The lowdown: You may want to run to your nearest bank office and change your savings plan after reading this I Will Teach You To Be Rich summary based on Ramit Sethi’s book.
Let’s be honest, we all spend too much money on things we don’t actually need, like that dress or suit in the window of H&M we swear it was yelling to be bought.
The thing is, you can’t do without having a backup plan, otherwise, your bank account will always be in red. I Will Teach You To Be Rich does exactly that. There is a way for you to have those guilt-free pleasures and still have a retirement plan all at once. Whether it’s an investment plan or well manage of your credit cards, simple things that we often took for granted drifting off by the media or a poor education system about financials.
The truth is if we want to become economically independent, we must do something ourselves. It’s time for us to become responsible for our future and start ignoring those signs that say “Huge Deal at $99,99”
There are three key lessons you should focus on in I Will Teach You To Be Rich:
- Credits are always good if you use them well
- Choose wisely when it comes to bank accounts and investment plans
- Be aware of how much you spend, how you spend it and what can you do to improve your savings.
Lesson One: Credits are always good if you use them well.
Credits let you buy things when you don’t have the actual money to do it. Understanding how to use it properly is a big issue here.
There’re two aspects you need to know if you’re going to be successful in this. First, you need to have a good credit activity, which means you can’t spend all the limit of your credit card in one wild night in Las Vegas. And two, learning how to manage well your credit will allow you to have a good credit score which allows you to earn points and be “attractive” to lenders that give you better loans and save you a hell of a nightmare with interests.
The key lays in reducing your expenses and be punctual in your payments. You can also ask your credit card company to send you feeds and services charges and reduce your annual percentage rate.
Lesson Two: Choose wisely when it comes to bank accounts and investment plans.
If you want to be an investment guru, you need to learn which bank offers you the best interest rates. According to the author, online banks do exactly that. So, you would only need next is a checking account and a savings account. And you may ask, why do I need that many accounts? Easy, in your checking account you will put the money you need to invest, where you can make frequent withdrawals, and in your savings account just put the money for goals, like that trip to Europe or in my case, Disneyland. What most experts recommend is to have your checking account in your usual bank office and your savings account in an online bank, because of, well, great interest rates obviously.
Once you understand this, it’s time to start a good investment. For example, you can open a 401(k) retirement fund, on which you authorize your employer to put a portion of your paycheck and, just like that you can sit and relax with a good whiskey on the rocks and watch your money grow — a piece of a cake. Or you can also open a Roth IRA, that uses your own money to invest and not your employer’s. Risky but you can invest in whatever you want, and it’s strongly advised to have both plans.
Lesson Three: Be aware of how much you spend, how you spend it and what can you do to improve your savings.
This one speaks for itself don’t you think? Next time you have the urge to spend all your paycheck at once think twice. You have to adopt a spending plan that means buying things you actually need, leave a small part for investments, another part for savings and another one for those small pleasures you can’t resist. Then, decide how much you want to spend on those four areas.
All you need to do at the end is to arrange automatic payments and transfers, such as pay your credit cards, transfer money to your investments and keep on track what you spend in case you exceed it.
My personal takeaway
I found this book really entertaining to read because it simplifies subjects like investment, retirement plans and savings to a level where young adults like you and me can understand and use those tips into our life. Personally, I think I’m going to start controlling how I spend my money and to save some to buy things I really want and need.
Put into action
Learn how to properly manage your money, start investments that will get you more incomes in the future, be patient and smart about those investments and always have a backup plan when it comes to unexpected expenses.
You should consider this book if…
If you want to be responsible for how you spend your money and what can you do to improve your incomes in the future, then you should put this book in your next reading list.
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