Ramit Sethi is the author of the New York Times bestseller ‘I Will Teach You to Be Rich,’ and his website (which has the same name as his book) helped creative professionals deal with clients and covers issues of psychology, personal finance and careers. He has been dubbed the “new finance guru on the block” by Fortune Magazine, as well as becoming a regular contributor to ABC, PBS and writing for the New York Times. Today he’s here to challenge us to change our thinking about money and try out a rich mindset.
Many of us may have grown up in situations where money wasn’t talked about, or the primary focus was on cost—and how to minimize cost. What would happen if we thought differently? What would a rich life look like for you? Can you learn to be rich?
In this episode, Ramit will tell us how he got to where he is today, and how we can start challenging our invisible scripts about money. He’ll give us some practical exercises to change our thinking about money and rich people, and encourage us to look at our spending in a different way.
- Learned about money while studying psychology, and intuitively didn’t want to follow the “cut back” types of advice
- Didn’t want to live a life of scarcity—wanted to live outside of the spreadsheet, spend on the things he loved
- Integrated psychology and money, grew a readership
- Some people believe “money is an inside out process”, it begins inside with your thoughts
- Many of us learn our financial values from our parents—and values have changed over time e.g. parents might not have bought pre-packaged vegetables, but now that is a normal behavior
- Classes about finance weren’t taught previously—the right time is now, there is so much information available
- You can automate your finances and get in control
- One some of us grew up with: “buying a house is the best investment you can make”—but when you run the numbers, you might find that buying a house is not best for you
- People should analyze their invisible scripts. This can be a difficult exercise because you have to examine your internal thoughts
- You can make it easier by analyzing somebody else—try looking at someone successful that you know of.
- By doing this you can move from disparagement to curiosity. Instead of disparaging somebody, try asking: why are they doing that? What do they know that I don’t?
- The primary lens people use in America for money is cost—cost drives everything. How much did that cost? Could I have gotten it cheaper?
- As people get more successful they don’t change the lens, but if you look at the world through this lens, the world doesn’t make sense e.g. why does this Manhattan restaurant charge $40 for an entree?
- Try looking at it through the lens of security: if I go there, I know I’ll get in because it won’t be busy, there won’t be people at the bar doing shots
- Other lenses you can look at situations through: experience, results, cost
- Try to learn to be adaptable when looking at financial situations, play with the use of different lenses to change the way you think about money: instead of just cost, you can optimize for convenience, quality, personal extravagance
- Common lenses: cost, results, experience, security, convenience
- Try the question: “why spend less when you can spend more?”
- When you find something you love, try spending on it and see what it feels like
- Ask yourself: what do you like to spend your money on? This might be spending on relationships, experiences, material things
- If you could spend 4x what you spend right now, what would that feel like to you? What would you spend the money on?
- Humans will do whatever it takes consciously and unconsciously to avoid feeling bad
- Don’t forget to take a screenshot of this episode, tag us both on social media (@ramit & @jimkwik) and share your greatest “aha!” moment from this episode with us!