What can you get when you mix psychology and personal finance?

I Will Teach You to Be Rich - Ramit Sethi, Hodder & Stoughton

I Will Teach You To Be Rich – Ramit Sethi

Ramit Sethi has been a great inspiration for me. He has found his own special niche in personal finance literature by focusing on psychology behind the money, big wins and earning more.

The name of the book is controversial for many reasons. It easily makes people “judge the book by its cover” without actually ever reading it. I encountered this often when I suggested Ramit’s website to others: “It must be a scam!”.

This is true with many business books, but not all of them. I claim that “I Will Teach You To Be Rich” is pure gold. While reading the book, I jotted down five reasons that make it so special for me.

  1. Ramit’s background is in psychology – This has lead to a refreshing approach to money and personal finance. It is one thing to give advice and a completely different thing if people act on that advice. The book teaches you how to use psychology to force you to save. Ramit often uses budgeting as an example of such useless advice that people do not act on.
    (Authors note: I calculate my spending regularly and budget my money, so this has not been a problem. However his non-traditional angle to personal finance is still really amusing.)
  2. Focus on automation – People are by default lazy. This is why traditional personal finance advice is not that effective. The book helps you to build an automated system to manage your money. After you set it up you can take a step back and relax. It does the work for you.
    (Authors note: Done this, it works great! I have several accounts for saving, investing and spending. My paycheck is automatically divided between those.)
  3. The idea about conscious spending – It is okay to spend money on things you love as long as you have achieved your goals in saving and investing.
    (Authors note: Done this too. I used to feel guilty after spending for something not necessary. Now I have a certain amount of “guilt free” money each month designated for fun. )
  4. Less talking, more action – Ramit stresses the importance of taking action. Many people just read and read but never get anything done. Analysis paralysis is a serious disease in the information society. The book is divided into six week long chapters with action points after each one of them. They follow each other in sensible order starting from the basics and advancing to more difficult aspects of personal finance.
    (Authors note: I used to be the guy who was all about talk and never ended up doing anything. After I found Ramit’s blog I have gradually learned to cut the bullshit and take action. I fail a lot, but at least I can say I have tried.)
  5. Earning more – Traditional personal finance advice mostly concentrates on saving, budgeting and in general being frugal. The I Will Teach You To Be Rich shows you another path. Saving can only take you so far, but there are no limitations on how much more you can earn. Ramit has later taken this idea much further in the Earn1K course. (Authors note: This area I have yet to explore in depth.)

Ramit’s book is not for everyone. The title of the book could scare you off. You either love or hate the carefree and cocky writing style. He is clearly focused on younger audience and is not afraid to admit it. And finally as he offers very specific advice, some of it could be useless for you.

Personally, there are only few other business books that I could recommend more. This book, if any, has the potential of making you rich.

You can have a look at Ramit’s I Will Teach You To Be Rich blog for free here.

The book “I Will Teach You To Be Rich” is available for example from Amazon.com and Amazon.co.uk.

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