I will teach you to be rich, second edition no guilt no excuses no BS just a 6 week program that works

AdditionalPraiseforRamitSethiandI
WillTeachYoutoBeRich
“RamitSethiisarisingstarintheworldofpersonalfinance
writing...onesingularlyattunedtothesensibilitiesofhis
generation....HisstyleispartfratboyandpartSiliconValley
geek,withalittlebitofSanFranciscohipsterthrownin.”
—SANFRANCISCOCHRONICLE

“...oneofourfavoritepersonalfinancesites.”
—LIFEHACKER

“Theeasiestwaytogetrichistoinherit.Thisisthesecondbest
way—knowledgeandsomediscipline.Ifyou’reboldenoughtodo
therightthing,Ramitwillshowyouhow.Highlyrecommended.”
—SETHGODIN,AUTHOROFTHISISMARKETING

“Thecommonperceptionaboutpersonalfinancebooksisthatthe
adviceisloadedwithtechnicaltermsandjargon.Onthisfront,I
WillTeachYoutoBeRichcomesasacompletesurprise.Itis
writteninanextremelybreezystyle,butitdoesn’tmeanthatit
containsfrivolousadvice.Onthecontrary,itpacksuseful
informationforbeginnersonhowtheycanmanagetheirmoney.”
—ECONOMICTIMES

“...particularlyappealingtotheyoungergenerationwithitseasyto-read,no-holds-barredlanguage.”
—BUSINESSINSIDER


RealReaderResults

Ramit’steachingthatfrugalityisn’tabout“spendingnothing”butratherabout
spendingextravagantlyonthethingswelovechangedouroutlookonlife.My
wifeandIretiredfromfull-timeworkatages33and35,respectively,and
adventurearoundthecountryinanAirstreamRV.Wewakeupeverymorning
excitedandenergeticbecausewecontroleveryminuteofourday.”
—STEVEADCOCK

“WhenIwas30,Ihadno401kandastudentloanof$16,000.NowI’m35,I
havenostudent-loandebt,ahealthy401k,anIRA,anadditionalinvestment
account,andonesecuredcreditcardwhichIusetopaymymonthlybills.I
usedIWTtodoallofthisandnowspendmostofmymoneyonwhatIlove,
whichismykids,food,andebooks.”
—ARIELSTEWART

“Sinceimplementingafullyautomatedsystemin2011,mynetworthwent
fromzerotocloseto$450k.Ineverhavetoworryaboutmoney—Ihave
enoughforbills,anyindulgence,andmaxingoutretirementaccounts(Roth
and401k).”
—ROSSFLETCHER


“Ireadyourbookin2010whenIwasa25-year-oldexecutiveassistantata
tinybookpublishermaking$28,000.I’mnowleadingafullteamofwritersin
SanFranciscoandmaking$155,000.”
—CLAIREPEACOCK

“Afterreadingyourbook,Inegotiateda$175monthlyreductioninapartment
rentbyofferingalong-termextendedleaseandputtingtheapartmentasa
preferredvendor.Landlordagreedimmediately,andthatsavedmeover
$3,500!”

—SAMEERDESAI

“I’vegotover$100,000growingforretirement,$8,000inthepersonal
investmentaccount,andhavenextyear’sRothcontributionalreadysetaside
inaninterest-bearingaccount.”
—DAVIDCHAMBERS

“IusedtheadvicefromIWTtosetupmySchwabIRA,apersonalinvestment
account,andacheckingaccountpriortostartingmyfirstjobwhenIwas24.


