Based on the video seminar Suze Orman conducted, she mentioned that people have two goals in mind: (1) Keep what you have; and (2) Create what you deserve in life. I personally agree with what she mentioned that the usual technique that our parents or grandparents had been doing in terms of their finances is not applicable in today’s generation. She mentioned that because of the accessibility of the information we were able to receive. In this case, it would be easier for us to decide what we need to do in our finances.
I think that most of the people would agree on this; thus, she introduced the five laws of money that she deemed as timeless in which one can apply any time and it is applicable from one generation to another.
Truth creates money, lies destroy it.
This law seemed simple, but as Ms. Orman explained the reason, I was now able to understand what she was trying to say. It is really true that when we want something that we cannot afford, we sometimes have the tendency to use our credit cards to pay for the said item even if it is not something we really need. Thus, it causes us to have an illusion that we can borrow something that we do not really need and if we were not able to manage our finances well, it would cause us more stress to pay the debt or even the compounding interest the credit card companies are charging. No wonder, credit card companies kept on increasing a person’s credit card limit at the same time, keep on giving us credit cards even if we did not have any intention to apply for one. In this situation, it is important to be truthful with oneself such as accepting the fact that you cannot afford to buy a certain item and borrowing money to acquire a certain item is not an acceptable idea, as a small bad decision can lead to a series of bad decisions, which would eventually become an issue that would be hard to overcome.
Look at what you have not at what you had.
This is the law in which I fully agree. As a person who invest in stocks, I usually have the tendency of looking at stocks that are quick moving at the same time would assure that it would give me a high interest rate so that I could at least get my income on the right track. Personally, I think it is important to know that the past should be used as a lesson for the present so that we could prepare ourselves for the future. However, if we keep on looking back at the past or reminiscing the good things that we had in the past, it will not be helpful in our present, which might affect the future that we could have.
Do what’s right for you before what’s right for your money.
The third law states that we should prioritize our own welfare before our money’s welfare. I think one should be able to determine first his/her risk profile such as determining whether one is a risk taker, risk avoider or had a balanced approach. Aside from determining the risk profile, it is also important for an investor to be informed that when he/she decided to become a risk avoider, he/she should know that he/she should not expect something huge in return, as the saying goes, the higher the risk, the higher the returns. In my situation, sometimes when the stock I chose does not have a chance to get back to the price that I initially bought, I sometimes had the tendency to sell everything so that I would be at peace with myself even if it meant that I lost around a thousand pesos for a bad decision that I made. I think for every loss, it should be taken note that there is a lesson that is being incorporated. However, I know that I can still sleep even if the stock that I bought went down as I had bought other financial instruments that would give me dividends and interest.
Invest in the known before investing in unknown.
I think this all boils down with ensuring that a person is at least investing in something that is stable or guaranteed such as savings. Ms. Orman also mentioned that one should also have at least eight months of emergency fund in which it would enable a person to tackle the unknown in order to be known. Example of known according to Ms. Orman is buying a roof over your head (house) and an example of an unknown is the stock market since one cannot predict whether the market will go up or down.
Always remember that money has no power on its own.
Lastly, it is extremely important to take note that we should not allow money to control nor define who we are. We are the ones who are in control of our money. It is up to us to determine what we are supposed to do about it. As Ms. Orman had mentioned in the last part of her video, she mentioned that we are given two wings, the first one is the Wing of Grace in which it keeps on flapping even without our effort. The other one is the Wing of Self-Effort, which meant that we should keep on exerting our effort in order for both of the wings to flap together. If one wing (specifically the wing of self-effort) is not doing it’s part, we would not become successful as it would require two wings for us to function well and be successful in our own life.
The author is an MBA student at the Ramon V. del Rosario College of Business. This essay is part of a journal she keeps in fulfillment of the requirements of the course, Lasallian Business Leadership with Corporate Social Responsibility and Ethics. Visit her blog at http://sarahjanego.blogspot.com/.
The views expressed here are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators