Our planet’s youngest generation of people face hardships unique to the era in which they live. With more debt and less income than generations before them, millennials have grown up in a financially stagnant world. Now, they’re at an age where they must try to forge a path to financial independence, despite the grueling challenges that come with it.
This journey is no small feat, but Ramit Sethi’s book I Will Teach You to Be Rich offers guidance for anyone looking to achieve financial independence, no matter where they’re starting from. Sethi believes in an “85% solutions” approach to finances. Simply getting started, even if you only get 85% of things right, is better than doing nothing at all.
The Fabulous Daily Motivator app will assist you during this journey using baby steps and scientific methods.
Launched in 2014, the app was developed on principals of behavioral economics at Duke University’s Center for Advanced Hindsight, overseen by behavior change scientist and New York Times best-selling author Dan Ariely. It’s presently used by millions of people, with over 175,000 enthusiastic reviews on Apple Store and Google Play.
In fewer than 15 minutes and using the science of behavior change, Fabulous starts small and help you build lasting habits to achieve your goals.
The first three weeks involve building a financial foundation. This is done through savvy credit card usage, setting up a no-fee, high-interest savings account for short-term goals, and opening investment accounts, even if you only have $50 to start with. Sethi especially stresses the importance of paying off your credit card balance every month. Credit cards have extremely high interest rates. Not paying the debt as quickly as it’s accrued can have devastating consequences on your ledger in the future.
The next two weeks talk about tracking, prioritizing, and automating your monthly spending. This ensures you have enough to get by while still contributing to the investments and savings you started earlier. Sethi scorns the traditional budget. Instead, he suggests organizing monthly income by percentages. Superfunds, investments, and savings each get 5% of your income. The rest goes to fixed costs (rent, utilities, etc.) and your credit card payments. Sethi also recommends linking your credit card to your checking account to allow for easy payments (and to keep you mindful of your balance).
In the sixth week, Sethi discusses what he calls “the myth of financial expertise.” Many everyday people don’t invest because they don’t believe they have the knowledge to do so, nor can they afford to enlist the help of an expert. However, these so-called experts often have little more insight on the stock market’s ups and downs as anyone else! They’re also able to hide their failures and show off only their successes. This survivorship bias makes them appear more reliable than they really are. Sethi bypasses ” expert advice” by walking you through the investment process himself, showing that investing isn’t “just for rich people.”
Finally, Sethi asks readers to consider two questions: Why do you want to be rich, and what does being rich mean to you? The answers will be different for everyone but having a solid idea of your values and goals will help keep you on track over time.
While getting rich in six weeks is unrealistic at best, Ramit Sethi offers sound advice to help anyone revamp their finances and set a solid foundation that will, in time, lead to financial independence and even outright wealth.