I’mnow30andhaveover$300ksavedbetweenmypersonalinvestment
account,401k,andIRA.”
—HILARYBUUCK

“Atfirstyourchapterondebtfreakedmeout—youcan’tjustgetoutofdebt
sofast!ThenIrealizedmakingmoremoneywasnotscaryordaunting,but
verydoable.Iwentfrommakingaround$4,000amonthto$8,000amonth
frommycompany.Ihad4,500indebtthatisnowdownto$900(soonit’llbe
at$0).”
—REENABHANSALI

“I’veusedtheIWTprinciplestopaydown$40,000indebtinsidetwoyears
bynegotiatingaraiseandtakingonmyfirstside-gigprojectswiththe“1Kon
theSide”project.Andwiththeautomationprinciples,andpayingourselves
first,mywifeandIbuiltcloseto$200,000insavingsinthelasttwoyears.”
—SEANWILKINS

“ItookthisbookonaCaribbeancruiseandcouldn’tputitdown.Itledmeto
gettinga$20,000salaryincreaseinmydayjobandstartingasidebusinessas

acareercoach,earningthousandseachmonth.Ithelpedmenegotiatedown
billsandfees,increasemycreditlimit,growahealthyretirementfundand
savings,andfundamentallychangemymindsetaboutearningmoney.”
—MARYGRACEGARDNER


“Iwentfromhavingnothinginmyinvestmentaccountstohavingover
$55,000todate.”
—ALEXCRAIG

“Ididn’thaveanycreditcarddebtsoIwasabletoimplementthewholebook
inaboutthreeweeks.Afterthat,Ikindofforgotaboutit.EightyearslaterI
wasworthcloseto$200,000withnodebtasaretailemployee.”
—DANIELLEEREIFENBERGER

“Ichangedmystudentloansfrom20-yearloansto10-yearloans.Ihadno
ideathedifference,anditendedupsavingmeover$10k....Justbypaying
anextra$50amonth.”
—LYLANUTT

“WhenIwas25,Ihad$8,500ofcreditcarddebt,and$3,000ofotherdebt.
IWTgavemethemanageablestepstogetoutofmyhole,betterusemycredit
cards,notlivechecktocheck,payoffwhatIowed,andstartsaving.At28,I
have$50,000insavings,amdebt-free,haveautomatedmyfinances,andIam
goingtobuyahousethisyear.”


—ALLISONREYNOLDS

“InfouryearsafterIreadIWT,I’vesaved$40,000usingdollarcost

averagingtocontributetomy$20,000indextrackingfund.Ireceivedone
promotionandfourraises,increasingmyearningpotentialby70percent:)”
—BEVANHIRST

“Withoutthebook,Iwouldn’thavestartedmyretirementaccount.Itshowed
mewhattoopenandhowtousesystemstoautomaticallysavemymoneyfor
futurepurchases.SofarIhave$40,000+inretirementbymaxingoutmy
Rotheveryyear.”
—JAMESMONROEŜTEVKO

“Iwas25whenIreadthebook.Ihadacrappyjob,verylittlesavings,and
evenlessofacluewhattodowithmymoney.IimplementedIWTsystems
andIgotanewjob(witha20percentraise)atacompanywhereI’ve
flourishedforthepastfiveyears.Ihave$100,000inmyretirementaccounts
andsixmonths’salaryinanemergencyaccount,alongwithothersavingsfor
variousgoals.”
—SHEILAMASTERSON


“Before,Ifeltguiltybecauseat37Ishouldhavehadmystufftogether.Now
everythingiscompletelyautomated.Ifeelmoreconfidentandcanspend
guilt-freewiththemoneyleftover.Sincereadingyourbook,Imaxedoutmy
RothIRA,madea$7,000emergencysavingsaccount,haveagrowing
investmentaccount,andhavemultipleaccountsforspecialpurchases.”
—QUINNZEDA


IWILL
TEACH
YOUTO

BERICH
NoGuilt.NoExcuses.NoBS.
Justa6-WeekProgramThatWorks

RAMITSETHI
SECONDEDITION
WORKMANPUBLISHING
NEWYORK


Tomywife,Cassandra.
You’rethebestpartofeveryday.


