How To Create A Rich Life

The strength of Ramit Sethi’s book can be gauged from the fact that Lewis Howes used it to get out of debt. Although he had cash, but the book helped him to get structured about his finances.

The result is that the stress goes away and a new beautiful problem comes on how to grow more money or manage it.

Money As A Tool

When you see money as a tool, you open up to the possibility that it can change your life.

If you want to buy your parents a fancy vacation, you can. Or you want to buy that jacket, you can. You start to realise it’s not holding you up. Instead, it’s amplifying your life.

High Earners Problem

Once you take the advice and implement it and if you are out of debt and making a decent, growing money then you have a new problem. What should you do with all the money?

And it isn’t easy to talk about it because most of the advice doesn’t apply to you. Also, it seems like you are showing off by stating this problem.

Being Curious

If you see high earners spending thousands of dollars on business class, it is easy to dismiss it thinking they are stupid for wasting the money.

Instead, try to be curious – she is earning a lot of money, has a successful business. So what does she knows that you don’t? When you shift this perspective, you learn a lot. Maybe you don’t agree with their reasons, but now you know why they do such spendings.

Money Dial

You have a money dial like Lewis and Ramit. These are areas of your life where you spend money on extravagantly.

For example, for Lewis, his money dial is relationship, so he picks up the tab on food every time. For Ramit, it is a convenience, so he doesn’t mind spending time making sure everything is taken care of without his presence.

Once you identify your money dial, that’s an opportunity to cut money on other money dials where you don’t care. And put most of the money in money dial you care the most about. For example, if travel is your money dial where you find the most joy, tune it up. Go to vacation more times,  lead a team of travelers – the opportunity is endless.

What Do High Earners Do

If you are earning a lot, then you will max out on all the tax break investment opportunities. Next, you need to buy non-tax break investment fund for the long term.

The market may go up or down – doesn’t matter, you need to keep investing because, in the long term, the market gives a healthy return. And chances are you will start earning more money from your investment than from your income.

At this point, you can have fun with 10 percent of your money. So if you want to invest in someone’s bar or cryptocurrency then do that. If you lose that’s nothing but don’t go all-in.

Half Million Dollar

If you have half a million dollar or more lying around every year and you have done everything, then what’s next.

Below are some things which you must have covered, if not then do them:

  • Maxed out all tax break investment
  • Save for your parent’s old age
  • Arrangement for your wedding
  • A plan for kids education

Things which are bound to happen like buying a house and other things which are important to you

Once you have done all of this, then you can choose to live a better life. You have won the basic game; now you get to benefit from it.

The Handshake Effect

Ramit rents on purpose for the past ten years. When someone comes to his house, they ask if he owns the place while doing handshake.

And once he says he rents it, then they get all confused. The thing is they are looking for approval of buying the house is the right decision from a stranger; the propaganda in buying the house is strong.

All you have to do is run the numbers and then make a conscious decision. If you find value in buying then go for it, else rent it. But make no mistake it’s no investment better than the stock market.

Of course, if you are a real estate agent who plays on the bigger ground, then that’s a different game. Else take the matter in your hands and take a decision.

Ramit’s Spreadsheet

When Ramit started he did everything by himself, and all of the things are in the book – what to do when you have 5000 dollars in your bank account.

But when you get more sophisticated, you don’t do things better but change your perspective. Ramit hires a bookkeeper, and now he has his CFO. Also, he did this because his money dial is convenience. So you need to revamp the things once you climb high on money ladder.

How To Talk About Money

If you are high earner, then hang out with other high earners. Often you can share your spendings and value at that level. This information won’t be available in other formats.

If you are embarrassed about talking money because there is value and worth attached in society, then do a book reading session. And then discuss the book, and suddenly it is an experiment. Now you can explore and learn new things.

Tips For Low Earners

If you are not a high earner and you have some money in your bank account then you need to systematically put money in below things till you can achieve all o them:

  • Your companies matching pension account
  • Clear off debt and have a date when your debt will be over, be aware of it
  • Put more money in a pension account, max it out
  • Have emergencies fund
  • Invest in compounding fund

If you don’t have money in your bank account, then you don’t need to cut your current friends.

Instead, you need to allow new people to come in your life. This isn’t a Disney’s movie and no ones coming to save you.

Get out and find those people, do the work, and climb up the ladder. You deserve this, and you have to do it yourself.