We all have different goals in life, but most of us probably have one thing in common: we'd love to be the kind of person that's "good with money". You know, that guy or girl that has their s*** together. Ramit Sethi's I Will Teach You To Be Rich may not make you a millionaire, but it will show you how to get your money in order with minimal hassle.
Title image remixed from Roman Psyhchyk (Shutterstock).
Chances are you've heard of Ramit Sethi and his bestselling (and somewhat hyperbolically-titled) book before. It's not a new title by any means, but after picking up the book and giving it a cover-to-cover read myself, I thought it was worth sharing some of its lessons.
Who This Book Is For
If you're already a personal finance nerd, this book probably isn't for you. Instead, it's geared toward regular people who know they need to get their money in order, but don't really know how or where to start.
You can stop after reading it or use it as a stepping stone to becoming a total finance nerd. Essentially, it's Money Management 101. After reading it, you'll probably have your money more together than most of your friends, particularly if you're in your 20s or 30s -- the age group at whom the book is aimed.
What You'll Get
Despite the book's name, it won't make you rich in the traditional sense of the word. Instead, it's filled with simple, practical steps you can take to save more money so you can spend it on the stuff that really matters.
Sethi breaks the book down into 9 chapters, with six "weeks" of topics covering different areas of personal finance. The main topics include:
- Credit cards: How to pick one, use it without going into debt, and optimise your rewards
- Banks: What kind of accounts you'll need, how to choose a bank, and negotiate fees
- Investing: Why you should invest, and how to open an investment account with very little effort
- Budgeting: How to create a "conscious spending plan" for your money, knowing when to skimp and when to splurge
- Automation: How to automate all of the above so you can save money while you sleep
He goes into more detail on some of the topics (like investing) for those who want a deeper look, but Sethi is a big proponent of what he calls "85% solutions": Simple methods that get you 85% of the way with almost no effort. If you want to make the absolute most of your money, you can put in more time, but for the lazy among us, that 85% is a hell of a lot better than nothing.
One Trick You'll Take Away
There are a lot of useful tips in this book. A lot. But out of context, they feel inaccessible. The ladder method is easy to paraphrase, for example, but your eyes will glaze over if you still think of "investing" as something only rich businessmen do.
So instead of sharing a specific tip, I want to share one of the overall themes of Sethi's book: this stuff is not out of your reach. Popular media has taught to think of investing and finance as complicated, expert-only topics, but they aren't. In fact, they're incredibly simple for us average Joes. Sethi explains in his book's introduction:
There's a difference between being sexy and being rich. When I hear people talk about the stocks they bought, sold or shorted last week, I realise that my investment style sounds pretty boring: "Well, I bought a few good funds five years ago and haven't done anything since, except buy more on an automatic schedule." But investment isn't about being sexy -- it's about making money, and when you look at investment literature, buy-and-hold investing wins over the long term, every time. Forget what that money TV station or finance magazine says about the stock-of-the-month. Do some analysis, make your decision, and then reevaluate your investment every six months or so. It's not as sexy as those guys in red coats shouting and waving their hands on TV, but as an individual investor, you'll get far greater returns.
Once you realise how simple this stuff is to implement, the rest of the tips will actually seem useful, and not out of reach.
If you're still on the fence, check out the freely available excerpts on Sethi's blog. A good portion of the book is freely available, and you should get a good idea of what you'll learn with the first chapter.
This book is solid. Like I said at the beginning, it's a great basic intro to personal finance for those who don't know where to start. The chapters are well organised, and the end of each chapter includes a set of "action steps" based on what you just learned, so you can easily turn it into a to-do list and get right to work. Even allowing for the US-specific nature of some of the examples, it's very useful.
Sethi explains everything very clearly, and doesn't go into too much detail where it isn't needed. This makes it a fairly quick read, which is a good thing: it's super easy to get through in a couple days and get right to the important stuff. He's even put some of the deeper details in their own chapters and tells you what to skip if you only want the lazy method, ensuring that no one gets bored and gives up halfway through.
However, the book isn't perfect. Anyone who's read Sethi's blog knows that he has a pretty distinct writing style, and it definitely isn't for everyone. It's very blunt, brash, and in your face, and at times can feel a little infomercial-y. Heck, even the title of the book is kind of a turn-off. This can distract a bit from the book's otherwise great information. It's hard to argue with the book's success, and Sethi's communication style is clearly very effective with some people. But if you're like me, try to set aside your issues with his style -- it's well worth it if you do.
There are also some annoying "callout" boxes within the book's chapters that interrupt the flow of the text. Usually they contain useful stories or information, but it's really frustrating when they just stop what you're reading in the middle for something completely different. Again, it's not worth ignoring the book entirely, but it does hamper clarity from time to time. I usually opted to skip them and come back after I was finished with the current section.
Lastly, some personal finance geeks will claim that Sethi's book is overly basic. I don't consider this a bad thing, though -- in fact, it's one of the book's biggest strengths. Let's remember who this book is for: regular people, who would never make it through a traditional, more detailed finance book. I Will Teach You To Be Rich includes almost the perfect amount of detail on every subject for those getting started. If you're looking for something more advanced, there are a lot of other books out there to read after you've covered these basics.
I don't want the above three paragraphs to deter anyone, though. This book has good advice, is well-organised, and keeps you interested even if you aren't "into" finance. I only mention the above shortcomings as a warning. It's 100% worth the read, despite a few minor annoyances that you'll just have to get past.