Contents
AnOpenLettertoNewReaders
INTRODUCTION

WouldYouRatherBeSexyorRich?
Whydopeoplegainweightaftercollege?Thesimilaritiesbetweenmoney
andfood■Counterintuitivebuttrue:Weneedlesspersonal-finance
information■Commonexcusesfornotmanagingmoney■You’renota
victim—you’reincontrol■StopdebatingminutiaeandfocusontheBig
Wins■ThekeymessagesofIWillTeachYoutoBeRich■“Rich”isn’tjust
aboutmoney:Whatdoesitmeantoyou?
CHAPTER1

OptimizeYourCreditCards
Howtobeatthecreditcardcompaniesattheirowngame
WhyIndianpeoplelovenegotiating■Stopbeingintimidatedbyyourcredit

cards■Pickingthebestcardforairlinemiles,cashback,andrewards■The
sixcommandmentsofcreditcards■Howtonegotiatewithyourcreditcard
companytogetfeeswaivedandreceivelowerrates■Secretperksyourcard
offers■Whyyoushouldalwaysbuyelectronics,travel,andfurnitureonyour
creditcard■Whatnottodowithyourcards■Theburdenofstudentloans■
Whencreditcardsgobad■Fivestepstogettingridofdebt■WeekOne:
ActionSteps


CHAPTER2

BeattheBanks
Openhigh-interest,low-hassleaccountsandnegotiatefeeslikeanIndian
Howbanksrakeitin■ThebankaccountsIuse■Whyyoureallyneeda
separatesavingsaccount■Openinghigh-interest,no-feeaccounts■Why
peoplestickwithterriblebankaccounts■Fivemarketingtacticsbanksuseto
trickyou■Negotiateoutoffeeswithyourcurrentbank(usemyscript)■
WeekTwo:ActionSteps
CHAPTER3

GetReadytoInvest
Openyour401(k)andRothIRA—evenwithjust$50
Startinvesting,stepbystep■Whyyourfriendsarescaredofinvesting■
Investingisthesinglemosteffectivewaytogetrich■Whereshouldyour
moneygo?Introducingtheladderofpersonalfinance■Masteringyour
401(k)■Crushyourdebt■ThebeautyofRothIRAs■Whataboutroboadvisors?■TheexactaccountIuse■Feedyourinvestmentaccount■HSAs
■Beyondretirementaccounts■WeekThree:ActionSteps

CHAPTER4

ConsciousSpending
Howtosavehundredspermonth(andstillbuywhatyoulove)
Howtospendextravagantlyonthethingsyouloveandcutcostsmercilessly
onthethingsyoudon’t—withoutmakinganannoyingbudget■The
differencebetweencheappeopleandconsciousspenders■Howmyfriend
spends$21,000peryeargoingout—guilt-free■Usingpsychologyagainst
yourselftosave■Thefourbuckets:fixedcosts,savings,investments,and
guilt-freespendingmoney■Theenvelopesystemfornotoverspending■
Whatifyoudon’tmakeenoughmoneytosave?■Howtomakemoremoney
■Handlingunexpectedexpenses■WeekFour:ActionSteps
CHAPTER5

SaveWhileSleeping


Makingyouraccountsworktogether—automatically
Thepowerofdefaults■Howtospendonly90minutesamonthmanaging
yourmoney■Waystousepsychologytohelpyousavemoney■Createyour
automaticmoneyflow■Usingyourautomatedfinancestofuelyourrichlife
■WeekFive:ActionSteps
CHAPTER6

TheMythofFinancialExpertise
Whyprofessionalwinetastersandstockpickersareclueless—andhowyou
canbeatthem
Whoshouldyoutrust?■Expertscan’tguesswherethemarketisgoing■
Howexpertshidepoorperformance■Youdon’tneedafinancialadviser■
Behindthescenes:Whentwowealthmanagerstriedtorecruitme■Active
vs.passivemanagement
CHAPTER7

InvestingIsn’tOnlyforRichPeople
Spendtheafternoonpickingasimpleportfoliothatwillmakeyourich
Thebeautyofautomaticinvesting■Assetallocation:moreimportantthanthe
“beststockoftheyear!”■Retiringinyour30sor40s:TheFIREmovement
■Convenienceorcontrol?Youchoose■Themanyflavorsofstocksand
bonds■Creatingyourownportfolio:Howtohandpickyourinvestments■
Investingtheeasyway:target-datefunds■Feedingyour401(k)andIRA■
TheSwensenmodelofassetallocation■Insanecrypto“investments”■
WeekSix:ActionSteps

