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I never wanted to be rich.
To be rich brings up a lot of negative associations for me and is one of my money limiting beliefs.
So I admit that the title itself – I Will Teach You To Be Rich – turned me off for a long time.
But through the internet, I am aware of Ramit’s philoshophy of “Spending extravagantly on the things you love and cut costs mercilessly on the things you don’t” and it has always resonated with me.
So finally, I decide to read I Will Teach You To Be Rich.
Specifically I read the second edition, UK version.
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I loved it.
Even though the book is aimed at the youngsters – 20 to 35 year olds.
It’s a 6 week personal finance program – step by step guide on how to use credit cards, set up automation of savings, investments and retirement accounts, setting up a Conscious Spending Plan (no budget here … another of Ramit’s philosophy that resonates a lot with me, haha) and so on.
There is a ton of advice – how to talk to your partner about money; negotiating a raise; how to save for a wedding; should you pay off your student loans or invest; rent or buy a house and so much more.
I also enjoyed references to his Indian heritage as I relate to a lot of it. My Chinese heritage is not dissimilar ie parents wanting good grades, tertiary education a MUST for progressing in life and of course, marriage and kids (big fail here – which my Dad always reminds me every Christmas and Chinese New Year)
So, what lessons did I, a late starter, learn from I Will Teach You To Be Rich?
Lesson 1 - What does your Rich Life look like?
Ramit asks this question early in the book – What does your rich life look like?
I love, love this question!
Because without knowing the answer, it seems pointless to be saving, automating investments and salary sacrificing into retirement accounts.
After all, what is the money for?
It’s easy to think that I am saving for my retirement, that I want to be secure and that saving will give me options later. But options to do what, exactly?
I have been pondering a version of this question for most of the year. And will likely do so for the next 5 years as I transition to retirement at 55.
Questions such as – What do I really want to do once I fully retire? What will be my purpose? Will I still be productive? And useful? How will I use my free time? What will my lifestyle look like? And endless more ..
But Ramit challenges you to be SPECIFIC.
He wants you to have a vision for what to do with your money. To have that vision front and centre will motivate you when you make decisions to pay down debt, save and invest.
If you know what you value and what you don’t, it is much easier to “spend extravagantly on the things you love and cut costs mercilessly on the things you don’t.”
And this is where I found it quite hard. I have never really wanted to dream or ask for specific things because I never want to be disappointed if I don’t get them.
Gosh, that is such flawed thinking, isn’t it?
So what does MY Rich Life look like?
This is my attempt to be more specific about what my rich life looks like. I look forward to expanding on this initial list as I learn not to be so afraid to have specific dreams.
In no particular order, my rich life looks like this.
- Eat well – I can afford to use quality ingredients when cooking at home and be able to indulge in fine dining while on holidays. When I eat out, I always want to be able to afford desserts at the end of the meal. I want to eat what I feel like eating and not be concerned about the prices of the meals. I can eat all the cheese I want – not stopped by cost but by health reasons 🙂
- Travel – I can afford to travel overseas at least once a year and enjoy experiences unique to the destination. I want to slow travel, staying put in a place for weeks or months instead of days and really getting to know the local culture, food and lifestyle.
- Read – I have all the time in the world to read. Additionally, I am not restricted by what my local library has in stock. If I want to read a specific book that my library doesn’t have, I can buy it.
- Continuous learning – I can afford to attend workshops and buy courses, cooking lessons and gardening classes.
- Unfettered time to spend with family and friends here and overseas. If a family member needs my help overseas, I can drop everything and be there for them.
- Wake up whenever I like, without an alarm clock – this would be HEAVENLY for me
- Cook for others, whether that is having friends and family over or volunteering in a soup kitchen. Be adventurous and experiment with new recipes and ingredients
- Visit museums and art galleries, attend plays, musicals and concerts – in my own city and not just while I’m on holidays elsewhere
- Be healthy enough to do all the physical activities I want such as walking and hiking
- Write in some form
- Pursue any project or hobby without time or cost constraints
- Not having to work to support my lifestyle ie I have sufficient passive income or a big enough investment portfolio that I can draw down ie working for money becomes optional
- The ability to do my chores on weekdays instead of cramming everything into the weekends
Lesson 2 - Guilt free spending
Lesson 3 - Decide ahead of time what you'll do with a windfall or a raise
I never really thought about this before.
Any bonuses I received would go to my investment account. Or I’d use it to pay for upcoming expenses. For example, my tax refund was used to pay for my medical out of pocket expenses earlier in the year.
Ramit suggests you should spend some of it as a reward. So that you’ll always look forward to getting a once off unexpected income.
So from now on, if I win the lottery or get an unexpected bonus, 50% will go to my Pearler autoinvest account, 40% into my travel fund and 10% into “Invest in Myself” account.
Any overtime payments go into having a one month buffer for everyday living expenses. Once this is funded, any overtime payments can go to my travel fund.
And any cash dividend under $100 will fund “Invest in Myself” account. Any single cash dividend greater than $100 will be transferred to Pearler. The vast majority of my dividends are automatically reinvested via Dividend Reinvestment Plans so cash dividends are minimal.
If I get a raise, I’ll just increase the contribution to my Pearler autoinvest account. The faster I build up my shares portfolio, the faster I can retire. But I don’t want to do this at the expense of my sanity.
Lesson 4 - Set some spending 'framework'
This one is a bit dangerous for me, being a spender.
Ramit’s example is if he’s thinking of buying a book, he’ll just buy it. Even if he learns one thing from the book, it would have been worth it.
Here are mine – the first revolves around travel.
When travelling, if there’s an expensive experience or activity I want to do or a fine dining restaurant to visit, just do it – I may never return to this place again.
Time is precious – only look for direct flights or one connecting flight if direct flights are not possible.
My second spending framework involves food.
I never ever want invited guests to go home hungry or needing to buy McDonald’s on the way home. So I don’t mind spending a bit more and having more food than absolutely necessary – I love leftovers anyway and nothing is wasted.
I can’t come up with any more spending frameworks at the moment but it has made me think.
Lesson 5 - Live life outside your spreadsheet
Yes, I needed this reminder.
Lately, I have been charting many metrics related to my FIRE journey. I’m blaming this on seeing many pretty charts on Instagram. And on the current lockdown that seemed to drag on forever.
I keep checking my numbers to make sure I’m still on the right track. I’m driving myself nuts.
The truth is I have automated my savings and investments and I am on track.
It is time to live outside my spreadsheet and charts and just trust time to do its thing.
I Will Teach You To Be Rich is essentially a 6 week step by step guide for managing your personal finances, aimed at 20 to 35 year olds. But it is so much more than that.
I am not the book’s target demographic plus I have already automated my savings, investments and bill paying before reading the book.
But even so, I loved it for the ‘higher level’ thinking it’s provoked in me.
To recap, the 5 most valuable lessons for me are:
– Be specific about what my rich life looks like
– Have an account for guilt free spending
– Decide ahead of time what to do with a windfall or a raise
– Set some spending frameworks
– Live life outside the spreadsheet