Suze Orman: This Uncommon Approach To Building Wealth Could Change Everything If You’re Sick of Low Returns

Personal finance expert Suze Orman knows a thing or two about building wealth from the ground up. With humble beginnings as a server out of college, her financial savvy and hard work in the financial sector built a personal fortune estimated at $75 million. Here are five unique pieces of advice she says will give you a leg up in following in her footsteps.

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Money mistakes the super wealthy never make - that you might be doing now.

Distinguish Savings From Investments

According to Orman, there is a big difference between money you identify as savings and money you mark as investment. And never the twain should meet. Savings is money you plan to use in the near future or have on hand for emergencies.

“And all savings belong in a low-risk bank savings account or money market account,” she wrote on Facebook. “The goal is to keep your money safe so that when you go to use it, it will be there.”

Investment money is money you don’t plan to spend, but want to put to work earning long-term returns. Knowing the difference is vital to building sustainable wealth.

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Save For Retirement First, College Second

In a blog plog, Ormon wrote that she believes one of the biggest mistakes she sees parents make is saving for their children’s college tuition at the expense of their own retirement. This, she argued, hurts the child as much as the parent.

“That teen of yours today will one day be the 30-something/40-something/50-something adult raising their own family,” she wrote. “The last thing you want to do is be in a precarious financial state that at best makes them worry and at worst requires them to help support an older you.” So pretend it’s an air disaster: mask yourself first, then your child — and avoid two tragedies.

Don’t Let Rate Reductions Entice You Into Debt

With the Fed recently cutting interest rates and many expecting them to lower rates even more in the coming year, it might seem like a great time to buy a new car or other big ticket item. But, said Orman in her blog, this could be a huge mistake.

“The question you should always ask with any decision that involves borrowing is whether you are purchasing a need or a want,” she wrote. Going into debt for things you don’t need but merely want could jeopardize your long-term wealth and that thing you really need, like retirement savings.

Forget the 4% Rule for Retirement

A common mantra among retirement and financial experts is that a retiree can withdraw 4% of their retirement savings per year of retirement and enjoy comfortable, worry-free golden years.

Orman disagrees. She believes the world has changed, with markets and the economy too unpredictable for such a simple formula. She advises retirees to adopt a scarcity mindset instead. And if you must have a target number, Ormon suggests 3% at most.

Lose the Guilt

Gaining a fresh start and beginning to build wealth does not begin with a savvy financial move or killer investment strategy. It begins with your self-worth. Specifically, it begins with ditching any shame you feel about bad past financial decisions or the current state of your finances.

“The first, and most difficult, step is to absolve yourself and your spouse or partner of any guilt,” Orman wrote on Oprah.com. Basically, investing is about the future, so stick to looking ahead, not back.

This article originally appeared on GOBankingRates.com : Suze Orman: This Uncommon Approach To Building Wealth Could Change Everything If You’re Sick of Low Returns