CHAPTER8

HOWTOMAINTAINANDGROWYOURSYSTEM
You’vedonethehardwork.What’snext?Here’showtomaintain(andgrow)
yourfinancialinfrastructuretoachieveyourRichLife.
Feedyoursystem—themoreyouputin,themoreyou’llgetout■Ignorethe
noise■Thetrickypartofmanagingyourownportfolio:rebalancingyour
investments■Nuttybeliefsabouttaxes■Whentosell■Forhighachievers:
aten-yearplan■Givingback—animportantpartofbeingrich


CHAPTER9

ARichLife
Thefinancesofrelationships,weddings,buyingacar,yourfirsthouse,and
more
Studentloans—Paythemdownorinvest?■Howtohelpparentswhoarein
debt■Thebigconversation:talkingaboutmoneywithyoursignificantother
■Shouldyousignaprenup?■Whywe’reallhypocritesaboutourweddings

(andhowtopayforyours)■Negotiatingyoursalary,IWillTeachYoutoBe
Richstyle■Thesmartperson’sguidetobuyingacar■Thebiggestbig-ticket
itemofall:ahouse■Thebenefitsofrenting■Isrealestatereallyagood
investment?■Planningforfuturepurchases■YourRichLife:Goingbeyond
thedaytoday

Acknowledgments
Index


ANOPENLETTERTONEW
READERS
Ifyoulistenedtoalltheinternetinfluencerstellingyouthethingsyou“need”
todoeverymorning,here’swhatyourdaywouldlooklike:
4:00a.m.wakeup
4:01a.m.meditate
5:00a.m.drink37gallonsofwater
5:33a.m.gratitudejournal
10:45a.m.eat(ketoonly)
11:00a.m.trackeverypennyofspendingfromthelast16years
11:01a.m.die
Idunno,guys.Ipreferadvicethatactuallyworks.AndwhenItookahard
lookattheadviceIgaveinthisbookadecadeago,Irealizedonething:Iwas
right.
Ifyouboughtthisbooktenyearsagoandfollowedtheexactadviceinit,
here’swhatyouwouldhaveaccomplishedbynow.
■ Ifyouhadinvestedjust$100/month,that$12,000wouldhaveturnedinto
over$20,000(TheS&P500averagedaround13percentannuallyoverthe
lastdecade.)
■ Ifyouhadaggressivelyinvested$1,000/month,that$120,000you

contributedwouldhavegrowntomorethan$200,000.
■ Youwouldbespendinglessthan90minutespermonthonyourmoney.
■ Youwouldhavebeenabletotakemultiplevacationsandflybusinessclass
—completelyfree—usingcreditcardpoints.
■ Moneywouldhavegonefromasourceofanxietyandconfusiontooneof
calmandpossibility.
Asyou’llseeinthisbook,Idothingsdifferentlythantypicalmoney
“experts.”Iwon’tlectureyouaboutcuttingbackonlattes(buyasmanyas
youwant).Iwon’ttrytoconvinceyoutokeepabudget(Ihaveabetter
method).Andonemorething:I’marealguy.IpostonInstagramandTwitter
(@ramit)andIwriteformillionsofpeopleonmyblogandnewsletteralmost


everyday(iwillteachyoutoberich.com).Solet’sstartoffdoingsomething
different:Iwanttohearfromyou.Really!Sendmeanemail
(,subject:newbookreader)andtell
metwothings:
1.Whatmadeyoudecidetotakecontrolofyourmoneytoday?
2.WhatdoesyourRichLifelooklike?(Pleasebespecific!)
IreadeveryemailandItrytorespondtoasmanyaspossible.

