I Will Teach You to Be Rich, Second Edition: No Guilt. No Excuses. No B.S. Just a 6-Week Program That Works. by Sethi Ramit

I Will Teach You to Be Rich, Second Edition: No Guilt. No Excuses. No B.S. Just a 6-Week Program That Works. by Sethi Ramit

Author:Sethi, Ramit [Sethi, Ramit]
Language: eng
Format: azw3, epub
Publisher: Workman Publishing Company
Published: 2019-05-13T16:00:00+00:00

This is as much about where to invest your time as it is about where to put your money. Sure, setting up an Automatic Money Flow will take you a few hours. It would be easier to do nothing—but that would mean you’d have to manage your money constantly for the rest of your life. By spending a few hours up front, you’ll end up saving huge amounts of time over the long term. Your money flow will be automatic, and each dollar that comes in will be routed to the right account in your Conscious Spending Plan from Chapter 4 without you really having to think about it.

The payoff for these few hours is huge, because this automatic system will let you focus on the fun parts of life. No more worrying about whether you paid that bill or if you’re going to be overdrawn again. You’ll start to see money as a tool for getting what you want without the manual drudgery of tracking categories and transferring money from one account to another each week.

I read the book at 23, when I had $17,000 in savings. I set up a robust system of automated savings for long-term goals (retirement, emergency savings) and short- to medium-term goals (car repairs, vacations, even Christmas gifts); ten years later, I have $170,000 saved. I’ve also used the book to get the best deal when buying a car and negotiate cell phone bills, saving hundreds of dollars.

—Lisa Lunsford, 33

The Power of Defaults

We know people are incredibly lazy and will do whatever requires no work—often at their own financial expense. Think about how many people lose thousands of dollars per year by not taking advantage of 401(k) matches alone. How much more money do we lose from inaction overall?

The key to taking action is, quite simply, making your decisions automatic. You think you’ll actually do the work each week? No, you won’t. You don’t care. Sure, you might care right now, but in two weeks it’ll be back to Twitter and Netflix. Nobody really cares about managing their money. Hell, I don’t even care. Get away from me, endless mailings from banks and investment accounts.

Your money management must happen by default. We’ve already talked about this in reference to 401(k)s, but now we’re going to apply it to every dollar you make. You’ll be making your contributions to your savings and investing accounts grow passively—with no action required. In fact, by setting up an automatic payment plan, you actually make it difficult to stop the contributions to your retirement account! Not because you can’t—you can adjust your system anytime—but because you’re lazy and you won’t. Hey, I’m lazy too. You just have to know how to take advantage of it. Once it’s set up, this system is so hands-off that if you got eaten alive by a Komodo dragon, your money system would continue transferring money from account to account by default, a ghostlike reminder of your financial prescience. Haunting, but cool.

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