Key Takeaways from ‘I will teach you to be Rich’
Hi everyone – I can’t even apologise enough for being MIA for the past few months. The reason for my pause on the newsletter was work. I was started a role that entailed the use of financial research which meant that all my published personal opinions on the market were taken as the company’s outlook- which limited all the plans I had for the newsletter. Then I got super busy and did a stint in the US.
Last month, I was watching a Netflix show by Ramit Sethi called ‘I Will Teach You to be Rich’ and it basically was a tv show that reiterated the concepts from his 2009 New York time’s bestseller book ‘I will Teach you to be rich’ and these were my key takeaways.
1. Figure out how much you’re spending then direct money where you want to go.
People usually follow other people’s rules for example, ‘you should spend no more than 40% of your income on rent’ or you should spend only 10 % of your income on food but at the end of the day the best way to live your rich life is to decide what matters to you, spend money on it and cut cost mercilessly in other areas.
For example, I value my comfort very much, so I’d rather spend money on a premium flight upgrade or an uber when I am stressed out, than to spend money on designer high heels which I don’t care so much about.
2. Use your credit cards smartly.
The point of owning a credit card is to use it to help yourself. Credit cards aren’t meant to be used for purchases that one can’t afford. In Ramit’s book, he mentions the need for one to pay of their debt immediately it is due to avoid bad debt, and a suggestion I also have is to ensure that your credit card has benefits. Some credit cards give you cash back at specific retailers and points just for using them so be sure to use them to your advantage.
3. Open investment accounts even if you only have a 50$ to start.
One myth that Ramit disproves is the need to have huge amounts of money to invest. He suggests opening investment accounts with whatever money you have, and I agree. Habits are built over time in one’s youth, so it is extremely important for one to build the right habits early. People forget to factor in income growth and positive life changes, when they think about investing, so it is important to view investments from that perspective. What you invest per month this year, will probably increase next year and it is sometimes hard to break away from the view that you need a lot of money to invest, so just start today and ask questions later.
Investing $100 per month is $1200 per year, so start small and let compound interest do the magic.
I did a quick model with a conservative interest rate of 5% which is lower than the S and P 500’s 10% return over the past few decades and the returns are amazing. The more you invest the higher these numbers go, so get started ASAP.
Podcast Recommendation of the week
- I recommend Steven Bartletts episode with Ramit, The Money Expert: 10 ways to make REAL money because I think we all need to hear some of Ramit’s digestible money tips.
‘Money does not make a man powerful, but man makes money powerful’
I hope you enjoyed this week’s post. Till next time, Daisy O