I Will Teach You To Be Rich is a fantastic book if you want to get to grips with your finances and learn more about to build wealth.
I’ve never been the most financially literate person and have only recently learned how to get my finances in order and make my money work for me.
Reading this book was one of the things that gave me a kick up the backside to take an active interest in my finances.
I had always wanted to invest in the stock market, I just never knew how to do it, or much about the industry. Ramit Sethi‘s guidance gave me a great introduction and reassured me that I would not just be wasting my money.
There are other finance books out there such as Rich Dad Poor Dad, but if you’re looking for an introduction into the financial world, this is the book I recommend.
It will tell you how to set up your finances up so it requires minimal effort, but has maximum efficiency while giving you a basic education on the world of finance.
After reading this book I was much more confident in my ability to manage my money and I’m sure after you’ve read it you will be too!
I Will Teach You To Be Rich summary
Takeaway 1 Take responsibility for your finances
There is only one person who is going to look after your finances and that’s you.
No matter how uncomfortable or boring it may be, the onus to take charge of your finances and manage them better rests solely on your shoulders.
I know this better than anyone. I built up a decent amount of money prior to travelling around Australia, by the time I was living in Spain 3 years later, I had gone through most of that money.
I had no plan for saving money. I was scared to look at my account and see how much money was in there. I was burying my head in the sand hoping the problem would go away.
Dealing with money is scary. It’s terrifying looking to invest in the stock market in the beginning. You’re worried about losing money, not doing what you’re doing.
We might not like to admit, but a lot of us are bad with money. Instead, of shying away from this, we should own up to it and look to become better at managing our finances.
This is easier to do when you’re young as you can take more risks. If you lose money, you have more time to earn more.
The power of compounding interest is why you have to start investing and managing your finances as soon as you can. The sooner you do this, the more money you will have in later life.
Money is often a dirty word and we can feel uncomfortable chasing more of it. But, it’s not hard and there’s nothing wrong with wanting to be comfortable and not live from paycheck to paycheck.
Managing your money is simpler than you think, but the first step is to take responsibility and own the situation.
Takeaway 2 Automate your finances as much as you can
One of the many reasons don’t take care of their finances is because they believe it’s hard work. These were my sentiments when I was younger.
I always put off sorting out my finances as I deemed it too much work and I didn’t really know what I should do.
Should I set up a savings account? Is it better to have a pension? What current account is best for me?
All of these questions ran through my head and led to me putting off doing anything because I was overwhelmed by what I didn’t know.
Turns out you can set a lot of your finances to run on autopilot!
One of the things Ramit recommends you do is to automate as much of your finances as you can. Instead of going into your account every month to move money from your current account to your savings account, set up a monthly payment which takes care of it for you.
You can do the same for your bills and any other money you wish to save. This takes a lot of the stress out of managing your finances and allows to check in from time to time to make sure everything is ticking over rather than actively managing your account every other day.
This will make your life so much easier and once it’s set up, you’ll wonder how you ever managed without it.
Takeaway 3 Spend extravagantly on what you love and cut back on what you don’t
Spending too much money is the downfall of many a person, but it doesn’t have to be that way.
You might think most personal finance books tell you to rein in your spending, but that’s not the case.
Ramit argues that you should spend extravagantly on things you like and reduce your spending on those that you don’t.
This is one of those pieces of advice that seems so obvious, you wonder why you hadn’t thought of it before.
We all worry about spending too much, but that’s often because we spend money on things we don’t like.
Instead, after you’ve allocated your money to savings, bills and investing, whatever money you have left is yours to spend on whatever you want.
Ramit states this should be about 20% of your monthly income and you should spend it guilt-free in the knowledge that the other 80% is taking care of itself.
The trick is to prioritise what you like and spend on that. For me, I love sports, travel and reading. I have no problem spending money on books, as I see them as an investment. I enjoy watching sports, so going to a live football match is worth the money in my eyes.
I also enjoy travelling, so whether it’s travelling in the surrounding area to check out cool places, or going on holiday somewhere, it’s something I enjoy.
Some people will think watching football is a waste of money and that’s fine. Everyone is different and you should spend your free money on whatever you enjoy.
Frugality is often thought of as an ugly word, but it’s misunderstood. You should be frugal on the things you don’t like. I’ve cut back on alcohol a lot recently, as I get little satisfaction out of it anymore and I don’t want to deal with hangovers.
By cutting back your spending on things you don’t like, you’re freeing up money to spend on those that you do. It’s a common-sense approach to managing your money that Ramit sums up below:
“Frugality isn’t about cutting your spending on everything. That approach wouldn’t last two days. Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on— and then cutting costs mercilessly on the things you don’t love.”
I Will Teach You To Be Rich review
This I Will Teach You To Be Rich summary has looked at one of the best financial advice book son the market.
This book has helped me a lot with my finances. Before, I had an inkling of how to manage money but I came away with a much clearer view after reading this book.
The advice isn’t groundbreaking, a lot of it is intutitive. However, because few of us are taught these things in school, this can pass us buy.
One of my favourite parts of the book was in regards to how you should spend your money.
Ramit gave an easy way of looking at it. Save on those things that you don’t like, or are unhealthy and spend freely on those that you enjoy.
For me, this would mean cutting back on alcohol, and saving my money so I can travel.
It’s little insights like this that make I Will Teach You To Be Rich such a great read!
Who should read I Will Teach You To Be Rich?
If you want to get a primer on how to manage your finances, this is the perfect book. It’s written with newbies in mind and will help you a lot.
If you’re more experienced in money matters, it’s still a useful read, but you may already most of the advice given.
That said, you might not and you can’t put a price on good advice!