Safeguard Your Health
Angela has renter's insurance and a nonowner's auto insurance policy, but no health insurance. How can you possibly be there for others if even a small health crisis would wipe you out financially? Within two days of our conversation, Angela had applied for an individual health insurance policy. Because she has solid savings and she's young and healthy, I suggested she opt for a policy with a high deductible. She can cover the deductible from savings if necessary and in the meantime save money on a lower annual premium. (You can shop for individual health insurance coverage at

Don't Talk Yourself Out of What You're Worth
Angela works for an educational travel company, leading trips to China. While she loves her work, it pays just $2,500 a month, and she is an independent contractor, which means she isn't eligible for most benefits. But she was also quick to tell me that the firm is a small start-up in a tough economy, and she couldn't see how the company could afford to pay her more. Talk about self-sabotage. I explained to Angela that it is not her job to worry about the company's finances. A $30,000 salary is not enough. She knows it, and I know it. But Angela still lacks the courage to ask for what she needs. That has to change. How to ask for a raise.

Keep It Simple
Angela asked me what I thought about her investing in a rental property to generate more income. I warned her that for someone so bright this was a plain dumb idea. Real estate is full of risks—renters can be unreliable, repairs and upkeep can be costly—and she doesn't yet have the financial security to make it worthwhile. Building her retirement account, adding to her emergency funds, saving for her own home come first.

Give to Your Future Before Giving to Others
Angela told me she is planning to invest in a low-cost Vanguard mutual fund for retirement. (Most Vanguard funds have a $3,000 initial requirement, though some let you start with $1,000.) I pointed out that she has limited herself by focusing on a specific fund company. What she should really be focused on is how to contribute $5,000 a year—the annual maximum for someone under age 50—to a Roth IRA. (The maximum is $6,000 if you are at least 50 years old.)

That means setting aside $416 a month. A tall order for someone with pretax monthly income of $2,500? Sure, but Angela has always heeded Mom's sage advice to "pay myself first." She splits $200 a month between emergency savings and retirement. Her $12,000 in savings could cover eight months of expenses, so I told Angela all $200 should go toward the Roth IRA. I also noticed she spends $150 a month on gifts and donations. I love the sentiment but not the financial hit. Give your attention and time to people and causes that matter; right now that $150 goes toward retirement. For the last $66 she needs each month, we agreed that Angela will negotiate a more respectful salary. If she can't, then it's time to seek other opportunities.

If Angela can save $5,000 a year in a Roth IRA, she could have $800,000 by retirement. And she'll likely earn more in the coming years and be able to amass even larger savings. That will not only break her family's cycle of poverty but also give Angela the personal security she needs to step up for them in the future—if they need the help.

Suze Orman's most recent book is The Money Class: Learn to Create Your New American Dream (Spiegel & Grau). To ask Suze a question, go to

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Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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