What Are Your Financial Priorities?

Interview with Suze Orman

“A lot of people, for whatever reason, have low self-worth, and low self-worth will always equal low net worth. Even if you make money, it will leave you,” says Suze Orman, American author, financial advisor, and television host.

Douglas Goldstein: I’m very excited to be talking to Suze Orman. Suze Orman is probably America’s most recognized expert on personal finance and a bestselling author.

Now, Suze, one of the things I know that you have focused on in your career is the issue of women and investing.

I have to share with you that I have done that too, because when I started as a financial advisor, I was partners with my mother, who was a financial advisor as well.

In fact, she learned it from her mother - my grandmother. My grandmother was one of the first women to be licensed as a stockbroker in America.

Tell me, what is it today that makes men and women different in terms of how they invest?

The Difference between How Men and Women Invest

Suze Orman: It’s not just how they invest, but also how they handle money in any way, shape or form, and what the purpose of money is to a woman vs. what the purpose of money is to a man.

The big difference between the two is that it’s a woman’s nature to nurture.

She has the ability to give birth and she has the ability to feed that which she has given birth to, in most cases.

A woman will take care of everybody; her spouse, her parents, her children, her employers, her employees, her brothers, her sisters, her aunts, her pets, and her plants before she will take care of herself.

In a woman’s mind, the main reason to make money is to take care of her family.

The reason that most women are in charge of a household expenses and men usually are in charge of investing is because the household is everything that a woman loves, especially single mothers.

The only thing that matters to them is their kids - period.

That’s even more so because they feel that because they’re not married, and because they don’t have a male or a partner in the situation, that they are depriving their children of things that they really need, like a father figure.

Women are very, very different and the best way that I could summarize is it for you is that men will not even ask for directions.

That is true all over the world. I personally call men “financial stakers”. They think they know what they’re doing, and they act like they know what they’re doing when it comes to money.

However, where do they get their information from? From John, who got it from Joe, who got it from Jim, who doesn’t know anything, which is why we were able to witness the Bernie Madoff syndrome.

Nobody knew what Bernie was doing.

If you had any idea what to do with money, you never would have given him a penny because nothing made sense.

That notwithstanding, major stocks, major Jewish organizations, majorly got taken advantage off because one told another, who told another.

Women, on the other hand, always ask for directions. They’ll always say, “I don’t understand. Can you tell it to me again?” Women are very, very different in what the goal for money is for them vs. a man - what the goal of money is for him.

Douglas Goldstein: What do you think the goal is for men then?

What Are the Financial Goals for Men?

Suze Orman: The goal for men is for them to have money, for them to be secure and to be able to have their boy toys. It’s a very different thing.

Men have no problem asking for a raise, not wanting to go back to work for less than.

During the 2008 debacle, here in the United States and really worldwide, because of it, you found men that were making $200,000, $300,000 a year and they refused to go back once they lost their job to work for $80,000 a year. They would not do it. They would rather sit at home and starve.

Women on the other hand, if they were making $100,000 or $200,000 a year and they lost their job, became waitresses or bartenders.

They did anything and everything to support their families. Men have a very, very different relationship with their money.

Again, in terms of investing, I think many men are horrific investors because they like to be more speculative. They like to brag about it, in my opinion, but they really don’t understand it as well as they should.

Women will take money off the table. They’d rather own their home outright. Men do not want to own their home outright because they would rather take that money and invest it than see it rot in a home. Again, those are just a few of the examples.

Douglas Goldstein: We’ve also seen academic studies that have shown that women are better at investing than men.

They seem to score slightly higher in terms of their overall returns. Would you attribute it to the same personality traits that you are describing now?

Why Women Are Better at Investing Than Men

Suze Orman: I would, because when women make an investment, they’ve already decided why they want to invest.

I have a saying that fear, shame and anger are the three internal obstacles to wealth. When women are afraid of something, they don’t do it and they’re not ashamed to be afraid. They’re not afraid to cry and they’re not ashamed of those emotions.

Men, on the other hand, can be really afraid to do something but yet they’re going to do it anyway.

When you’re afraid and you make an investment, when it goes from 30 all the way down to 10, your fear kicks in and that’s when you sell.

Women, on the other hand, who weren’t afraid, when it goes from 30 to 10, they still like the investment. They still understand it, and they will hold onto it, and before you know it, it goes from 10 all the way up to 100.

I did a study once with my own clients. I bought everybody the same stock at the same time.

There were some that sold when it went down, and there were some that kept it and made money. Those six solds mainly were men.

When I asked them, when they purchased the investment to begin with, were they afraid to do it but they were just afraid to tell me they didn’t want to do it, they all said yes.

The women, on the other hand, when I said, “We’re you afraid when you made this investment?” and they made money, they said, “No, I really loved the idea Suze, and I had faith in it.” See the difference there?

Douglas Goldstein: Suze, one of the things I know that you talk about is this concept of people first.

In my day job as a financial advisor, I’ll often talk to clients who come in, and it’s funny, this man-woman distinction you’re describing.

I don’t necessarily have specific academic evidence, but I see it when I talk to people. Men sit down and they’ll say, “Doug, how much money are you going to make me?”

I’ll always try to turn the conversation to talk about things like what do they want to do. What are their goals, and where do they want to be?

Usually these conversations go better when it’s only a woman in the room because she’s happy to talk about what her goals.

She may not want to sit and talk to me about, “How much money can I make?” because who the heck knows? When you talk about this concept of people first, is that what you mean?