WhathasIWillTeachYoutoBeRichallowedyouto
do?
Oneofmygreatestjoysishearingfromyouabouthowyou’veappliedmy
materialtochangeyourlife.Iaskedsomeofmyreaderstosharetheirresults.
I paid off $10,000 in
credit card debt that I
accumulated
while
unemployed, bought a

condo
in
San
Francisco, and am
now debt-free and
building my retirement
funds.
—JULIANABRODSKY,38

I have $200,000 in retirement savings and countless vacations paid
forbycreatingspecificsavingsaccountsforthem;it’shardtoputa
specificnumberonthat.
—KYLESLATTERY,30

I travel internationally for a month 1 or 2 times a year. Last year it
wasSouthAfrica;thisyear,Korea.
—ESLILIGAYA,34

The Rich Life is about freedom. In my case it allowed me to take 9
monthsoffworkandtravelthroughoutArgentina,Colombia,andthe
US.Andnowit’sallowingmywifetotakea6-monthbreakfromwork
tofigureoutwhat’snext.
—SEANWILKINS,39


Wewereabletoputthreechildrenintoprivateschoolononefull-time
income.
—BRYANDILBERT,32

Allthatsaid,I’lladmitthatIwasn’tperfect.Tenyearsago,Imadethree

mistakeswhenwritingthefirsteditionofthisbook.
MyfirstmistakewasthatIdidn’tcovertheemotionsaroundmoney.I
spenttimecoveringthenutsandboltsofpersonalfinance—Igaveyouthe
perfectword-for-wordscriptstogetlatefeeswaived,theexactasset
allocationIuseforinvesting,andevenhowtomanagemoneywithyour
partner—butifyoudon’ttackleyourinvisiblemoneyscripts,noneofit
matters.
Invisiblescriptsarethemessagesyou’veabsorbedfromyourparentsand
societythatguideyourdecisionsfordecades—andoftenwithoutevenbeing
awareofit.Doanyofthesesoundfamiliar?
■ “You’rethrowingyourmoneyawayonrent.”
■ “Wedon’ttalkaboutmoneyinthishouse.”
■ “Creditcardsareascam.”
■ “Stopspendingmoneyonlattes.”
■ “Moneychangespeople.”
■ “Youdon’tgetthatlevelofwealthwithoutmakingafewshadydealshere
andthere.”
■ “Thestockmarketisgambling.”
■ “Studentloansareascam.”
Inthisedition,I’llshowyouwhatthemostinsidious,powerfulinvisible
moneyscriptsare—andhowtobeatthem.
ThesecondmistakeImadewasbeingtoooverbearing.Thetruthis,you
canchoosewhatyourRichLifeisandhowyougetthere.Intheoriginal
book,IdidwriteaboutthedifferentdefinitionsofaRichLife,butIdidn’t
acknowledgethatwemighttakedifferentroutestogetthere.
Forexample,yourRichLifemightbetoliveinManhattan.Itmightbeto
skifortydaysayearinUtah,ortosaveandbuyahousewithahugeyardfor
yourkids,ortofundanelementaryschoolinCroatia.That’syourchoice.
Buthowyougetthereisalsoyourchoice.Somepeoplechoosethe
traditionalrouteofsaving10percent,investing10percent,andslowly

