Unlocking Financial Wisdom: Insights from "I Will Teach You to Be Rich" by Ramit Sethi

Hello Curious Minds,

In this week's edition of Curiosity Logs, we're delving into the wealth of knowledge found in "I Will Teach You to Be Rich" by Ramit Sethi. Join me as we explore actionable snippets and practical strategies from Sethi's guide to mastering personal finance and living a rich life. Also I will be sharing my automation framework based on Ramit’s book.

📚 Weekly Book Highlights

From automating your finances to investing wisely, "I Will Teach You to Be Rich" offers a roadmap for achieving financial success and abundance.

Here are some interesting financial wisdom snippets from Ramit’s book

• automating your money will be the single most profitable system you ever build.

• But I also see the dark side of blindly following the idea of being the best without reflecting on why you’re working so hard. … ask yourself what the point of all of this work is.

• The concept of winning becomes the goal instead of knowing why you’re playing in the first place.

• By doing the research that 99 percent of other people don’t, you can save tens of thousands of dollars on your house over the life of your loan.

• you should buy a house only if it makes financial sense….. bottom line here: Buy only if you’re planning to live in the same place for ten years or more.

• just that you should think of it as a purchase, rather than as an investmentlet’s get rid of the idea that renters are “throwing away money” because they’re not building equity.

• Most of us fall into one of two camps regarding our money: We either ignore it and feel guilty, or we obsess over financial details by arguing interest rates and geopolitical risks without taking action. Both options yield the same results—none.

• Yes, the best time to start investing was ten years ago. The second best time is today.

• Cynics don’t want results; they want an excuse to not take action.

• In relationships and work, we want to be better than average. In investing, average is great.

• The single most important factor to getting rich is getting started, not being the smartest person in the room.

• believe in small steps. I want to reduce the number of choices that paralyze us. It’s more important to get started than to spend an exhaustive amount of time researching the best fund in the universe.

• The 85 Percent Solution: Getting started is more important than becoming an expert…. I’d rather act and get it 85 percent right than do nothing. Think about it: 85 percent of the way is far better than zero percent.

• Spend extravagantly on the things you love and cut costs mercilessly on the things you don’t.

P.S. I’d love to know: What is the single snippet above that sounds most interesting or impactful to you?

Weekly Curiosity Corner

Here is my Automation framework based on ideas from IWT book

Step 1 : Dividing the Cash Pie

Evaluate all your earnings and spending of last 3 months

Figure out average spending per month in % of average earning per month(Post tax amount)

Eg: Person X has 50,000 per month salary(post tax) and his average spending per month is 35,000

So every month he saves 15000.

Lets go with a basic assumptions that 70% of salary goes for expenses every months and 30% can be saved/invested.

Step 2: The 3 account method

List all your bank accounts, Investment accounts and investment apps - Note down account numbers and login info.

Now select 3 bank accounts which you prefer to use. Each has a special purpose

[1]. Input Account

• All your earnings will come to this account. Your salary, bonus, dividends etc.

• Never carry the debit card of this account for transactions.

• This is only for receiving money

[2]. Spend-it Account

• All your spending happen from this account. Rent, emis , groceries, eating out etc.

• Carry debit card of this account. And create UPI linked to this .

• Start of each month transfer the amount you need for a month worth spending from your input account.

[3]. Invest-it Account

• All remaining money from input account after transferring to Spend it account comes here.

• All your investment account are linked to this. Mutual fund apps, equity apps etc

Step 3: Automating Your System

Every month when salary hits your account, you system should start working and move your money into 3 specified accounts according to the money pie split you have decided. Use Standing Instructions provided in your Online banking site to automate the money movement.

Now in invest-it Account you need to setup automation for your investments. Based on your investment types you can use different methods. Please read my blog post here to know more.

PS : If you have any query or need support in setting up your automated finance system please reply /comment.