My street name is "the Money Lady." That's what strangers say when they stop me: "Look, it's the Money Lady!" Emphasis on money. Early in my career, they seemed to be commenting primarily on the fact that I was always popping up somewhere giving financial advice. But as the years have gone by, I've sensed that the people I meet are referring to my success—and that I am powerful in their eyes because I've made money.
They've got it all wrong. Money didn't make me powerful. And if it weren't for the fact that I'm usually standing in a crosswalk when people stop me, I'd tell them that when I first had a lot of money, it served the purpose of showing me exactly how powerless I was. In fact, money has taught me a great many lessons. Let me share them with you:
1. Power comes from who you are, not what you have
Society has programmed all of us to think that external achievement is what gives us power. But that's only perceived power, and it can be fleeting. I can't tell you how many times my grandfather would say, "Suze, they can take your house, they can take your job, they can take your money, they can even take your mind, but they can't take your heart. So you have to grow up valuing your own heart, who you are."
My grandfather understood the difference between external and internal power. It was something that took me years—and a number of painful experiences—to comprehend.
2. Money has no power of its own
You alone are the power source. You are the one who makes the choices to spend money, to save money, to borrow money. That's why I say money is such an amazing teacher: What you choose to do with your money shows whether you are truly powerful or powerless. [See: When to save and when to pay off debt]
When I started to make serious money in my 30s, I was exhibit A for external power. I drove a fancy car, had a closetful of expensive clothes, wore a watch that cost the equivalent (at that time) of a 25 percent down payment on a house. Why did I have all those things? Because I was dating someone who was seriously wealthy, and felt I needed to keep up with the rich crowd I found myself in. I, Suze Orman, took money out of my 401(k) to pay for that pricey Cartier watch. And when I ran through all my money, I started using the bank's: I eventually had more than $60,000 in credit card debt. How could that be?
I'd done the work—made the choice—to earn money, but then I made another choice: to use the money not to build personal wealth or move toward financial security but to try to impress people. Money didn't make me powerful. It just showed me how sadly powerless I was.
3. Self-worth builds net worth
I realized that until I started acting honestly, I would be broke and unhappy. It was my own aha moment: I realized we spend more than when we feel less than. I felt less than because I could not afford what all those rich people could. But look where that got me—in debt and miserable. It was right then that I started to use money as my guide. I began watching how I was using money and how I was feeling when I made money choices. When I learned to give myself—and my money—the love and respect we both deserved, I felt as if a huge weight had been lifted. I was no longer racing to keep up; I was so happy being right where I was. Being me. I stopped spending money I didn't have and started living within my means. I had found my power. I was clear on who I was, what I wanted, and what I thought. No more letting the external world define me—I defined me. And it was only when that happened that I was able to dig out of debt and build the lasting net worth I now have.
If you have credit card debt and no savings, and you feel miserable, don't attribute your woes to not having enough money; instead see the lessons your money is trying to teach you. Is it possible you have yet to find your self-worth? [See: How to take control of your finances]
4. Do what's right, not what's easy
Believe me, I know how easy it is to run up credit card debt. I have 60,000 memories of what happens when you act without conscience, doing whatever you want rather than pulling yourself back and considering whether it is right. If I had stopped to have that talk with myself, I would have seen my powerlessness earlier. That would have saved me money and gotten me to happy a lot faster.
To know whether something is right or just easy, I turn to my three gatekeeper questions: Is it kind? Is it necessary? Is it true? And I make sure I can answer yes to all three. Is it kind—to me? Is it necessary—for me? Is it true—for me?
I see so many women fail the gatekeeper test when it comes to dealing with loved ones. When a sister asks for a loan to pay off her credit card or a child asks you to cosign a loan for a new car, you jump in and say yes without a moment's hesitation. It is imprinted in your DNA to always give, no questions asked. But if you were to ask yourself the gatekeeper questions, you would often see that what is easy to do is not necessarily right. If you lend money to someone, are you really solving their problem or just getting them off the hook? My experience is that people who are bailed out of trouble often end up back in trouble. How is that help really kind to them? And if you are lending money that depletes your emergency savings, or prevents you from working toward your own financial goals, is that kind or true to yourself? Repeat after me: Say no out of love rather than yes out of fear.
5. Ignorance is not bliss where money is concerned.
We all take in financial information from outside sources, whether it's friends and family, professionals we hire, the magazines and blogs we read, or the television we watch. Gathering that information is important, but at the end of the day you must depend on yourself to synthesize it and make your own informed decisions. Seeking out opinions is smart; blindly following those opinions without thinking through whether they make sense to you—and for you—will leave you drowning in a pool of powerlessness. When I was a struggling waitress and some amazing customers raised $50,000 to help me open my own restaurant, I blindly "gave" the money to a stockbroker without knowing how he was investing it. Within a few months, my account was worth zero. Zero! Was it the broker's fault? Sure. But it was mine, too. That was the moment I learned how my powerlessness had cost me a fortune. That was when I vowed to never trust anyone else to care about my money more than I do.
6. How you respect your possessions says a lot about how you respect yourself.
My closets are temples of organization. But they have been a work in progress. When I was just starting to make money as a stockbroker, I would come home after a long day and throw my clothes on the floor; by the weekend I had a pile of disheveled items that I schlepped off to the dry cleaner. I spent a lot of money having clothes cleaned and pressed because I was too lazy to hang them up at the end of the day. Sound trivial? I don't think so. It was symptomatic of my lack of respect for the money I had worked so hard to earn.
Cars are another dead giveaway. I once knew a woman who had serious external power and a super-impressive career. But her car was a disgusting mess: fast food wrappers all over the place and a trunk that was a mini-dump. One day she was driving us somewhere and asked me to pull her wallet out of her purse; my hand came back smeared in lipstick. Ick. No surprise, her financial life was a mess, too. I was at her house once when someone from the utility company came by to turn off her service because of lack of payment. Do you really think this was a happy woman? When you can't manage to keep the power turned on, exactly how much are you in control of your destiny?
And buying what you can't afford, regardless of how well you take care of it, is flat-out disrespectful of yourself. Purchasing a home with a crazy mortgage just because you think it is your right to be a homeowner—and then not being able to keep up with the payments—is not being true to your circumstances. Leasing a fancy car to keep up appearances when you have to borrow from your 401(k) to make the payments, or don't have enough to fund your Roth IRA? Tell me what that is all about!
If you don't respect what money can buy, you don't respect money. If you don't respect your financial obligations—paying your bills on time, buying only what you actually have the money for, saving for your future—then you don't respect money. And if you don't respect money itself, that is a sign you are not respecting yourself. It takes hours, weeks, and months working at a job to earn the money you then spend. To turn around and use that money in a wasteful or powerless way is just heartbreaking to me. You deserve better.
I want you to measure your power right now by walking through your home. First, open every closet and every drawer, and take a serious look in the garage, including the interior of the car. Are things organized or a mess? Next, pull out everything that still has a sales tag attached or is in unopened packaging. Why did you buy it? More important, when did you buy it? Perhaps when you were feeling less than? Every possession you bought is waiting to tell you a story. Take the time to learn the lessons that your money can teach you, and you will be on the path to building lasting and gratifying internal power. I'll bet all my money on it.
Suze Orman's most recent book is her 2009 Action Plan: Keeping Your Money Safe & Sound (Spiegel & Grau).