Ramit Sethi has some controversial views on personal finance and i’m all here for it. While I don’t agree 100% with everything he has quickly become one of my personal voices of reason that many people should listen to when it comes to their own dollars. These are some of my favorite lessons learned since I’ve started listening to Ramit.
Automation Is Your Friend
Automating your finances can save you time and energy, and make it easier to stick to a budget. This can involve setting up automatic payments for bills, transferring money to savings accounts, and more.
Ramit takes on an out of sight out of mind approach to money. I’m all for it as the less involvement I need to have with my money, the better. He recommends setting up a few checking and saving accounts for different purposes. You’ll have a main checking account where all your income goes to. From there, the funds get sent to their respective places. Personally, we have different bank accounts for our mortgages and real estate expenses, our daughters expenses, and groceries/food etc.
I love using Charles Schwab Bank accounts as they have no minimum account requirements, no ATM fees, and no international fees. They are also a brokerage so you can invest with them. I also use Schwab for investing in treasuries (which acts as a high yield savings account for me) At the time of this writing, i’m getting 5.39% APY on my savings with a 1 month maturity. If you’d like to open a free Schwab account, use this link as get a small commission based on signups and funds deposited. No obligation to do so but if you’re tired of getting hit with fees for using a bank, schwab is the way to go.
I also wrote a more thorough article Banking automation. Feel free to check out the blog post here.
Budgeting
Creating a budget is a crucial aspect of managing your finances. It helps you track your spending, identify areas where you can cut back, and allocate your money towards your long-term goals.
This is not a new concept but Ramit breaks down a budget easily and has helped me understand the concept easily.
For me, I set up all of my expenses that are recurring like rent, daycare, utilities, insurance, debts, and subscriptions. From there I take an average of the past 6 months of category expenses to get a rough idea of what I spend there.
For example, if you average $400/month in groceries, then make sure to make a note of that. Then when you have everything added up, ensure that every paycheck you have is able to cover that base amount. For example, let’s say after all expenses are accounted for, you spend $3,000 every month and you make $4,000/month, you have $1,000 in excess money monthly.
Having a budget is able to bring more clarity on how much money you actually have every month which is extremely helpful. From there, you can make a much more calculated decision of what to do with your funds. 🙂
Credit cards Are a Super Power
Credit cards can be a powerful tool for building credit and earning rewards, but it’s important to use them responsibly. This means paying your balances in full each month, avoiding high interest rates, and using credit cards to your advantage, rather than letting them control you.
I personally love the Capital One Venture X Credit Card. This thing is a beast! Not to get too into the details but let’s say if you travel frequently, the Venture X should be a no brainer as it pays for itself every year. You also get 75,000 miles as a sign up bonus 🙂
If you use Credit Cards strategically, you can heavily reduce or completely cover the cost of all travel related expenses. With travel costs easily being hundreds or thousands of dollars, finding ways to cover this large expense will be extremely helpful in saving yourself loads of money.
Negotiating
Learning how to negotiate can help you get what you want, whether it’s a higher salary, a better deal on a product or service, or improved terms in a contract. It’s important to be confident, prepared, and clear about your needs and expectations.
You never know until you ask. There are so many cases where if you simply ask for a discount, you’ll get it. You’d be surprised at the amount of times that you can save a little bit of money, get a little bit more of something that you’re asking for or even get promoted just by asking.
I’ve personally experienced this over 10 times in the past couple months where I’ve saved 10 per cent on my order or got A free product just because I asked. Afraid to ask for what you want and challenge yourself a little bit. The results might surprise you.
Cut Costs Mercilously on Things You Don’t Like So You Can Spend Lavishly on The Things You Love
This is something I would tattoo on my face because it has such a powerful impact. Is so short and a lot of people are concerned with saving $5 on Starbucks because over 30 years it might benefit them a couple $1000. But what if I like drinking Starbucks? Is it actually logical to cut out the thing I genuinely enjoy by saving $5 because the financial gurus tell you to do so?
I think about this the same way as people will step over a dollar to pick up a nickel. Too often we focus on the small, Seemingly unimportant things That barely bring any difference versus focusing on the large tasks that provide the most benefit. I rarely like going out to eat so what if instead of spending 50 or $100 a month on restaurants, we put that money into something that actually brings joy and value to your life like a nice sweater?
Think about how this can apply to your own life.
In conclusion, these are just a few of the valuable lessons I’ve learned from personal finance expert Ramit Sethi. Whether you’re interested in improving your finances, building your career, or simply becoming a more effective and successful person, there’s a lot to be gained from following his advice and insights.
