I Will Teach You To Be Rich // 10 Favorite Takeaways

• Rumiz Sethi's wisdom from "I Will Teach You to Be Rich"
• Importance of spending extravagantly on what you love
• Focus on big wins for better financial outcomes
• Taking action is more crucial than perfection
• Systematizing your finances leads to early success
• Avoid advanced financial tips that distract from basics

Rumiz Sethi is most recently known for hosting Netflix's money show, How to Get Rich, a show where he gives people the tools they need to fix how they think about money and essentially live a rich life.

However, before he became a Netflix star, Ramit is better known for his book I Will Teach You to Be Rich that he wrote over 10 years ago. I've learned a lot from him and his book.

So in the spirit of us all living our rich life, let me share with you 10 of my favorite takeaways and hi, if you're new to China, my name is Teayy from Financial Tortoise, where we learn to grow our wealth slow and steady.

My number one favorite takeaway from I Will Teach You to Be Rich: Spend extravagantly, especially on the things that you love. Spend extravagantly on the things that you love and cut costs mercilessly on the things that you don't.

Ramit spends a lot of time talking about this concept called the rich life that at the end of the day, the reason we want to get good with our finances isn't to have the most optimal financial system or the best returns on our investment. Rather, it is so that we can design the life that we want—the rich life.

For one person, this may be the ability to travel all over the world to exotic places. For Ramit, it's being able to order as many appetizers as he wants whenever he goes out to restaurants.

And for me, it is the ability to get the most premium hair treatment money can buy. We all have different things that we want to spend our money on, but the common theme of a rich life is the ability to spend as much as we want on things that bring us joy.

Of course, counterbalance that with rationalism. Therefore the part about cutting back on everything else that doesn't contribute to that rich life.

Money, if we can be frank, is a very boring topic. Who wants to sit around talking about expense ratios, spending plans, and interest rates? Well, maybe some of you, but for the majority of people, spending extravagantly gets us more excited than cutting coupons.

So if you feel yourself losing steam in your financial journey, remind yourself that the reason you're working so hard is so that you can live your rich life—a life where you can spend extravagantly on the things that you love.

Number two favorite takeaway from I Will Teach You to Be Rich: Focus on big wins. Get the big wins right and you can order as many lattes as you want.

David Bach, the author of Automatic Millionaire, became famous for the term the latte factor. He pointed out that if you can save $5 a day on daily habits, like the latte, this can add up to nearly a million dollars over a 40-year time period.

Therefore, most people, when they first commit to cutting back on spending, spend a lot of their energy on small things—$5 lattes, $450 for gas vs. $465 at the other end of the city, shopping at discount clothing retailers vs. paying full price for t-shirts.

Now rational frugality has a time and a place; however, the issue is when we place overemphasis on these small things because the fact is what will really move the needle are two or three big areas of our lives.

Instead of leasing a brand new vehicle, use local public transportation. Live in a small home with a small mortgage even when the bank says you can borrow more. Negotiate a salary increase at work so your annual pay gets a $5,000 bump.

If you can get two or three of these big ones right, you can order as many lattes as you want. So don't get so blinded by the $5 decisions that you forget to ask the $50,000 question—the five to ten things that get you disproportionate results, including automating your savings and investing, finding a job you love, and negotiating your salary.

Get the big ones right and you can order as many lattes as you want.

Number three favorite takeaway from I Will Teach You to Be Rich: When it comes to money, action trumps intelligence.

The single most important factor to getting rich is getting started, not being the smartest person in the room. Ramit teaches something called the 85% solution. He says he would much rather get it 85% right than know nothing at all.

There are a lot of decisions we have to make when it comes to personal finance. What bank should I hold my savings account in? What apps should I use to track my expenses? What investment firm should I use?

And because there are so many decisions to be made, we postpone and postpone, not being able to pull the trigger. However, accept the fact that you aren't going to get it perfectly right the first time.

You might try out a bank and realize that it doesn't work well with you. You might try a budgeting app and find out it doesn't have the features that you want. However, that is okay. Instead of waiting on the sidelines, you jumped in and started.

You're further ahead because you took action. If you had waited until you had a 100% solution, which will never come, you likely would have never opened a savings account or an investment account.

