I am currently reading a book named ‘I will teach you to be Rich’ by Ramit Sethi. The style of this book is totally casual and so is the style of writing. What i love about this book is how he makes one understand a complicated issues in matter of few minutes. The book gives you only the information that is needed in each area like saving, investing, optimizing credit card and choosing the right bank account. It does not provide pages of lectures on the subjects. The best part of the book according me so far is the chapter where he talks about conscious spending.
Instead of asking us to be frugal and stop having our favorite lattes and buying our favorite brand of shoes, he encourages us to spend more on what we like and cut down on things that matter less. For example, if you are not watching each and every channel that you get through your cable connection, withdraw from the subscription and just pay for your favorite shows on i tunes store. Use the saved money to shop on your favorite items.
Ramit has sketched a better plan for us. Whatever may be our income, divide the take home pay for specific purposes and always stick to the plan.
50-60% – Utilities and Educational Loans
10%- Debt
10%- Savings ( your IRA & 401(K))
10%- Saving for a specific cause ( Wedding, down payment for your future home , for Christmas gifts for friends or to get yourself your dream laptop)
5 %- Investment
5%- Guilt free spending on your favorite items.
Important point to notice here is that the money you spend eating out on saturday nights falls under the last 5% and not the first 60%. If you’re in your 20’s and haven’t started thinking about getting rich, its high time you start. If you’re above 30 and still haven’t started about managing money, you can do right now because after 5 years you would anyway feel that you should have started earlier.
Remember the saying ‘ Its never too late to become what you might have been’ Hence make your start right away.