workingtheirwaytoacomfortableRichLife.Otherssave50percentoftheir


incomeandquicklyreachthe“crossoverpoint”wheretheirinvestmentspay
fortheirlife—forever.(Thisiscalled“FIRE,”orFinancialIndependence,
RetireEarly.)
YouchooseyourRichLife.Andinthisedition,Iwanttoshowyou
differentwaystogetthere.Todothat,I’veincludedlotsofexamplesof
peoplewhotookunconventionalroutestocreatetheirRichLives.
Finally,thethirdmistake.LetmejustsaythatI’vemessedupquiteafew
thingsinmylife:I’vehiredandfiredthewrongpeople.Iruinedmychanceat
aTEDtalkbywalkingintothemeetingunprepared.Iwassixfeetand127
poundsintomymid-twenties,lookinglikeahairyIndianGumby.Butnothing
comparestomyworstmistakeofall:
Writingtheactualinterestratesofbanksintheoriginaleditionofthis
book.
Here’swhatIwrotebackthen:
“Onlinebankspayahigherinterestrateforsavingsaccounts—about2.5to
5percent,whichwouldproduce$25to$50interestperyearonthat$1,000,
comparedwith$5peryearontheBigBanksavingsaccount.”
Theinformationwasright...atthetime.Theproblemis,interestrates
change,whichIforgottomention.Andintheyearsafterthefirsteditionwas
published,theydropped—from5percentto0.5percent.Iassumedpeople
wouldrunthenumbersandrealizethattheinterestratedoesn’treallymatter
much.Forexample,ona$5,000balance,thatmeansyourmonthlyinterest
droppedfrom$21to$2.Inthegrandscheme,notthatbigofadeal.
Butwhenfacinglowerinterestratesonsavingsaccounts,readersgotmad
—reallymad.Andtheytooktheirangeroutonme.HereareafewemailsI
got:
■ “Thisbookisascam.Wherearethe5%interestratesyoutalkabout??”

■ “Whatbankhas3%interestrates??”
■ “Subj:WHEREARETHEBANKSUWROTEABOUT”
Forthelasttenyears,I’vegottenovertwentyoftheseemailseverysingle
day.Neveragain.Seemyfavoritebanks.Butnottheirinterestrates.WHICH
WILLCHANGE,GUYS.Inthisedition,I’vecorrectedthesemistakes.And
I’veaddednewmaterial.
1.Newtools,newinvestmentoptions,andnewapproachestomoney.Ifyou
wanttogetmoreaggressiveaboutinvesting,I’llshowyouhow.WhatdoI
thinkaboutrobo-advisors?I’lltellyou.Andwhataboutpre-nups?Isharemy
thoughts.


2.Newmoneyscenariosyou’llconfront.Howdoyouhandlerelationships
andmoney?I’veaddednewmaterial.Onceyourfinancialsystemissetup,I
wantyoutoknowwhattofocusonnext.Andfinally,ifyouknowpeoplewho
complainaboutpoliticsandbabyboomerstoexplainwhytheycan’tpayoff
theirdebtandgetahead,theyshouldreadmythoughtsonvictimculture.
3.IncrediblestoriesfromotherIWTreaders.I’veincludedtonsofnew
examples,includinginspirationalsuccessstoriesfromalldifferentkindsof
people:menandwomenintheirtwenties,thirties,forties,andfifties;people
whostartedfromnothingandpeoplewhobuiltonsuccesstogrowevenmore.
Plus,gut-wrenchingstoriesaboutpeoplewhoprocrastinatedonimplementing
thematerialinthisbook—andwhatitcostthem.
Iaddednewmaterialwhereappropriate,butIpreservedtechniquesthat
continuetowork.Manypeoplewant“new”advice—butthevalueinthis
bookdoesn’tcomefromnovelty;itcomesfromusefulness.
Intenyears,I’vealsochanged.I’vegottenmarried,I’vegrownmy
business,andI’velearnedmoreaboutmoneyandpsychology.NowIgetthe
chancetosharewhatI’velearnedwithyou.Amidstthenoise,thehype,the
appsoftheday,theIWTpersonalfinancesystemworks.Long-term,low-cost

investingworks.Automationworks.UsethisbooktocreateyourownRich
Life,justlikethousandsofothershave.
—RamitSethi


INTRODUCTION

WOULDYOURATHERBESEXY
ORRICH?

