Lots and lots of practical financial advice from “I Will Teach You To Be Rich” by Ramit Sethu. Having said that, I skipped around 75% of the content of the book, as my main interest was to develop a conscious spending plan, using 4 buckets of spending; similar to YNAB.
Here are some of my favourite quotes and takeaways from the book:
Instead of saying “How much money do I need to make?” Change the question to “What do I want to do with my life, and how can I use the money to do it?” For me that is traveling three times per year, learning to specialize in data analytics, fitness and family.
Spend extravagantly on the things you love, and cut on the things you don’t. See the answer to the life question above.
Ask yourself “Why do you want to be rich?” For me, it is so I can provide for my family.
Conscious spending plan (we all need one). This is made up of 4 buckets separated into percentages; see the table below for suggested percentages VS what my percentages are. Be recommends putting money aside for unexpected spending every month, as it will happen. If you overspend in one area, you will need to take it away from another.
Category | Suggested Percentage | Actual Percentage |
Fixed costs (rent, groceries, internet etc) | 50-60% | 31% |
Investments | 10% | 22% |
Savings (long and short) | 5-10% | 16.5% (long) and 16.5% (short) |
Guilt free spending | 20-35% | 14% |
To decrease spending, focus on the high areas where you are spending, not on the small items.
Save money for a particular goal NOT just to save for the heck of it. For me, that is to save 50K. 10k for a new kitchen for my mum, and 40K to build a house. This serves to motivate you and give you focus. This goal also needs a time frame. So, 50 K USD, in 5 years should do it.
Track your expenses once a week, for around 30 minutes to 1 hour.
For one-off unexpected income, spend 50% of it on something you’ve been saving up for and then save or invest the other 50%.
You might say that because I skipped 75% of the book that is like ordering a pizza and only eating the crust! But hey, at least I got something out of it, a conscious spending plan using four buckets.
Enjoy 🙂