Most of the personal finance gurus that have gained mass popularity will give you sound advice. They all promote saving, avoiding credit card debt, and explain interest rates and taxes. I like to ankle-bite entire sections of Dave Ramsey or Suze Orman’s advice. Rich Dad Poor Dad is more of a charlatan but even that blind squirrel is able to find a nut and say some things of value. I won’t waste time nitpicking them here. Instead, if you are interested in personal finance, I’d push you towards Ramit Sethi.
The easy part of money is the technical details. All the gurus get that right. Online calculators are abundant and free. As I showed, money is complicated because of psychology. Money planning can feel like torture so people put their head in the sand. This is where Sethi’s edge comes in. With a keen understanding of psychology, Sethi frames money decisions in ways which invert the trade-offs so that instead of making you feel deprived, you can’t wait to follow your plan.
Some of his best insights:
- Identify your “invisible scripts”. These are beliefs that are so deeply held in our culture that we don’t even realize they’re beliefs.
- By focusing on what you love you are forced to pinpoint what money means to you. For example, if you want more money to increase some vague sense “security”, it’s worth unpacking this feeling. Security is one of these concepts that will eat you whole. You’ll never have enough. This pull towards some unattainable, undefined goal will affect your risk tolerance and ultimately your well-being. Sethi will help you dissect it. When you forget that money is a tool, not a goal, every decision becomes a monetary one. That would be like living without depth-perception.
- That approach leads to his concept of “money dials“. Introspect then ruthlessly cut spending on things that don’t matter to you. So many things appear to matter until you dig deeper. Not to mix gurus, but Marie Kondo this. For the things that do matter, here’s a new idea — think about you could achieve spending 10x or even 100x on it. Reading about “money dials” feels like emerging from a cave. Imagine implementing it.
- Sethi gives practical advice for automating your finances. Instead of hyper-focusing on budgets, which isn’t behaviorally sustainable, he shows you how to not only think in more flexible buckets but automate the process as well. A huge upgrade to your odds of adherence.
- Stop fighting with your partner over $5 coffees. If that’s something they deeply enjoy respect it. Focus on high impact decisions. He inspired my matrix. You are guilty of “bikeshedding”. Quit it.
If you’re interested, don’t let his book title deter you. It’s legit. You can also start here:
- YouTube interview
- He was recently on Tim Ferriss’ podcast (link with notes). The discussion on prenups is interesting and the money dials are fun to hear.