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I Will Teach You To Be Rich Paperback – March 23, 2009
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“Don’t let the breezy, irreverent style of this book fool you. It contains serious advice on personal-finance decisions from budgeting and savings to spending and investing.” —Burton G. Malkiel, author of A Random Walk Down Wall Street
“Ramit Sethi is a rising star in the world of personal finance writing . . . one singularly attuned to the sensibilities of his generation . . . His style is part frat boy and part Silicon Valley geek, with a little bit of San Francisco hipster thrown in.”—San Francisco Chronicle
“The easiest way to get rich is to inherit. This is the second best way—knowledge and some discipline. If you’re bold enough to do the right thing, Ramit will show you how. Highly recommended.” —Seth Godin
“Particularly appealing to the younger generation with its easy-to-read, no-holds-barred language.”—Business Insider
“Ramit’s like the guy you wish you knew in college who would sit you down over a beer and fill you in on what you really need to know about money—no sales pitch, just good advice.” —Christopher Stevenson, Credit Union Executives Society
“Smart, bold, and practical. I Will Teach You to Be Rich is packed with tips that actually work. This is a great guide to money management for twentysomethings—and everybody else.” —J. D. Roth, Editor, GetRichSlowly.org
“. . . one of our favorite personal finance sites.” —Lifehacker
From the Back Cover
As irreverent and entertaining as he is practical and wise, Sethi explains how to beat banks and credit cards at the fee game, automate your cash flow, negotiate for a raise, manage student loans, and enjoy your lattes and Manolo Blahniks by practicing conscious spending. It's how to master your money with the least amount of effort―and then get on with your life.
- Publisher : Workman Publishing; 1st edition (March 23, 2009)
- Language : English
- Paperback : 272 pages
- ISBN-10 : 0761147489
- ISBN-13 : 978-0761147480
- Item Weight : 13.3 ounces
- Dimensions : 6 x 0.62 x 9 inches
- Customer Reviews:
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Top reviews from the United States
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This is definitely the best personal finance book I've read so far. It's a logical, step-by-step, practical handbook for financial success, specially written for people in their 20's. Sethi gives advice on “automatically enabling yourself to save, invest, and spend - enjoying it, not feeling guilty...because you’re spending only what you have.” His main point: automate your finances so you effortlessly save and invest, leaving you money to spend on things you love without feeling guilty. Automatic saving and investing helps overcome psychological barriers and laziness.
In addition to his emphasis on automation, I agreed with Sethi’s recommendation for long-term, passive, buy-and-hold investing instead of speculative, market-timing investing. I also liked Sethi’s 85 Percent Solution, which states that it's better to act and get it 85% right than to do 0%; sometimes good enough is good enough, and it’s always better than doing nothing.
Another good message is "spend extravagantly on the things you love, and cut costs mercilessly on the things you don't." That's valuable because everyone defines being "rich" differently, and it's not all about money. Money is just the tool we use to acquire the material possessions and experiences we want. That's the difference between being cheap and being frugal; being cheap is trying to cut spending on everything, and being frugal is cutting costs on the things you don't care about so that you can splurge on the things you do.
I liked the concept of making a Conscious Spending Plan instead of a budget. Almost no one actually makes a budget, and even fewer follow it. Instead, consciously decide how you'll spend your money. I especially like this idea of guilt-free spending, because too often the recommendation is to limit all spending. But people in their 20s want to live it up, not sit at home and pinch every penny! The Conscious Spending Plan lets you spend a certain percentage of your money on whatever you want, without feeling guilty, since you’re paying yourself and your bills first.
The book is written in the form of a 6-week action plan. Each chapter describes the tasks and reasoning behind them, and ends with a checklist of steps to take. Here are the weeks:
Week 1: Credit Cards. Check your credit, pick a good credit card, set up automatic payments, pay off debt.
Week 2: Bank Accounts. Open or assess your checking account, open and fund a high-interest savings account.
Week 3: Investing Accounts. Open a 401(k), make a plan to pay off debt, open a Roth IRA and set up automatic payment.
Week 4: Conscious Spending. Create a Conscious Spending Plan, track spending, and cut in the right places.
Week 5: Automatic Money Flows. List and link accounts, then set up an Automatic Money Flow to automatically fund the 4 categories of your Conscious Spending Plan.
Week 6: Investing Choices. Figure out your investing style, research investments, and buy funds.
The book gives a fairly in-depth explanation of the concepts and fundamentals of personal finance, but also contains plenty of examples of actual bank accounts and funds. There are many references to the 2008 recession and other events, so those parts of the book didn't age well.
