I Will Teach You To Be Rich: No guilt, no excuses - just a 6-week programme that works

by Ramit Sethi

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

So instead of saying, “How much money do I need to make?” you’ll say, “What do I want to do with my life – and how can I use money to do it?”

One of the key differences between rich people and everyone else is that rich people plan before they need to plan.

Have some standards, people.

If you’re booking travel or eating out, use a travel card to maximise rewards. For everything else, use a cashback card.

Focus on the Big Wins to get the big results. They may not be as obvious or sexy as jumping from account to account and getting a few extra quid, but the Big Wins will make you rich over the long term.

If you learn only one thing from this book, it should be to turn your attention from the micro to the macro. Stop focusing on picking up pennies and instead focus on the Big Wins to craft your Rich Life.

Don’t worry about micro-optimising your bank account interest rates. Just pick great bank accounts and move on.

But it’s not just about your immediate earnings – it’s about developing the right habits.

Build the right habits when the amounts are small – with the right accounts, with automatic saving and investing – so that when your income increases, your habits are rock-solid.

Remember, with a customer-acquisition cost of more than £100, banks want to keep you as their customer. So use this information to your advantage and make the call next time you see any fees levied on your account.

Forget budgeting. Instead, let’s create a Conscious Spending Plan.

In reality, I love when people are unapologetic about spending on the things they love. You love fashion and want to buy £250 Brunello Cucinelli T-shirts? Awesome.

If you decide that spending £4 on Cokes when you eat out isn’t worth it – and you’d rather save £10 each week for a movie – that’s not being cheap. That’s consciously deciding what you value.

There is power in saying no to the things we don’t care about. But there is even more power in saying a big YES to the things we love.

Everybody talks about how to save money, but nobody teaches you how to spend it.

Very few people decide how they want to spend their money up front. Instead they end up spending it on random things here and there, eventually watching their money trickle away.

Do you know people who get so obsessed with something new that they go completely overboard and burn out? I would rather do less but make it sustainable.

Build the habit first. Systematise it later.

Remember that getting a raise is not about you. It’s about you demonstrating your value to your employer. You can’t tell them you need more money because your expenses are higher. Nobody cares. You can, however, show how your work has been contributing to the company’s success and ask to be compensated fairly.

That’s because automating your money will be the single most profitable system you ever build.

By investing a little now, we don’t have to invest a lot later.

Money exists for a reason – to let you do what you want to do.

Yes, it’s true, every pound you spend now would be worth more later. But living only for tomorrow is no way to live.

If you invest in yourself, the potential return is limitless.

As Warren Buffett has said, investors should “be fearful when others are greedy and greedy when others are fearful”.

Imagine one day you woke up and you had enough money in your accounts to never work again. In other words, your investments were generating so much money that your money was actually producing more money than your salary. That’s the Crossover Point, first described by Vicki Robin and Joe Dominguez in their book Your Money or Your Life.

Many call this “retiring early” (RE); together, they’re Financial Independence + Retiring Early = FIRE.

You don’t want to own only US small-cap stocks, for example, or funds that own only small- cap stocks. If they didn’t perform well for ten years, that would really suck. If, however, you own small-cap stocks, plus large-cap stocks, plus international stocks and more, you’re effectively insured against any one area dragging you down. So if you were to invest in stocks, you’d want to diversify, buying all different types of stocks or stock funds to have a balanced portfolio.

if you’re nervous about investing and just starting out, your biggest danger isn’t having a portfolio that’s too risky. It’s being lazy and overwhelmed and not doing any investing at all.

Target date funds are simple funds that automatically diversify your investments for you based on when you plan to retire. (Let’s assume you’ll retire at age 65 throughout this book.) Instead of you having to rebalance stocks and bonds, target date funds do it for you.

Target date funds are actually “funds of funds”, or collections made up of other funds, which offer automatic diversification.

A few notes you may want to keep in mind as you research these funds. Some companies call them “target date” funds, while others call them “target retirement” or “lifecycle” funds. They’re all the same thing.

But here’s a question: If you have a big pile of money to invest, what’s the better option: pound-cost averaging it or investing the entire lump sum all at once? The answer might surprise you. Vanguard research found that lump-sum investing actually beats pound-cost averaging two-thirds of the time. Because the market tends to go up and stocks and bonds tend to outperform cash, investing all at once produces higher returns in most situations.

If you negotiate, you explicitly communicate that you value yourself more highly than the average employee. Are you average? If not, why would you settle for an average salary?

Negotiating tactic: Always frame your negotiation requests in a way that shows how the company will benefit.

“Let’s find a way to arrive at a fair number that works for both of us.”

2. Have another job offer – and use it. This is the single most effective thing you can do to increase your salary.

Five Things You Should Never Do in a Negotiation

1. DON’T TELL THEM YOUR CURRENT SALARY.

DON’T MAKE THE FIRST OFFER.

IF YOU’VE GOT ANOTHER OFFER FROM A COMPANY THAT’S GENERALLY REGARDED TO BE MEDIOCRE, DON’T REVEAL THE COMPANY’S NAME.

DON’T ASK “YES” OR “NO” QUESTIONS.

“Fifty thousand pounds is a great number to work from. We’re in the same ballpark, but how can we get to fifty-five thousand?”

NEVER LIE.

Literally bring a strategic plan of what you want to do in the position and hand it to your hiring manager. Do you realise how few people come to a negotiation with a plan for their role? This alone could win you £2,000 to £5,000.

Negotiating tactic: Have a repertoire of your accomplishments and aptitudes at your fingertips that you can include in your responses to commonly asked questions.

5. Negotiate for more than money. Don’t forget to discuss whether or not the company offers a bonus, stock options, flexible working, or training.

Negotiation is about finding a cooperative solution to create a fair package that will work for both of you. So check your attitude: you should be confident, not cocky, and eager to find a deal that benefits you both.

Negotiating tactic: The phrase to use here is “We’re pretty close . . . Now let’s see how we can make this work.”