The only way to really improve any area of you life is to find and utilize information from many different sources. Sure, reading this blog may help you out financially and even provide a few life lessons along the way, but there are other great sources of information as well.
The more useful information you take in, the more skills you acquire for leading a rich and interesting life.
And so kicks off the first of the book review series. We will begin with Ramit Sethi’s I Will Teach You To Be Rich. This book is an excellent crash course for the financial novice, covering topics such as banking, credit, investing (the true form of investing), spending and automation.
Sethi provides a very organized approach on how to build what I like to call an efficient financial engine. The book provides step by step instructions on how to manage your accounts in a way that minimizes effort and fees while earning higher interest.
Ramit emphasizes a “focus on the big wins” approach that I very much enjoy. You are encouraged to look for the steps you can take now that will pay you dividends for the rest of your life. The book provides steps on how to find a few of these “big wins”. My favorite was showing how taking a few VERY simple steps to improve your credit could decrease your mortgage interest by a few percent, saving you up to $100,000 in mortgage interest over your lifetime. All of this for less than a few hours worth of work.
As far as the book’s take on the spending category, Ramit Sethi and I may be at a crossroads. The book talks about “guilt free spending”. A strange concept where you talk yourself into believing a little bit of senseless consumerism that does not contribute to long-term happiness is okay as long as you are investing 20-25% of your paycheck. In Ramit’s view, a 25% savings rate is impressive. This is only because he is comparing it to the national average of -2% savings. You read that right, the average person in the US spends more than they make in a year.
It is equally important to recognize the importance of the “small wins”. Not throwing away your time to cable. Not being dependent on convenience. Not feeling the need to “treat yourself” because you know happiness comes from within. Those who have woken up to the wonders of leading a versatile and adaptable life see a 25% saving rate as sub par.
So in the area of spending, this book falls short. Those small wins really add up over time.
Ramit Sethi states in his book that with his strategy, you can retire early at age 50 or 55. The only difference between the philosophy in his book and this blog is making monetary decisions based on happiness and growth. Strange thing is, around here we talk about retiring in our 30’s.
Despite those last few critical paragraphs, this really is an excellent book. It was given to me by a friend back in the days when I myself was transitioning to an early retirement lifestyle. The book gave me insight on how to take action with my money. I strongly encourage it to anyone who is looking to run a cleaner financial engine. Just remember that “guilt free spending” comes after you have established financial independence.
*Found this great series of interviews of Ramit on a podcast called the art of charm, worth a listen!