I Will Teach You to Be Rich: No Guilt. No Excuses. No B.S. Just a 6-Week Program That Works.

by Ramit Sethi

Spend on What You Love

The mindset of conscious spenders is the key to being rich.

Conscious spenders try to get the lowest price on most things but are willing to spend extravagantly on items they really care about.

A Conscious Spending Plan involves four major buckets where your money will go: fixed costs, investments, savings, and guilt-free spending money.

Notice that I didn’t include “eating out” or “entertainment,” as those come out of the guilt-free spending category.

“IRS withholding calculator”

Monthly Expense

Finally, once you’ve gotten all your expenses filled in, add 15 percent for expenditures you haven’t counted yet.

I currently save $200/month for unexpected expenses. At the end of the year, if I haven’t spent it, I save half and I spend the other half.)

A good rule of thumb is to invest 10 percent of your take-home pay

Buying a house.

Let’s just say the average house in your neighborhood costs $300,000 and you want to do a traditional 20 percent down payment. That’s $60,000, so if you want to buy a house in five years, you should be saving $1,000/month.

a good rule of thumb here is to use 20 percent to 35 percent of your take-home income for guilt-free spending money.

Go for Big Wins

The simplest way to start is to use Mint

I recommend using a piece of software called You Need a Budget (youneedabudget.com)

Some people use Personal Capital (personalcapital.com) but I just use my Vanguard account.

(More on this in my course, Advanced Personal Finances, on my website.)

I use myfico.com to get my credit score and report each year.

To run calculations on investment scenarios, I use the calculators at bankrate.com.

I’ve opted out of credit card offers at optoutprescreen.com, and I use a service called Catalog Choice (catalogchoice.org) to keep from getting unwanted catalogs in the mail.

Use the Envelope System to Target Your Big Wins

Negotiate a Raise

Three to six months before your review:

Prepare a “briefcase” of evidence to support the exact reasons why you should be given a raise.

Extensively practice the conversation you’ll have with your boss, experimenting with the right tactics and scripts.

On the day you negotiate, come in with your salary, a couple of competitive salaries from salary.com and payscale.com, and your list of accomplishments, and be ready to discuss fair compensation.

If you have free time at home, you can sign up to be a virtual assistant on sites like upwork.com.

How to Handle Unexpected and Irregular Expenses

Known irregular events

In fact, this is already built into your spending plan: Under savings goals, allocate money toward goals where you have a general idea of how much it will cost.

Unknown irregular events

These types of surprises fall under your monthly fixed expenses,

Earlier, I suggested that you add about 15 percent to your estimate of your fixed costs to accommodate these surprises. In addition, I recommend starting by a...

As a fun incentive to myself, if I still had money left over in the account by the end of the year, I’d save half of it—and spend half on something fun.

Unexpected one-time income.

I use 50 percent of it for fun—usually buying something I’ve been eyeing for a long time.

Raises.

How to Spend Only 90 Minutes a Month Managing Your Money

you can control how much your employer withholds from each paycheck to pay taxes by speaking to your HR department.)

Link Your Accounts

■ If you haven’t already done this, connect your paycheck to your 401(k), so it’s automatically funded each month. (I cover this in Do It Now: Setting Up Your 401(k).) ■ Connect your checking account to your savings account. ■ Connect your checking account to your investment account/Roth IRA. (Do this from your investment account, rather than from your bank account.) ■ Connect your credit card to any bills you’ve been paying via your checking account. (And if you’ve actually been paying bills by writing checks with a pen, please understand that man has discovered fire and combustible engines and join our modern times.) For example, if you’ve been paying your cable bill by check each month, log in and switch it so that the bill is paid by your credit card instead. ■ Some bills, like rent and loans, can’t be paid using a credit card. Link these regular bills to your checking account. (Do this by logging in to the company’s website and initiating the transfer from your checking account to the company.) ■ Set it up so that all your credit card accounts are paid from your checking account. (This is set up from your credit card’s “Transfer” or “Link Accounts” page.)

The easiest way to avoid this is to get all your bills on the same schedule.

To accomplish this, gather all your bills together, call the companies, and ask them to switch your billing dates. Most of these will take five minutes each to do.

If you’re paid on the first of the month, I suggest switching all your bills to arrive on or around that time too.

Call and say this: “Hi, I’m currently being billed on the seventeenth of each month, and I’d like to change that to the first of the month. Do I need to do anything besides ask right here on the phone?”

2nd of the month:

you’re treating your checking account like your email inbox—first,

5th of the month:

Automatic transfer to your savings account.