I Will Teach You to Be Rich: A Top Personal Finance Book Review
An Entertaining Guide to Getting Your Financial Life in Order!
''I Will Teach You to be Rich'' is a personal finance book that promises to get your financial life in order in six weeks -- and it pretty much will if you do follow the plan.
Author Ramit Sethi (photo left) writes with a clear entertaining style, guiding you through setting up credit cards, bank accounts and investing. The book feels like it's aimed at twenty-something college graduates -- or at least younger people just starting out -- but that could be because many of the anecdotes he uses deal with his acquaintances and he is a younger man. The tips he provides would work for any age, so don't be put off if you are a bit older like me!
The ISBN for the is book is 0761147489. The photo is a download from his website.
How to Manage Credit Cards and Bank Accounts
Many of the tips that author Ramit Sethi provides have been talked about by other personal-finance writers, such as making sure you maximize how you use credit cards and how to get rid of the fees and interest that such cards bring.
And pay yourself first each month -- no matter how small an amount -- by contributing to a retirement or savings account.
And he very clearly explains why stock brokers aren't working in your interest, and how you probably could do just as well with a few good mutual funds.
So it's not necessarily the guidance alone that makes this book worthwhile. It's the attitude he wants you to develop that makes all the difference. Control your financial life and you will be happier and less worried. It's very good advice for everyone, and the main reason I recommend this book.
Buy the Book Today!
Automate Your Financial Life
The thrust of Sethi's advice is to set your financial life on auto-pilot as much as possible. Create a system that automatically switches contributions from your paycheck to your 401(k) and has your bills paid automatically from your checking account, for instance. Set up your credit card to pay your monthly utilities (and earn mileage on an airline card, while you are at it).
Once you have the system set up correctly, with additional money being sent to separate savings accounts for your goals, then you won't have to spend much time even worrying about your financial life. And really, shouldn't that be the way you'd want it?
Getting Your System Started is More Than Half the Battle!
The main thing, Sethi says, is to get started. Yes, he offers an overall six-week plan. But even if you only take some steps you will be better off than you were before.
Don't throw your hands up and drop trying to improve your financial life just because you don't have time to do all the things he suggests. Even doing just a few of the steps -- like getting a lower interest rate on your credit card -- is better than doing nothing. His take is ''85% of the way is better than nothing.''
Or to use the old saying, ''Don't let the perfect be the enemy of the good.''
Cheap vs. Frugal: A Distinction Everyone Should Make
One of the best parts of the book is a discussion of the difference between cheap and frugal, and how today's consumer-driven society and culture seem to blur the distinction. This is a trend that has always bothered me, because when I was growing up I was very conscious of the fact that I would need to pay for college myself.
As such, I was very aware that spending money meant making choices, and a frugal person understands that. Being frugal isn't about avoiding spending at all costs -- it's about being intelligent about your spending, and understanding value for money.
Cheap on the other hand is almost always about self-serving sacrifices, and about a short-term focus on spending as little as possible.
As an example of frugality, for instance, many pieces of furniture in our house were bought at antiques markets and would be considered collectibles (about 70-100 years old). They are made of solid wood and are well-crafted, and cost more than what we could have picked up at a department store during one of the sales weeks. But even though we paid higher prices, we are getting more value because the furniture will almost surely last our entire lives. Modern furniture can be so poorly constructed that replacements will be needed at some point. So, while it is cheaper to buy a lower-quality piece on sale, it is actually more frugal to spend more for higher quality. That is at least the way I view it.
Author Sethi has a similar view, and it's nice to see he isn't one of those advisors who makes it seem like being financially responsible should be about deprivation.
Be a Conscious Spender
The other part of his guidance that is key: Learn to be a conscious spender. Some books will tell you that the only financially responsible thing to do is deprive yourself -- give up on Starbucks lattes and new cars -- and live way below your means.
But that's always been way too narrow-minded. I always thought that good financial planning should include being able to obtain what you want in life. Sethi agrees.
Being a conscious spender in Sethi's view means using your cash to get more of what you love by cutting the expenses of things that you don't really care about. Slashing your credit card fees, for instance, can free up money for you to eat in a nicer restaurant, for instance. So, yes, live within your means. But be more careful on how you allocate your money.
I can use a great example from my life as an illustration.
When my wife and I moved to Chile in the early 1990s to be freelancers, we needed to find an apartment. There were some very nice places for rent in upper-class neighborhoods that would have been great -- but the rent would have forced us to take jobs and assignments we didn't want or back on the traveling we hoped to do.
So, we ended up picking a plainer apartment in a middle-class neighborhood with a smaller rent bill. We were able to travel more, while I focused on the work I wanted to do. My wife even ended up leaving her full-time job to help me, something she wouldn't have been able to do if we had a more expensive apartment.
It's all about knowing what you want, and making choices that enable you to get it.
For More Information
- I Will Teach You To Be Rich
Ramit Sethi's official website
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