on a part-time job if time allows for it. Two, create a budget. This is crucial. Without a budget, many of us lose account of what’s coming in financially and what’s going out. When others have asked me for financial advice, my top question is, what are you spending on? Unfortunately, I’m often met with the deer in the headlights stare and a response of “I don’t know.”

Unfortunately, not knowing will destroy you financially.

Three, if you don’t already have an emergency fund, create one.

Start small with an emergency savings goal of at least $1,000.

Sure, it’s small but it’s a safety net, and it’s a start. If you can put away about $85 a month, you’ll reach that goal and have some wiggle room. However, be sure to store this in a separate “don’t touch” account, automatically depositing money every time you’re paid. Plus, if you ever receive another source of income, such as a bonus or a gift, put it directly into that “don’t touch” account instead of spending it immediately.

Fourth, pay off your debt if you can. That includes credit card debt, mortgage debt, and student loan debt. If you want to get better control of that debt. Five, live below your means. As Suze Orman has said, live below your means to achieve financial freedom. Identify your needs and your wants, eliminating part of the expenses tied to wants. Automate your savings. Figure out your savings goal.

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