Life and Money Lessons by Suze Orman

     On one of our class sessions, we had the chance to watch a film and the topic was about Laws of Money and Life Lessons by Suze Orman. It was my first time to watch her and she got my attention because I was amazed on how she explained her topic on stage. Suze Orman is such a powerful and inspirational speaker where she made a lot of sense and it was an impressive talk that was an hour worth watching. She discussed the five laws about money where I think that all of us can relate to. I will enumerate the five laws and share my thoughts and opinions into each law based on my own experience and perception.

Law # 1 – Truth creates money, lies destroy it

     In this law, she points out that most of us don’t have the courage financially to tell the truth. She cited an example of a company like ENRON where they lied of what the company’s real worth is and what they really did with the money or the investments that they’ve had from their investors. Back then, ENRON Company’s stock price skyrocketed and was making huge investments from investors but they were hiding the truth from the public all along –the truth that they’re suffering losses and not disclosing it to the public for personal gain. In the end the truth will always prevail and in their case, everyone found out about what really happened which damaged not just their reputation but also to the individuals who invested and believed their lies.

     Financially speaking, lies could burn us alive and our money with it. ENRON was one example in a bigger picture but looking into individuals, most of us have this guilt in us –not being financially honest within ourselves. Most of us have that denial and pretension that we could live our daily lives more than what we have in our pockets. It is made possible especially nowadays where credit cards and loans can be easily obtained by an individual. We enjoy the benefit of it without noticing that with such credit in our hands we could just literally be living our daily lives in a lie. I have been always tempted to purchase different kinds of things that are beyond my financial capacity. I’ve made mistakes and I keep on learning from it. I believe that it’s all about discipline of how you handle yourself financially. I believe that is very important to know your place or status of where you should be and let the truth have its day.

Law # 2 –Look at what you have and not what you’ve had

     “We don’t need to look past just to get what we need” is always one thing that I keep on telling myself every time. I am not perfect; there are times when I make the same mistakes because I just can’t get over the past.  Suze Orman mentioned about the depression that an investor encounters when he suffers from a loss. I am a stock trader in the stock market and I also have my own personal investments in stocks. I know how it feels to suffer from a loss and at the same time I know how others feel about it  because I encounter it from clients whenever there’s a bearish market. Being the investor, we have choices to make. Internal conflict kicks in when prices turn sour, so we should quickly assess if we should buy the same investment? If we should shift to another stock or we could just do nothing about it. As Suze Orman mentioned, doing nothing is also an option. We can’t always have the market or our investments are in our favour. I believe that the best thing that we could learn and figure out early in life is having the strength to move on. The faster we can move on, the more options and opportunity we could get in life which is very important. We should value time and get over with feelings as fast as we can, to quote from a famous saying “time is gold”.

Law # 3 –You have to do what’s right for you before you do what’s right for your money

     We just have to figure out what’s right for us and managing our own finances effectively will follow. When I was studying in college I didn’t have the discipline to save money. I’ve only appreciated the concept of it in when I had a job and realize how difficult it is to earn money. We could do things with money, we can either spend it in a good way or in a bad way otherwise we put it aside for savings. Good spending is obviously purchasing things that are only necessary or investing within the calculated amount of my purchasing power. Bad spending is just pure recklessness, carelessness and unmanageability which I am guilty of even as of now. I think that I’m still finding the balance to be in the right mind to assess my financial life and value each peso as if it was my last one. Self discipline and self control plays a large part in this law which would bring me and to others closer to our goals.  

            Law # 4 –You must first invest in the known before the unknown

     Investments are very attractive, all of us want to earn money for ourselves but we need to pick wisely and investigate thoroughly when investing. There are a lot of investment varieties to choose from, stocks, bonds, mutual funds, real estate, life insurance etc. Being in the stock market industry, generally these are the “known” investments. There are a lot of victims of “unknown” investments. These are scams where they market their investments promising very high returns which just seem too good to be true. These institutions or companies raise a lot of ethical questions of how they operate their businesses. Specifically I am talking about the “networking” otherwise known as the “pyramid scam” that has already been making fools out of many people time after time. They register their business by to sell some products and having a legal permit to operate but the product itself is not the main business that they do –it’s networking or pyramid scam. This is one type of fake investment and is an example of the “unknown”. I think that one should be mentally prepared before entering such an investment. One should educate himself, attend trainings and seminars which talks about real investments like stocks or bonds and investigate further before making such an investment. One could look at the financial statements of a certain company that is approved by the SEC (Securities and Exchange Commission) preferably companies that already has a 3 year track record. Having a 3 year record shows the true fundamentals, nature of business and the cash flow that the company generates from it. Investment is a must but we should always think smart in everything that we do specially on investing.

Law # 5 –You must always remember that money has no power of its own

     Suze Orman defined this law saying that money will never define who you are which means that you will be the one who will define what you do with your money. This takes me back to law # 3 which states that you should do first what’s right for you before you do what’s right for your money. Doing the right things, making the best efforts to make the right choices could give us the power to manage our money effectively. Suze also mentioned that others won’t do anything because of the fear of making the wrong move. Well there’s always a risk/reward ratio for everything, the higher the risk the higher the return. We must know ourselves better than anyone else in order to figure out our risk appetite. We should evaluate how far would we go for spending for an investment, let’s say stocks for instance. A basic example is giving a certain percentage of how can far you can tolerate a gain or loss. Let’s say we set the limit of 10% in a stock loss, we sell the stock to cut loss so we still have a 90% to fund another stock or investment of your choice. On the other hand we realize a profit of 10% and sell the stock to realize a gain because it is not guaranteed that it would stay that way, it might fall back again to your break-even point o worse is it declines further than the purchase price.

     We encounter these laws and lessons in our everyday lives. Money has a lot to do in our everyday survival but it’s not the only thing that has value in this life. There are things money can’t buy and those things are priceless. Our nature, the environment, the earth, the universe and every precious moment that happens through time which does not involve money are things that we should further notice and appreciate in life. The air that we breathe, the stars that we gaze upon, the sunlight that gives life to our planet and the warmth of love are some of the things I value more than money itself.