I Will Teach You To Be Rich by Ramit Sethi
It’s either a great name for a personal finance book, or a scam! Lucky for you and me, it’s actually good advice, packed into a six-week program that will kick your financial butt into shape.
Ramit’s no stranger to writing about personal finance for Generation Y (those of us aged 18-30) – his personal finance blog, also named I Will Teach You To Be Rich has been around for years now. It was actually the very first website on personal finance that I read, so you can thank him for inspiring this website, at least in part.
Ramit’s advice is rock solid. Thanks to him, I started paying attention to where all my money was going, instead of (as Ramit puts it) “opening my bills at the end of the money and saying ‘I guess I spent that much.'” I also opened my first high-yield savings account and paid off my credit card debt based on his advice.
In fact, if I add up the money I’ve saved in credit card interest and the money I’ve earned in high-yield savings interest, Ramit has saved me $1,290 over the last two and a half years. Which is small potatoes compared to what he’s managed to save some people, but it big news for me, since I’ve been in college earning less than $5,000/year!
So is there a big difference between reading the IWTYTBR site and the IWTYTBR book? Absolutely. Look, I won’t knock the website – I learned a lot of stuff from Ramit that way. But I learned it over the course of the past two and half years, plus I read a bunch of back articles that were written before I started reading. The book, on the other hand, is a much more condensed, straight-forward plan to jumpstart your financial life.
Let me dig a little deeper into what, exactly, this “Six Weeks to Financial Literacy” entails…
Week 1: How to set up your credit cards and establish a credit history (and why your credit history is important). Ramit points out that people tend to worry about saving money on little thing (like cutting out expensive coffee), but then ignore big things like improving their credit history. Having excellent credit can easily save you hundreds of thousands of dollars over your lifetime. And help you to get kickin’ jobs and apartments as well.
Week 2: How to set up the right bank accounts, including no-fee, interest-earning accounts. Boy, do I love my bank accounts! Seriously, I do – and you don’t hear a lot of people say that. Ramit knows which banks are worth loving, and how to negotiate with your current bank to make them lovable, as well.
Week 3: How to open an account and start investing, even if you’ve only got $50/month to start. I adore the concept of the “Ladder of Personal Finance” that’s introduced in this chapter. It quickly answers the question of what to invest in first: a 401(K), paying off debt, or an IRA? And don’t worry if you don’t know what those things are – Ramit does an awesome job of defining things.
Week 4: How to figure out what you’re spending, and then make your money go where you want it to. I’ll admit it: I’m obsessive. I track every purchase religiously, down to the penny, in a spreadsheet that I made myself! But you don’t necessarily have to be as big of a nerd as I am to get a handle on your finances. And you don’t have to make that dreaded thing called “a budget.” (Even I don’t have one of those!) This is one of my favorite chapters in the book.
Week 5: How to automate your accounts. Once you’ve got the ball rolling, wouldn’t it be nice if the ball kept rolling by itself? Yeah, it would! Automating your accounts is really helpful, because you no longer have to rely on willpower or memory or anything else to save – it just happens.
Week 6: How to invest… and why investing does not mean picking stocks. Common misconception: you need to be lucky to “win” in the stock market, because it’s like gambling. Pssh! Gimme a break. This chapter covers concepts that sound like buzz words (“asset allocation” and “diversification”) but are actually the ticket to slow and steady riches.
Extra Credit: Six weeks of the plan and you still want more? One short chapter offers nerds like me a bit more to chew on, once we’ve tackled everything in the previous six weeks. Portfolio balancing, emergency funds, insurance, saving for children’s college funds… and the importance of giving something back, as well.
Q and A: To close out the book, a series of questions and answers on very particular personal finance situations. Age-old questions include: Pay down student loans, or invest? How to talk to parents and significant others about money? How do I negotiate my salary? How do I save big money when buying a car, or a house? What about other major purchases?
Does it seem like I’m gushing all over this book? That’s pretty much true. Look, the truth is, I’m always on the lookout for good personal finance books for my age group: 18-30 year olds for whom most personal finance books do not apply. Simply put, most books are written for older people who’ve already made bunch of mistakes. I want books for people who want to do things right from the start.
By Age Group
High school: Not sure this is the book for you, honestly. This book is extremely practical: telling people what to do right now, so you might not be able to do most of what’s in the book yet. But, if you’re really future-focused and want to do the best things right out of the gate, you would do well to read this book now, hold onto it, and refer back to it several times over the coming years.
College/Early 20s: This is the best book I have seen for you. Go read it now.
Late 20s and beyond: This is the best book I have seen for you. Go read it now.
The book is I Will Teach You To Be Rich by Ramit Sethi, and I have never found a book I would recommend more.