People First, Then Money, Then Things

Suze Orman: Not really. When I said, “People first, then money, then things,” which was my slogan that I signed off for 14 years on The Suze Orman Show when I had it on CNBC, I was mainly talking to the women.

Women, you need to put yourself first. You need to take care of your needs first. If you take care of yourself first, then the most important thing is to know that you need money before you can buy things.

Because I found over all the 35 years that I’ve been doing this that people have more things in their closet than money in their bank account; another fascinating thing.

We would total up everything in somebody’s house, and what it cost, just in their closets, and it was always more than they had in savings.

Douglas Goldstein: Unbelievable.

Suze Orman: Which was like, “What are you talking about people? Are you totally screwed up or what?”

That’s where that saying came from, because what’s interesting is that women love to be secure.

They want to know that they have their documents in place today to protect their tomorrow.

Good luck getting a man to want to go and do a trust or a will and say where everything’s going to go upon their death.

Women have a far slower approach to security, because the truth of the matter is, what is the goal of money? The goal of money is to make you secure.

Douglas Goldstein: Do you feel that’s a goal for women, or do you feel that it’s everyone’s goal?

Suze Orman: That’s everybody’s goal, and if it’s not, it should be, but it’s more of a woman’s than a man’s goal.

A man’s goal is to make money, make money, and talk about the money they made. The truth is, when someone sees a financial advisor, the first question shouldn’t be, “How much money are you going to make me?” It should be, “What does it cost for me to give you money?”

The truth is, Doug, some of these investors don’t even have any money. They say, “I have $30,000 of credit card debt, I owe this much on my home, I have this.” It’s like, “I don’t have any documents in place.”

They don’t care about personal finance. They only care about investing in the stock market. If you talk to a lot of these people, the truth of the matter is they have more debt than money to invest.

Douglas Goldstein: Don’t you think this comes from the fact that they suffer from “poverty of mind”? Instead of finding a way to get themselves out of it, they’re involved in this whole self-sabotaging neurosis of money instead of saying, “What are the simple steps I can do?”

For those of us who’ve been in this a long time, we know it’s actually not impossible to be personally financially successful, yet people simply assume they can’t, or they simply sabotage themselves.

How can average people who are afraid, and in fact, you mentioned the men, how can they get themselves out of that pit in order to become much more successful?

Getting out of the Financial Pit into Financial Success

Suze Orman: The only way to erase fear is to face your fear, and you have to face the truth of your life. You have to really stand in your truth.

First of all, do you even have a good relationship to begin with? Because what’s interesting is if you feel less than, you spend more than.

A lot of people, for whatever reason, have low self-worth, and low self-worth will always equal low net worth. Even if you make money, it will leave you. You’ll lose it or you’ll spend it.

It starts with going within to see why are you doing without? Why do you buy things that you want, but not what you need?

The great way for all of your listeners right now is to know about their money. Go into your closets, everybody, and especially the women listening. Look at all the items in your closets that still have price tags on them that you had to purchase, because you were afraid if you didn’t purchase it at that moment it wouldn’t be there the next time you came back. You have shoes that you’ve never worn, you have makeup that you’ve never opened. Why is that? Why do you buy things that you never use?

Douglas Goldstein: I think it’s something that they have to work on with their psychiatrist and not necessarily going to their financial planner, because if people are buying in order to help increase their self-worth, of course that doesn’t help them do it at all. It does the opposite. How do they get through this?

What are the first steps someone has to take to realize the problem so that he or she can overcome it?

Suze Orman: You first have to realize that you’re the cause of why this is happening.

Douglas Goldstein: Not the government?

Suze Orman: Actually, every single politician on both sides of the table should be so seriously ashamed of themselves that it has gotten to the point that it’s all self-serving and it has nothing to do with the people.

Douglas Goldstein: But the point is not government. It’s that each person has to watch out for him or herself.

Suze Orman: Yes, you have to have this desire to save yourself, and here’s what’s so sad.

Normally, that doesn’t happen until you have hit rock bottom. Until all of your credit cards are maxed out, all of your loans - if you are able to - from a retirement account have been taken. You have no place else to go to live a lie. A lie is when you’re leasing a car, your home is mortgaged to the hilt, and the clothes that you wear are financed by the debt on your credit card.

If that’s how you look like - $1 million and yet you owe it to everybody - you’re nothing more than a financial liar. If you don’t stop lying to yourself, right now, eventually you will hit rock bottom and then you will have no choice other than to turn around.

There’s one little thing that people may want to try, especially if they are in debt or they don’t have as much money as they wish they had – because you have to have money to invest, people! If you have debt, you don’t have money.

Douglas Goldstein: So what’s the one step?

Suze Orman: The next step is, from this date to the next six months, vow that you will buy only needs vs wants. Need is food at the grocery store while a want is food at a restaurant. You know when you say, “I want this and you know when you say I need this.” If it’s a want, walk away.

If it’s a need, then obviously you have to buy it. Just try and get as much as pleasure out of saving as you do spending. Just try it on for size.

Douglas Goldstein: That sounds like a great place for us to wrap up. Suzie, in the last few seconds, please tell us, what is the best way for people to follow you?

How to Follow Suze Orman

Suze Orman: You can always follow me on suzeorman.com. I’ve taken a year or two off now, to try to create new instruments that with artificial intelligence help people get in touch with who they are, financially speaking, and to figure everything out that you are asking me.

I’m trying to figure out how to do a self-examination of a person, to show how their financial flaws are; inwardly speaking, and then what can they do to conquer them, so that they can be the people they deserve to be.

Douglas Goldstein: Suze Orman, thank you so much for taking the time today.

Suze Orman: Anytime, Doug.