Financial guru, TV personality and motivational speaker Suze Orman has written numerous best-selling books on money management, yet never with the urgency apparent in her 10th book, The Money Class. Arguing that the old American Dream is officially over, Orman advises readers to “stand in their truth” by embracing important, if harsh, realities if they wish to create their own version of the new American Dream.
Here are a few important lessons covered in The Money Class that Orman believes will help readers survive—and ultimately thrive—in our altered economic landscape:
Learn to “stand in your truth.” Begin with a painfully honest, clear-eyed stocktaking of your personal finances as well as your dreams for the future. This personal accounting, Orman says, provides a critical foundation of honesty on which to build future dreams.
Embrace the power of cash. Orman calls paying with cash the “foundation of all truthful living.” Using cash—bills or a debit card—helps eliminate the temptation to spend more than you can truly afford.
Live below your means but within your needs. To reach and maintain your life goals, you need to live below your means or you will not be able to fund your dreams. Take a penetrating look at the dividing line between what you want and what you really need—even if that means reconsidering where you live, where your kids attend school, or the age of the car you drive.
Learn to get the same pleasure from saving that you feel when spending. The pleasure of saving is what makes your dreams possible; saving gives you happiness and peace of mind through finding security, hope and opportunity, says Orman. Learn to see saving as giving yourself a gift rather than denying yourself a purchase.
Establish an eight-month emergency savings fund. Orman actually prefers you think of this as a “life happens” fund. You may need it not just for emergencies like losing a job but to address other life events such as car or home repairs, or unanticipated doctor’s bills.
Think of your home as a savings account, not a hot stock. Though your home may be a solid investment that is likely to grow in value over time, it should never be considered a liquid investment, or confused with your emergency fund or credit union account.
Consider changing your attitude, not your job. In this new economic landscape, Orman advises readers never to leave their job without having another lined up; try instead to turn around a frustrating job situation rather than declaring it untenable.
Retirement planning begins with your first job. Start thinking about planning for retirement with your very first job. Retirement—what you are saving and investing for—is so important that Orman devotes a third of her book to the subject, beginning with advice for 20- to 30-year-olds in the early part of their careers.
Create a financially honest college strategy. Educating children is an investment and college matters. But so, Orman says, does cost. Sending your children to elite, expensive colleges should not compromise your other financial goals.
Look forward, not back. Refashioning a more truthful American Dream means letting go of a broken one. Do not mourn what you lost in terms of a higher salary, home value or stock portfolio. Spending your time wishing back pre-2008 values saps energy you need to move forward toward realizing your new American Dream.
Ed note: Excerpts from an advance copy. Final book may slightly differ.
The Money Class: Learn to Create Your New American Dream
Spiegel & Grau / March 8, 2011 / 9781400069736 / $26.00