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Friday, May 17, 2013

Money and Life Lessons from Suze Orman

I was able to catch Suze Orman's talk at the New Resorts World yesterday evening. Suze is the author of 9 New York Times bestsellers, a tv host, motivational speaker and financial advisor (including to some Hollywood stars like Oprah Winfrey). 

Just like her talk last year in Manila, she shared her inspiring life story and lots of practical financial advice and life tips during the Q&A portion.  She makes it a point to tell her story to dispel notions and excuses that one can't be successful and rich just because one is too young/too old, lacks education, buried in debt, etc. If you haven't read Suze's life story yet, read it here.

Here are some random personal finance, money lessons and life tips from Suze during the talk: 

- The goal of money is to feel safe and secure. If an investment is making you feel scared, don't do it.

-  Don't say yes to people because you love them or don't want to displease them (e.g. Financially helping out siblings who are physically capable of working and who are probably living a better lifestyle than you are) but instead say "No" because you love yourself. You have to love yourself first before you love others.  (I think Suze interviewed some Filipinos including OFWS the day before and learned that a lot of Filipinos do not just give financial support to parents but even to siblings. The support is somehow expected to be almost like an obligation and these generous souls don't have the heart to tell their family members that they can actually no longer afford to give support.)

- Take care of your parents but (again) not your siblings who are physically capable of finding work because by giving them easy money, you're not helping them.

-  If you have unpaid credit balances, pay them first. That's the best thing that you could do because in a year, that would could cost you at least 36% interest. 

-  If you have a mortgage and you've extra money, fully pay your home first. That would save you at least 6-12% in year (vs keeping your money in bank that earns you only 1 to 2% per annum).

- Contrary to the classic advice, don't live "within" your means. Instead live "below" your means but "within" your needs. 

- Buy things that you need. Don't buy just because you could afford them. Suze shares that though she can afford to buy a big house for instance, she only buys small condominiums because that's what she only needs. She mentioned the sq ft of her condo, either 1200+ sq ft or 1600+ sq ft but either measurement equals less than 200 sqm.  This is a person whose net worth is more than USD35M! 

- Find more pleasure in saving instead of spending. Be happier when you're able to save money and not when you buy things. Be happy living in a modest home because that's all the space you need. Be happy eating home-cooked meals instead of paying for expensive dinners that make you fat, Suze joked. :) 

- For parents, her advice is never to give your kids too much allowance.  Don't buy your kids all the things that they want. Buy them what they only need.  Teach them what are needs vs wants.  If you keep on buying them things and giving them money, they'll never appreciate the value of money and it will give them a sense of entitlement. They are not entitled to your money. Your money is yours.  Your kids have to learn how to make their own money.  Instead, make them understand how much you spend on tuition fees, groceries, electricity, etc.  

- Suze cites that one of the greatest things that has happened to her life was when her mom refused to lend her the money she was asking for to build a restaurant because the family didn't have money.  If not for that maybe she isn't where she is now.  She kidded that in the Philippines, if kids ask their parents, they may perhaps even borrow money just to provide for the kids. So to Filipino parents, she says learn how to say no to your kids.  Just give them enough.

- If you're a financial advisor, don't ever sell to your friends or family members because if the investment turns out to be wrong, you're gonna strain close relationships.  And when you sell to others, make sure to sell not because your paycheck depends upon it, but because the prospect really needs the product you're selling.  If you think the prospect needs to put the money somewhere more urgent and important, then tell him that. 

- As Suze likes to end her show, she emphasizes - People first, then Money, then Things.  She shared that she realized that money wasn't the most important thing when she witnessed a fire accident when she was a kid.  Her dad's store caught fire and all her dad's cash was inside the cash register. The cash register was made of steel and her dad tried to save the cash register inside the burning store.  Due to the extreme heat, the cash register actually melted and she saw how her dad carried it and when he laid the cash register down, his skin on his chest and arms got burned and ripped off. To his dad, money was more important than his life - he risked his life to save the cash register.  Suze vowed since then it's People first, then Money, then Things.

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