Book Review: The Laws of Money,
The Lessons of Life
By Matthew Arnold Stern
Suze Orman's book The Laws of
Money, the Lessons of Life is the first book about finance I've read
that recognizes the emotional attachment we make with money. We don't
measure money with numbers, but how it makes us feel. We use money to
evaluate our sense of self-worth, security, social standing, and even
love. These are the reasons so many people make stupid choices regarding
their money.
Suze Orman addresses these emotional ties with money and
their resulting problems with five common-sense laws. She wrote this book
in the aftermath of September 11, the burst of the stock-market bubble,
and corporate scandals, but the laws apply in all financial conditions.
Consider her first law, "Truth creates money, lies destroy it." This law
doesn't just apply to gross acts of corporate malfeasance like Enron and
Global Crossing. Think of times when you bought extravagances you cannot
afford with hopes of paying off your credit cards later. Meantime, you are
amassing interest along with your original debt, and you find yourself in
financial bondage for years.
In addition to addressing our emotional
issues with money, she also provides some practical advice. In the law
"Invest in the Known Before the Unknown," she advises to focus on paying
off our debts, especially our home mortgage, before dabbling in the stock
market. At a time when the stock market jerks up and down depending on
what happens in the news, we know that we can be assured a 5–7% rate of
return by paying off our mortgage. (For paying off credit-card debt, that
rate can be 18–21%.) For those of us who invest, she provides a good rule
of thumb of whether to keep investments or sell them.
To help you
address your emotional and practical concerns about money, the hardcover
edition of the book includes a 131-page workbook with exercises and
additional guidance.
After reading this book, I understand why Suze
Orman has such a wide following and has such great ratings for her PBS
specials and CNBC talk show. She makes the subject of money understandable
and human. In doing so, she can help us make better decisions about what
to do with our money by showing us the emotions that we tie to it.