I’vealwayswonderedwhysomanypeoplegainweightaftercollege.I’mnot
talkingaboutpeoplewithmedicaldisorders,butregularpeoplewhowere
slimincollegeandvowedthattheywould“never,ever”letthathappento
them.Yet,littlebylittle,mostAmericansgainanunhealthyamountof
weight.
InthetenyearssinceIwrotemybook,weightandhealthhavebecome
suchcontroversialtopicsthatIwasadvisedtodeletemyreferencestothem.
Butaftermyownjourneyswithnutrition,fitness,andmoney,Inowbelieve
evenmoreintheconnectionsbetweenthem—andthatyoucantakecontrol.
Weightgaindoesn’thappenovernight.Ifitdid,itwouldbeeasyforusto
seeitcoming—andtotakestepstoavoidit.Ouncebyounce,itcreepsupon
usaswe’redrivingtoworkandthensittingbehindacomputerforeighttoten
hoursaday.Ithappenswhenwemoveintotherealworldfromacollege
campuspopulatedbybicyclists,runners,andvarsityathleteswhoonce
inspiredustokeepfit.Buttrytalkingaboutpost-collegeweightlosswith
yourfriendsandseeiftheysayoneofthesethings:
“Avoidcarbs!”
“Don’teatbeforeyougotobed,becausefatdoesn’tburnefficientlywhen
you’resleeping.”
“Ketoistheonlyrealwaytoloseweight.”

“Drinkingapplecidervinegarspeedsupyourmetabolism.”
IalwayslaughwhenIhearthesethings.Maybethey’recorrectormaybe
they’renot,butthat’snotreallythepoint.
Thepointisthatwelovetodebateminutiae.
Whenitcomestoweightloss,99.99percentofusneedtoknowonlytwo
things:Eatlessandexercisemore.Onlyeliteathletesneedtodomore.But
insteadofacceptingthesesimpletruthsandactingonthem,wediscusstrans
fats,obscuresupplements,andWhole30versuspaleo.


WHYAREMONEYANDFOOD
SOSIMILAR?
WHENIT
COMESTO
FOOD,WE...

WHENITCOMESTO
PERSONALFINANCE,
WE...

don’ttrackcalorie
intake

don’ttrackspending

eatmorethanwe
know

spendmorethanwerealize—oradmit

debateminutiaeabout
calories,diets,and
workouts

debateminutiaeaboutinterestratesandhot
stocks

valueanecdotaladvice
overresearch

listentofriends,ourparents,andTVtalking
headsinsteadofreadingafewgood
personal-financebooks

Mostofusfallintooneoftwocampsregardingourmoney:Weeither
ignoreitandfeelguilty,orweobsessoverfinancialdetailsbyarguinginterest
ratesandgeopoliticalriskswithouttakingaction.Bothoptionsyieldthesame
results—none.Thetruthisthatthevastmajorityofpeopledon’tneeda
financialadvisertohelpthemgetrich.Weneedtosetupaccountsatsolid
banks,automateourday-to-daymoneymanagement(includingbills,savings,
and,ifapplicable,debtpayoff).Weneedtoknowaboutafewthingstoinvest
in,andthenweneedtoletourmoneygrowforthirtyyears.Butthat’snotas


coolorexciting,isit?Instead,wereadinternetarticlesfrom“experts”who
makeendlesspredictionsabouttheeconomyand“thisyear’shotteststock”
withouteverbeingheldaccountablefortheirpicks(whicharewrongmore
than50percentofthetime).“It’sgoingup!”“No,down.”Aslongasthereis

somethingbeingsaid,we’redrawntoit.
Why?Becausewelovetodebateminutiae.
Whenwedo,wesomehowfeelsatisfied.Wemightjustbespinningour
wheelsandfailingtochangeanyone’smind,butwefeelasifwearereally
expressingourselves,andit’sagoodfeeling.Wefeellikewe’regetting
somewhere.Theproblemisthatthisfeelingistotallyillusory.Thinkbackto
thelasttimeyouandyourfriendtalkedaboutfinancesorfitness.Didyougo
forarunafterward?Didyousendmoneytoyoursavingsaccount?Ofcourse
not.
Peoplelovetoargueminorpoints,partiallybecausetheyfeelitabsolves
themfromactuallyhavingtodoanything.Youknowwhat?Letthefools
debatethedetails.Idecidedtolearnaboutmoneybytakingsmallstepsto
managemyownspending.Justasyoudon’thavetobeacertifiednutritionist
toloseweightoranautomotiveengineertodriveacar,youdon’thaveto
knoweverythingaboutpersonalfinancetoberich.I’llrepeatmyself:You
don’thavetobeanexperttogetrich.Youdohavetoknowhowtocut
throughalltheinformationandgetstarted—which,incidentally,alsohelps
reducetheguilt.
I knew I should save
for retirement, but I
didn’treallyknowhow,
besides “put some
moneyinyour401(k).”
I also thought saving
was only about NOT
spending money. As a
result, I felt horribly
guilty about spending
money on *anything*,
even if I had saved up

forit.Ihadalsonever
really thought about
asking for a raise and
didn’t know how to
approach it. I had just
treatedtheinitialwage


