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I Will Teach You Too Be Rich Summary

I Will Teach You To Be Rich is a 2009 personal finance book by Ramit Sethi who writes a blog of the same name. The book, published by Workman became a

 The name of the book we will talk about today is I Will Teach You To Be Rich, written by Ramit Sethi.

The author studied psychology and technology from Stanford University. During that time he made some mistakes with money and one wrong investment forced him to understand how money works and how to make it work for himself. Sethi got the same advice over and over again and found that no one listens to this advice because it doesn't work, that's why he wrote this book (I Will Teach You To Be Rich).

I Will Teach You Too Be Rich Summary

The authors want to share their findings and knowledge with as many people as possible, believing that everyone has a chance to improve their money habits. His book became an instant best seller, boasting of over 20,000 success stories.

The book 'I Will Teach You To Be Rich' helps you identify where your money is going and how to make it work for you. This 6 week program shows you how to create a system that optimizes your bill payments, savings and investments so that your money goes to the right places with less than an hour of maintenance per month. This book is better for those who want to handle their finances in a good way.

This summary will explain the 6 week program of this book. The first week will focus on improving your credit card, the second week will see how to win the banks. Investments will be covered in the third week and careful spending will be talked about in the fourth week. Week 5 will focus on savings and week 6 will discuss the fallacy and idea that investing is for everyone and not just the rich and finally we will have a short discussion on how easy it is to maintain your new money habits.

So let's understand them in detail again:

Credit Card Customization

The first step you need to take in your money journey is to build good credit. Personal credit can take into account your credit report and credit score. Most adults have one or two credit cards, but most people do not know how to use them. Credit cards, if used properly, can save you thousands of money in the long run (I Will Teach You To Be Rich).

Credit report is information about your credit history, any current and recent transactions or any account you have with you. This information is given to the lenders ie those who give loans when you apply for a loan.

Credit score is slightly different, you are given a number between 300 and 850. This number is used to let the lender understand what your risk factors are when it comes to lending. If your credit score is high then you are seen as a low risk and low credit score shows more risk. It is very important to have a high credit score for future purchases, including home and loan. Based on your credit score and credit report, lenders and banks will decide whether they will lend you money or not (I Will Teach You To Be Rich).

If the credit card is used properly then it can be very beneficial. You must pay your bills in full and on time. Never delay these payments, otherwise you will have to face interest. When this happens, the credit card is actually giving you money that you don't have and paying interest is something you want to avoid at any cost. If you buy something with a credit card and pay interest at the end, then you are actually paying more than its value. "Building good credit is the first step to becoming rich."

Week one top tips – By using the mentioned tips, you can improve your credit score and avoid making common mistakes (I Will Teach You To Be Rich).

Request your credit score and report. Understanding what all the numbers mean for your credit.

If you already have a credit card, check with the bank whether it is a no-fee card, if not, request it. And if you do not have a credit card, then take it and request to waive all the fees (I Will Teach You To Be Rich).

Set up automatic payments so you never miss them and always get paid in full. Keep in mind that this should happen every month (I Will Teach You To Be Rich).

If you have any debt, we will make a plan to pay it. Talk to your lender so that it can be repaid as soon as possible. The goal is to pay off the loan as quickly as possible so you can reap the rewards (I Will Teach You To Be Rich).

Bank

Choosing the right bank and account is also important when you are setting up your finances. Your banks play an important role and you want to build a good relationship with them so that you don't waste money paying unnecessary fees (I Will Teach You To Be Rich).

Checking Accounts – Most people have a checking account, which is a standard account in which money comes in regularly. You should use it like an email box. If all your money comes in this main account, then you can filter it to send it to a side account, be it savings or investment. For a check account, choose an account that earns interest and is free, with no monthly, annual and transactional fees (I Will Teach You To Be Rich).

Savings Accounts – You should open a savings account for short to medium term savings. In this place, consider keeping all your money anywhere from one month to 5 years. Use this account as a vacation and house deposit (I Will Teach You To Be Rich).

week two top tips

Open a checking account if you don't already have one. Double check that there are no fees in it.

If monthly or annual fees are charged in your current account, then talk to the bank and request to wave it off. And you can also take care of the minimum amount and transactional fees.

Open a savings account with high interest. Separate the money you save from the money you spend (I Will Teach You To Be Rich).

Keep in mind that the amount of money in your checking account for the expenses of one and a half month, apart from that, transfer the remaining money to the savings account.

Investment

Investment is something that many people want to avoid. You must understand this so that you feel confident to invest. Many people have stopped investing after the global financial crisis, but it makes sense to invest during these times.

5 Simple Steps to Start the Investing Process

  1. Nothing can be better than those investments where you get 100% return and it is on every pay check, it requires almost nothing from your side except initial set up.

Pay off your credit card debt. Once this happens, you will have more money to invest. Take the time to make a plan to pay it off (I Will Teach You To Be Rich).

You should also open a separate individual retirement account or investment fund. The goal is to contribute as much of your after-tax income as possible.

If someone saves money, they can put it in their savings account.

When these 4 steps are completed, you will have some money which you can use. Think of a non-retirement fund with money to start your business (I Will Teach You To Be Rich).

Conscious spending

This is one piece of advice that you will often hear, which is budgeting. However, this is easier said than done. No one has time to keep track of every single penny, you should spend it carefully (I Will Teach You To Be Rich).

It is easy to spend carefully. When it comes to money, your priority should be to focus on your savings and investments account. When that's done, you can think about spending the rest of the money guilt-free.