You won't get it perfect the first time, but that's okay. Once you have an 85% solution, go for it. When it comes to money, it's actually very easy to end up like most other people—you just do nothing.

Number four favorite takeaway from I Will Teach You to Be Rich: If you want to guarantee your victory over money, create your automatic money flow system.

Do you know the difference between very fit people and the rest of the population? Is it a better workout routine, more motivation to eat healthier, or do they just have better genes? Actually, the key difference is that most of them have systematized their way to health.

They built a workout and a healthy food system into their daily routine and because of their system, they rarely actually think about working out—they just follow the plan and get results. In the same way, people who have wealth have systems built around their money.

They're not dependent on their mood to either live frugally or put away money in their 401k. They created a system to save themselves from their worst selves.

Let me share with you a few tips:

• Make sure you have basic money accounts like checking, savings, credit cards, and retirement investment accounts.
• Then, once set up, connect them to each other and set up automatic transfers.
• Set up automatic payments for your credit cards to be paid from your checking account before the due date so you never get charged late fees.
• Also from your checking account, set up the amount and time when you want your money to go to your savings account, retirement account, investment accounts.

The key outcome that you want to have is that you never want to have to think about actively saving, investing, or paying your bills.

Number five favorite takeaway from I Will Teach You to Be Rich: Don't let credit card companies take advantage of you. Instead, take advantage of them by beating them at their own game.

Credit cards get a pretty bad rep in the personal finance space because so many people struggle with credit card debt. Some financial gurus, such as Dave Ramsey, advocate for no credit cards at all.

However, if you have a good personal finance foundation, I feel like credit cards can be a useful tool in your arsenal—of course, that is if you have good money habits, such as spending responsibly and paying them off each month.

Credit cards can help you keep track of your spending, provide warranty protection of your purchases, and even provide free rental car insurance. My personal favorite perks of credit cards are travel rewards and points that allow my family to travel at a fraction of the cost compared to paying out of pocket.

Instead of playing defense by avoiding credit cards altogether, I want you to play offense by using credit cards responsibly and getting as many benefits out of them as possible.

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Real quick, in the spirit of learning new skills such as travel hacking: If you like more personalized support and refining your money knowledge, for a limited time, I'll be opening up my calendar for one-on-one money coaching sessions, a dedicated time where you can receive feedback directly from me.

Or if you just want to learn what credit cards to open up to get started with traveling for free. The money journey can be quite lonely, and sometimes you just want to get some unbiased feedback without being sold anything.

If you think this could be a value add to your financial journey, please go to my website to learn more. I also have a link in the description below.

Number six favorite takeaway from I Will Teach You to Be Rich: When to get a raise at work—take a systematic approach to salary negotiation.

The fact is that there's only so much we can cut from our budget. You can dial in and dial in your expenses as much as possible, but at a certain point, you hit a diminishing point of return because you can't live on $0.

So if you want to save and invest more, the other dial that you can focus on is your earnings dial. But if you aren't looking to change your job overnight or switch careers, then what? Not a problem. One of the most effective ways to boost your income today without changing jobs or careers is to negotiate a higher salary.

But the reality is that most people are really bad at this. There's a subconscious belief that we should not negotiate—it's rude. And what if my boss hates me for it? Let me be frank. I've been on the other side of the table hundreds of times as the boss and as a hiring manager, and I'll tell you—I was actually a bit disappointed when the other party did not counteroffer or negotiate.

Companies are always going to pay you the least amount possible. It is up to you as an employee to negotiate a higher salary to fight for your worth. But many go about it the wrong way.

Most new employees come to the table talking about how much they want to make. But just as you don't really care what your neighbor ate for breakfast, your company doesn't care what you want to make.

So what you want to get good at is always reframing your request in a way that shows how the company will benefit. Remember that getting a raise is not about you. It's about you demonstrating your value to your employer.

Tie the raise to a specific result you can provide to the company. Lay out what your role's primary responsibility is and what value you can provide to the company's bottom line.

You might not get the raise immediately, but when you can continue to tie your performance to the company's bottom line and thus your salary, you are making progress.

Number seven favorite takeaway from I Will Teach You to Be Rich: Despite what the media might make us want to believe, financial experts are clueless.

If you watch any of my other videos, you know I live by this mantra as well. There are many reputable experts out there—teachers, doctors, nuclear engineers, etc. So when it comes to money and investing, we think someone with a title like financial advisor or fund manager is someone we can trust.