I’d been offered as set
instone.
—ELIZABETHSULLIVAN-BURTON,30

WhyIsManagingMoneySoHard?

Peoplehavelotsandlotsofreasonsfornotmanagingtheirmoney,someof
themvalid,butmostofthempoorlyveiledexcusesforlazinessornothaving
spenttenminutesonresearch.Let’slookatafew:

InfoGlut
Theideathatthereistoomuchinformationisarealandvalidconcern.“But
Ramit,”youmightsay,“thatfliesinthefaceofallAmericanculture!We
needmoreinformationsowecanmakebetterdecisions!Alltheexpertson
TVsaythisallthetime,soitmustbetrue!”Sorry,nope.Lookattheactual
dataandyou’llseethatanabundanceofinformationcanleadtodecision
paralysis,whichisafancywayofsayingthatwithtoomuchinformation,we
donothing.BarrySchwartzwritesaboutthisinTheParadoxofChoice:Why
MoreIsLess:
Asthenumberofmutualfundsina401(k)planofferedtoemployees
goesup,thelikelihoodthattheywillchooseafund—anyfund—goes
down. For every 10 funds added to the array of options, the rate of

participation drops 2 percent. And for those who do invest, added
fund options increase the chances that employees will invest in
ultraconservativemoneymarketfunds.
Youscrollonlineandseeadsaboutstocks,401(k)s,RothIRAs,insurance,
529s,andinternationalinvesting.Wheredoyoustart?Areyoualreadytoo
late?Whatdoyoudo?Toooften,theanswerisnothing—anddoingnothingis
theworstchoiceyoucanmake.Asthetableshows,investingearlyisthebest
thingyoucando.
Lookcarefullyatthechartbelow.SmartSallyactuallyinvestsless,but
endsupwithabout$80,000more.Sheinvests$200/monthfromagethirtyfivetoageforty-fiveandthennevertouchesthatmoneyagain.DumbDanis
toopreoccupiedtoworryaboutmoneyuntilhe’sforty-five,atwhichpointhe
startsinvesting$100/monthuntilhe’ssixty-five.Inotherwords,SmartSally
investsfortenyearsandDumbDanfortwentyyears—butSmartSallyhas
muchmoremoney.Andthat’swithjust$200/month!Thesinglemost
importantthingyoucandotoberichistostartearly.


HOWTOMAKE$60,000MORE
THANYOURFRIENDS(WITH
LESSWORK)
SMART
DUMBDAN
SALLY
Whenbeginningto
invest,thepersonis...

35years
old

45yearsold

Eachpersoninvests
$200/monthfor...

10years

20years

$181,469.
Withan8percentrateof
return,atage65,their
accountsareworth...

Voilà—
thevalue
ofstarting
early

$118,589.Eventhoughhe
investedfortwiceaslong,
he’sbehindby$60,000

Ifyou’reyounger,yourmoneywillgrowevenmore.Ifyou’reolder,don’t
getdiscouraged.Irecentlygotamessagefromawomaninherfortieswho
wasunhappyaboutthesenumbers.“What’sthepointofwritingthat?”she
asked.“ItmakesmefeelbadthatI’malreadytoofarbehind.”
Iunderstandhowshefeels.Butwecan’thidefromthemath—soinstead
ofsugarcoatingthefacts,Ibelieveinshowingyouthetruth,includingways
toincreaseyoursavings.Yes,thebesttimetostartinvestingwastenyears
ago.Thesecondbesttimeistoday.