﻿Do you want to become rich? Instead of saving on $5 lattes, the ability to buy things you
want? Anytime, anywhere? Instead of being stuck in a job you hate, the freedom to pursue your
passions? Instead of worrying about money, the security to live life on your own terms?
Then welcome. You are in the right place. Hi, if you are new to the channel, my name is Tae
from Financial Tortoise - a channel dedicated to creating Personal Finance content for the Sandwich
Generation. In this video, I'll be reviewing one of my favorite personal finance books - "I Will
Teach You To Be Rich" by Ramit Sethi. I know, it's an amazing title. I'll share what I believe to be
5 most important lessons from the book to help you become rich. Lesson #1 - Define What Rich
Means To You When you ask 100 people what rich means to them, I'm sure you'll get 100 different
answers. My 8 year old son would say - the money to buy all the legos at Target My wife would
say - the freedom to enjoy her coffee quietly, without any interruptions My aging parents
would say - the physical health to watch their grandchildren graduate from high school one day
You must decide what rich means to you so that you can prioritize your spending Ramit Sethi says
“Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”
Essentially, it's okay to spend unapologetically on things you love - as long as you cut back
mercilessly, on the thing you don't care about as much. For my aging parents, their health is their
number one priority. They want to live long enough to one day see their grandchildren graduate from
high school. So for them, spending money on gym membership or the healthiest meals is their way to
living a rich life. And in order to do this, they cut costs mercilessly on things they don't value
as much - designer wear clothes, new cars and the biggest item on their list - housing. They somehow
convinced their son and daughter in law to pay for their housing cost! Card - You can learn more
about our multi-generational arrangement here. "NO" is a powerful statement. Especially when it
comes to money. We are making a statement that we don't just follow the Joneses when it comes
to purchasing things. Just because my neighbors bought the newest model SUV doesn't mean I need to
get one too - I say NO. Just because my co-worker is showing off her newest luxury model purse
doesn't mean I need to buy one as well - I say NO. "NO" empowers you. However, it becomes even
more powerful, when that "NO" against the things we don't value, allows us to say "YES" to the
things that we love. Lesson #2 - Overcome Analysis Paralysis We all have a friend or a relative that
seems to always be talking about money. "Let you tell you why you should invest in cryptocurrency"
"Did you see how high the CD interest rates are at the new bank down the street?" "I just got this
new investing app that gives you up to minute stock tips, you should totally get it too" But
when you ask them additional questions regarding what actions they took to improve their finances,
they would say, I'm waiting for the right moment, or I need to do more research.
And this would go on year after year, and you see them still waiting and still researching.
Ramit Sethi teaches something he calls the "85% solution" He says that he would much rather get it
85% right, than do nothing at all There is a lot of information when it comes to personal finance.
What bank should I hold my savings account in? What app should I use to track my expenses?
Where should I hold my investment However, you can wait and wait forever. Accept the fact that
you aren't going to get it perfectly right the first time. You might try out a bank and realize
that it doesn't work well with you. However, that is ok because instead of waiting on the sideline,
you jumped in and started an account. You are further ahead because you took action.
If you had waited until you had a 100% solution - which of course never comes, you likely would
have never opened that savings account or the investment account. Beware of analysis paralysis.
You won't get it perfect the first time, but that is ok. Once you have a 85% solution,
go for it. You'll be much further ahead than if you had waited for the perfect solution, that
will never come. Lesson #3 - Go For Big Wins, Not The $5 Lattes David Bach, the author of "Automatic
Millionaire" became famous for the term "The Latte Factor" He pointed out that if you can save $5 a
day on habits like latte, this can add up to nearly $1 million dollars over a 40 year time
period. Well, Ramit Sethi is also famous for his latte comments. But not for saving on your lattes,
He says - If you love lattes, you should buy as much as you want. Ramit Sethi emphasizes Big Wins
over Small Savings in your finances. Most people focus a lot on small things, when they first start
cutting back on their spending. I need to stop buying these $5 lattes I should try to shop at Old
Navy for clothes instead of Banana Republic I can get gas 5 cents cheaper at the gas station on the
other side of the town However, what will really move the needle are 2 or 3 bigs areas Instead of
leasing a brand new vehicle, testing out the local public transportation Looking at current home
mortgage and refinancing to take advantage of the lower interest rate and thus lowering home payment
And it's the same when it comes to saving and investing. People make similar mistakes Instead of
chasing interest rates or fees, they should focus on savings rate or getting the 401K employer match
Instead of manually trying to put away money each month, automating your money process - we'll cover
more of this in the next lesson Focus on cutting your costs or saving money in a few core areas
rather than a little bit here and there. If you can get 2 or 3 of these big wins rights,
you can buy as many $5 lattes as you want Lesson #4 - Automate Your Money System Do you know the
key difference between very fit people and the rest of the population? Is it a better workout