They know the lingo, they have the charts, and they even have the right swagger to play the role of a money and investing expert. And you think, just like anything else that we buy, if we pay more, we will get better results, better returns for investments, right?

However, the truth is that investment managers, the ones who can beat the market, are as rare as solar eclipses and shooting stars. They go on and on about how interest rates and oil production and the butterfly flapping its wings in China will affect the stock market.

Real experts deliver results. But study after study has shown that over the long term, that investment manager will almost never beat the market because of expenses, fees, and the impossibility of picking winning stocks.

Many actually do worse than a simple index fund. Don't believe someone because they have a fancy title—financial advisor, portfolio manager, investment savant. No one knows what will happen in the future, and if someone proclaims that they do, stay as far away from them as possible.

Number eight favorite takeaway from I Will Teach You to Be Rich: Real investing, one where you're really making money, is not sexy. It's as boring as watching paint dry.

Who doesn't get drawn into articles and videos from so-called experts who claim things like "the market crashes right around the corner" or "this year's hot stock"? And we think when we consume enough of this content, we're actually getting smart with money.

We can spew out random money facts we heard online, the latest seemingly hot stocks, and unnecessarily complex schemes to make money. But these so-called money and investing activities aren't doing anything to grow our net worth.

In reality, they're likely taking away from growing our money. If we want to grow our net worth, one of the best strategies is to focus on the long term by investing regularly as much money as possible into low-cost broad market index funds. My favorite is the Vanguard Total Stock Market Index Fund, AKA VTSAX.

But any low-cost fund that tracks the S&P 500 or total market will do. These low-cost index funds won't have all the bling bling that comes with other money-making strategies, options trading, crypto, real estate flipping, etc. It's super boring, just like this YouTube channel, but it's effective and gets the job done.

So what's it going to be in your room? Meet its own words: Would you rather be sexy or rich?

Number nine favorite takeaway from I Will Teach You to Be Rich: Be wary of advanced financial tips.

Once you get better with money, have a dialed-in spending plan and an effective investment strategy with a long-term financial plan, it's easy to get bored. There’s no real suspense with an effective financial plan. You're essentially watching your net worth grow incrementally over a very long period of time.

So what can happen to many people is to get caught in this endless search for these so-called advanced tips. People get obsessed about micro-optimizing their bank account interest rates, implementing the perfect backdoor Roth IRA, chasing after the lowest-cost index fund.

"Oh look, this fund has an expense ratio of 0.025% versus 0.03%." But understand that these are all just tiny icing on the cake that, in the long run, will not make much of a difference.

If you have a bank account that works, stick with it. BackDoor Roth IRA is nice, but if you don't even have a budget, what are you trying to accomplish? An index fund with an expense ratio below 0.1%? You're already winning. If you're thinking about switching because of the 0.1% expense ratio, you're literally splitting pennies.

Sometimes the most advanced thing you can do is the basics—consistently.

Number ten favorite takeaway from I Will Teach You to Be Rich: Don’t live in this spreadsheet. Actually live your life outside the spreadsheet.

I've talked to a lot of people that are really good with their finances. They have an excellent career, they know how much they're spending each month, and their investment portfolio is multiple times the size of mine. Yet many of them are still obsessed about money and can't seem to get their heads out of the spreadsheet.

The spreadsheet helped them to get their finances in order which is great, but then they don't know how to live without it. They obsess over their spending, micro-analyzing every expense down to the penny.

They run this and that scenario of their investment portfolio to see what impact a 0.01% expense ratio will have on their overall return. They run six-hour finance meetings every week just to see if they’re on track to their financial goals or not.

Get good with money, but be careful not to live in the spreadsheet so much that you're letting life pass by. You don't want to end up like this person writing on the Financial Independence subreddit, looking back at the past few years of my life and in my bank account: "I would gladly give away a hefty chunk of it and work longer if it meant I could have experienced more of the world and found more passion. I built my savings, but I never built my life."

The purpose of doing well in the money game is to design the life that you want to live. Don’t let the money game be your life.

Thank you for watching, and in the spirit of living the life that you want. If you want to learn about some of life's greatest investments—and I'm not talking about the stock market—please check out my video here. Until next time on the Best.