Ramit Sethi—the author of the bestselling book I Will Teach You to Be Rich, and the creator of a podcast by the same name—has a playbook for how you can “set up your finances so you can spend guilt-free and earn money every single day, automatically.” In this 25-minute video, Sethi walks you through his playbook step by step, covering all of the important bases.
Step 1 involves creating a “conscious spending plan” so that you know: a) how to save money, b) how to invest money every month, and c) how to spend the rest of your money guilt-free. Part of this planning comes down to deciding what spending matters most to you, and what spending matters the least–so that you can spend “extravagantly” on certain items, cut costs “mercilessly” in other parts of your life, and then have money left over to save, pay off debts, and invest.
Later in the video, Seth covers investing, focusing on how and where you can start investing the money you have saved. This includes investing in a 401(k), which provides important tax advantages. 401(k)’s can be particularly advantageous if your employer will match your contribution, essentially giving you free money. Ideally, you want to start investing early (Sethi recommends using a target fund), and let your interest compound. Other topics covered in the video include how to leverage the benefits of credit cards, and where to find high-interest savings accounts.
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