Personal Finance Ladder
Rung 1: invest enough in 401(k) to get company match
Rung 2: pay off debt
Rung 3: invest as much as possible in Roth IRA
Rung 4: put more into 401(k), as much as possible
Rung 5: invest in non-retirement (taxable) account
Conscious Spending Plan recommended percentages (save and invest more if possible)
50-60% on fixed costs
10% on long-term investments
5-10% on savings goals
20-35% on guilt-free spending
Use target-date funds or index funds.
Invest aggressively in retirement accounts, since retirement is so distant.
Recommended financial institutions: Vanguard, T. Rowe, Schwab
Rebalance every 12-18 months by investing more in underperforming assets (not selling outperforming assets).
Hold tax-inefficient (income-generating) assets like bonds in tax-advantaged accounts.
Hold tax-efficient assets like index funds in taxable accounts.
Choose funds based on:
1. Expense ratio
2. Asset allocation
3. 10-15 year return
Model your portfolio after David Swenson’s Yale Endowment portfolio:
30% US stocks
15% developed international stocks
5% emerging market stocks
15% government bonds
Buying a house
Houses are a poor investment compared to stocks; they’ve historically returned 0% after inflation. Before buying a house, determine the total monthly payment including mortgage, taxes, insurance, and maintenance. It should be less than 30% of your gross monthly income.
The total house price should be less than 3 times your annual gross income.
Buy a house only if you can live in it for 10 years. Make a 20% down payment and get a 30 year fixed rate mortgage.
To be fair, I probably should have listened to this one, but I did many of the other things Sethi points out.
Use savings for goals less than 5 years away.
Set your accounts for automatic deferrals, transfers, and payments to automatically direct money into retirement accounts, savings, bills, and a spending allowance.
Negotiate a higher total compensation (salary plus benefits) by researching compensation for comparable jobs and proving the value you bring to the company.
One thing I did was that I continuously talked to my friends about the book and we sat down together and completed a lot of the actions in sequence. By having those around me also aligned it made easier for me not to be tempted to go out. For example, we decided only to go out to eat for lunch once a week to stick to our plan.
Sethi also gives many tools and recommendations throughout the book to help you accomplish your goals.
When I started reading the techniques I got disappointed because I am not a USA citizen..
All the technicies he used to make you rich is suitable for people who are living and working in the USA, or have similar banking and retirement system as the USA.
I believe if the writer can use an approach where it can benefit the people who use the international financial and retirement systems (such as Dave Ramsey when he wrote the Total Money Takeover book) it will be a great book because Ramit method in explaining how to use the banking and retirement facilities is acceptable by most people who disagree with the methods used by Dave Ramsey for instant.
I wish to see another version of this book by Ramit where I will enjoy and benefit of reading it next time.
I followed the simple steps and I am a MILLION Gazillionaire...
Actually.. I save a bunch of money by dropping my bad bank and I saved a bunch on ATM fees.
I may not be rich yet, but I am a lot smarter than the people I work with.
Actually, I am smarter than most people I know.
I am also much prettier and dress better.
I bought this book a year ago and at the time I thought it was very valuable. However, like someone else said in the comments, it is pretty basic. It doesn’t teach you in depth, it gives you some investment options like 401K, it talks about stocks a little bit. It is somewhat educational, I learned from it but after reading Money Master the Game (Tonny Robbins) I feel like I learned more about economy is that one book than ever in my life. So my suggestion for you who is trying to learn how to invest, I would suggest starting with Money Master the Game. There is a lot there that you won’t see in this book. I hope this will be helpful.
If you’re a Type A person who hates generalized advice (quit your latte-a-day habit etc.), you will adore Ramit’s specific, step-by-step method to automating your finances. I read most of the book in one day, bookmarked the steps I needed to take, and knocked them all out in another two days.
Since implementing Ramit’s plan, I’ve saved/invested $200k and I’m right on track for my goals of purchasing a home, starting a family, and retiring at a comfortable age. I’ve bought copies of this book for every one of my close friends and they’ve loved it too.
Just buy it already!!! Follow his advice and you’ll be set for life! :)
Top reviews from other countries
There is only one major caveat. When I looked for the title of the book, the top result was for the 2010 edition, which is the edition I bought and read. Subsequently, Amazon kindly recommended the 2020 edition to me. I assume that quite a few things have changed in the last 10 years and I would have liked to read the latest edition. So, if you consider buying the book, you might want to check which edition you are ordering.
Some of the information is outdated - the book was released in 2010, I did pass over some sections and it may be what you know already however- if you need a little kick, structure and refocus I would recommend this book. Look forward to reading the rest!