The best way to handle money is to decide where you want to spend your money. You should adopt a frugal approach and not a cheap one. Frugality is preferred over everything because you can save money on most of your purchases and you can spend more money in some places. Identify your priorities. If you want to go to the movies every week, try not to buy coke and popcorn every time. It is up to you to decide where you want to sacrifice and where not (I Will Teach You To Be Rich).

week four top tips

When you get your next paycheck, break down your expenses and find out where you spend the most.

Can talk about your income, fixed cost, long term investment, saving goals and guilt free spending (I Will Teach You To Be Rich).

Look at the fixed cost, are you getting the best deal on insurance? Think of shopping around this cost and see where you can reduce.

Consider what your conscious spending plan would be like. Where will you save and spend.

Stick to your plan and update it every week. When you get the receipt, include it in your plan so that you can understand what is happening.

It is very important for your system to be straight and quick, you have to keep it for a long time (I Will Teach You To Be Rich).

Help

The next stage is to automate your system for saving, investing and spending. Aim is to automatically filter your income to the right account, without your intervention. By spending time once, you can save a lot of time in the future. This means your bills will be paid automatically and you don't have to worry about that (I Will Teach You To Be Rich).

Every week / fortnight / or month you will get your income.

Your workplace should automatically deduct part of your savings.

The balance can go directly into your checking account.

With this, automate yourself for saving and investments.

Pay your credit card bill automatically from your debit card. (It covers your saree fix cost like utilities, internet etc.) (I Will Teach You To Be Rich).

Whatever is left can be spent without guilt (I Will Teach You To Be Rich).

Week five top tips:

You should link all your accounts. All your login information should be in one place, warning you will waste time (I Will Teach You To Be Rich) for different login and username.

Spend time setting up your automatic money flow. Once all the accounts are linked, it will be easy. Set up individual automatic payments for each account.

Financial Expertise Myth

Many people are intimidated by the finance industry, financial advisors and fund managers. Whereas, most people are capable of doing their own investing (I Will Teach You To Be Rich).

You do not need to pay people for your investments. Fund managers are not magicians and they cannot predict what the market is going to do. Fund manager's 75% investment may fail. Mutual funds often have a fee charge which is useless and is paid to the fund manager.

Index funds can give better results with less fees. That's why observe the predictions of pundits. Ignore the performance of the fund for the last one or two years (I Will Teach You To Be Rich).

A fund manager can perform well in the short term, but can never beat the market in the long term. It is based on fees, expenses and mathematical probability, which come in front while choosing stocks.

Are investments only for rich people? Everyone deserves to invest, it is not just for the rich. It is possible to have a straightforward and low-maintenance investment portfolio. You should be diversified when it comes to investments. You should not only buy different stocks, but also think about different assets, stocks and bonds (I Will Teach You To Be Rich).

Take a little risk in investing when you are young. Upliftment is easier than the loss that can happen at that time. As you get older, you tend to be more conservative and take less risks.

Where should you invest? Index fund is a good option. They ask less than mutual funds. However, it has the drawback that you have to invest in a few different funds. In this, it will take a little more time and research than mutual funds.

Multiple funds means you have to rebalance your funds regularly, almost every year. This is a hard work in which you have to redistribute your money in different investments for your target asset.

There is another low cost option which is the lifecycle fund. These can take into account your age and automatically diversify your investments. Lifecycle funds are actually fund of funds.

For example, a lifecycle fund can be large cap, mid cap, small cap and international fund. In other words, your lifecycle owns many of the funds that stocks and bonds own (I Will Teach You To Be Rich).

week six top tips

Before you start, you need to decide how you want to invest. Keep in mind, lifecycle funds are simple and you have to give very little input, but you have less control. Otherwise, index funds are a good option if you are confident of diversifying your portfolio yourself (I Will Teach You To Be Rich).

It will take time to test your investments. Research well and understand what you are investing in.

After deciding buy your chosen funds (I Will Teach You To Be Rich).

If you don't have money to invest right now, create a savings goal for your investment account. You can buy as soon as you achieve your goal.

From here to where?

When all your accounts are in order and investments are under control, it is easier to maintain your system. Focus on your conscious spending plan and save any extra money that you may have by saving and investing (I Will Teach You To Be Rich).

You don't have to login to your investments account everyday, it will just be unnecessary stress, you have created this automatic system for a reason. Check in once a month and wait for the money to grow over time (I Will Teach You To Be Rich).

Be careful of exiting your investments too early. There are only three reasons to save your investments in your twenties and thirties: you need the money for an emergency, you made a bad investment that is underperforming in the market, or you have achieved your investment goal. Will Teach You To Be Rich).

Key takeaways

, Learn to use credit card properly.

, Never miss a bill payment, you don't want to pay interest.

, Automate bill payment so you don't have to worry.

, Request a no fees account from your bank.

, Open a high-interest savings account and standard checking account.

You can put money in your checking account for 1-one and a half months' expenses, and put the rest in your savings account.

, Pay off all your debts.

, Also open a separate retirement account or investment fund.

, Choose your investment style before you start.

, Research well and understand where you are investing.

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Education Learn Solution - Best Platform to Explore Books.: I Will Teach You Too Be Rich Summary
I Will Teach You Too Be Rich Summary
I Will Teach You To Be Rich is a 2009 personal finance book by Ramit Sethi who writes a blog of the same name. The book, published by Workman became a
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