I have been fortunate to study in a great school and two great colleges during my student days and had a few excellent teachers who were able to transfer a lot of their knowledge to me. This learning continued through some very good bosses that I had in the first few years in my career. In the area of personal finance, I am mostly a self-taught person but the one person who I consider to be my mentor is the US lady Suze Orman. I have learnt a lot from her shows, not only in terms of personal finance but about life in general too.
For those who have never seen her on TV a few words will be in order. She had a fairly unremarkable beginning and worked in all kinds of jobs such as a waitress etc, before she veered into the area of personal finance. For someone without a good formal education and a late starter, her success here is amazing. She wrote her first book when she was 45 and her books along with her TV show made her one of the most sought after speakers in the US. Of course, there are many success stories like this in the US – what makes her unique is the way she blended financial issues into the lives of her callers and provided solutions that were financially sound but with a human touch.
The most important lesson I learnt from her was encapsulated in her tag line – people first, then money, then things. What this means is we should first take care of our near and dear ones even if it means we are not very sensible financially. But she was also clear that this should not be done if the people are wasteful themselves. Beyond this she wanted the viewers to focus on building a secure financial base and acquire things only when they could afford it. Some of the commandments that she wanted everyone to follow were :-
- Always have an Emergency fund equivalent to 8 months of your expenses.
- Go for a home mortgage only when you can pay 20 % of the total payment on your own.
- If you are not able to settle your credit card bill in full then you cannot afford any new things.
- Loving your adult children does not mean that you support them financially.
- Any financial planner receiving commissions from the products that he is recommending, cannot be objective.
- Term life cover is the only kind of life insurance you should go for.
- Never withdraw money from any retirement scheme that you have.
- If your child insists on studying at an expensive college with a loan, do not co-sign it and become liable.
- Do not think you own a home that is mortgaged to a bank, reality is that the bank owns it.
- In the above case, you are buying it from the bank bit by bit.
The other most important thing I learnt from her was that when you feel powerful because of the knowledge and skills you have to add value to others you will attract money in some way or the other. She always advised people to get into a situation where they were doing something that they loved without having the constraint of needing to earn money through it. A lot of my own thoughts on financial independence were motivated through these real life case studies.
If any of you are interested you can get some of her books or , better still, watch a few of her old shows. It used to run in CNBC for more than 10 years and I must have seen the majority of those. I still miss them, it is only after you have watched them that you realize how much better our shows can be.
The hallmark of a mentor is when she can change the lives of her followers significantly and she has definitely done it for me in more ways than one. So much so, that when I try to help someone through my knowledge in this area, I still feel that I am passing on to others what I have learnt from her.