routine? More motivation to eat healthier? Do they have better genes? The key difference is that most
of them have systemized their way to health. They've built a regular workout and healthy
food into their daily routine. They don't think about working out, but rather do it based on a
scheduled system and preset exercises. They don't think about eating healthy, rather they often have
pre-made meals and eat at pre-established times. In the same way, people who are rich and have
wealth, most often have systemized their money, so they don't have to actively think about saving or
investing. They are not dependent on their day's mood to either live frugally or put away money in
their 401K. They've created systems to save themselves from their worst selves. For Ramit,
this means creating a system that automates our income to various accounts so we stick
to our long-term money plan. Few accounts you will need to setup this system Checking Account
This works like an email inbox where all the money goes first Then it distributes money to
the various accounts like investments and bills Savings Accounts This is a place for short-term
to midterm savings. Think of vacations, gifts, wedding or downpayment for a house Credit Card
Make sure you have good spending habits before you actively start using credit card as a tool But
this is a great tool to accrue cash back or travel miles I use it to pay most of my bills and have
used the travel miles to take my family to places like Hawaii and Korea for a fraction of the cost
Retirement and Investment Accounts If you have a traditional job that offer 401K, you can open one
via your HR department Outside of 401K, you can open up Roth IRA to supplement your retirement
account After you've maxed out all your retirement accounts, open up a brokerage account if you'd
like to invest additional money in the market If you aren't sure what to invest in, I have a video
where I talk about Vanguard and VTSAX you can check out right here Once you have these accounts,
the key to automating your system is to connect them to each other and set up automatic transfers.
From your checking account, set up an amount and time when you want money to go to your Savings,
Retirement and Investment Accounts. Setup automatic payments for your credit cards to
be paid from your checking account before the due date, so you never get charged late fees. The key
outcome here is that you never have to think about actively saving, investing or paying your bills
again. All the savings and spending happens on autopilot based on your preset amounts,
time and triggers. This money system isn't going to give you ripped abs and big biceps,
but you'll definitely have some fat investment accounts. Lesson #5 - Simplify Investing For
many people I've spoken to about money, the common area of personal finance that scare them the most,
is the area of investing. Isn't investing for rich people? I don't know how to pick stocks I don't
understand all these financial terms - stocks, bonds, funds, etc. Ramit Sethi and I share the
belief that investing should be simple and easy to maintain. The fear of investing keeps people from
tapping into the amazing growth of the stock market and therefore, the opportunity to grow
their wealth. Ramit Sethi presents what he calls the pyramid of investing options At the bottom,
you have individual stocks and bonds - you research individual stocks to invest in.
Next up, you have Index Funds and Mutual Funds - you research what index funds or mutual funds
to invest in. And then at the top, you have Lifecycle Funds or also known as
Target Date Funds. The concept is that, as you move up the pyramid, the simpler the investing
process. Both Ramit and I firmly believe that you should stay away from individual stocks and bonds
unless you are a professional investor. So you should either be in the Index Fund or Lifecycle
Fund category. Ramit suggests that if you best want to simplify your investment and not want to
think about things such as diversification and asset allocation, Lifecycle Fund is your way
to go. You just need to regularly put money into the investment using your automatic money system.
These Lifecycle Funds are not only invested in diverse index funds, but also automatically
readjust allocation for you as you get older and your risk profile changes. I personally believe
that, once you better develop your financial literacy, you can invest in index funds and do
the asset allocation yourself. But either way, if you are investing in either of these two methods,
you are doing better than the majority of people out there. If you aren't investing yet,
pick one of these two simple investing options and start investing now. Quick summary Define
what rich life means to you. It's different for everyone and you can decide where you are willing
to spend money on, so you can cut mercilessly on things that you don't care about. Don't get
caught in analysis paralysis - always waiting and researching because the conditions aren't perfect.
If there is a 85% solution, go for it. Focus on big wins, not the $5 lattes. In the long run,
big wins like managing your housing expense or negotiating your salary will move the needle,
not the $5 latte. Automate your money system. Best athletes automate their workouts and so can we
with our finances, so we aren't dependent on our mood of the day to become rich. There are simple
investing options - Lifecycle Funds or Index Funds. Pick one and start investing! The book is
amazing and has many more lessons. Support Ramit and this channel by getting the book from the link
in the description Thank you guys for watching. If you found value from this video, please hit
the like button, leave a comment and subscribe to the channel so that you don't miss out on any
of my other upcoming videos. I firmly believe that being part of the Sandwich Generation doesn't have
to mean financial stress. With careful planning and preparation, we can thrive during this stage
of life. Help me spread the knowledge. Thank you again and I'll see you in my next video.