AJ and I were chatting the other day when we realized that both of us are currently watching Netflix’s ‘How to Get Rich‘ with our spouses. This hot new show, hosted by Ramit Sethi, follows the path of six individuals/couples as they struggle with bad (mostly) financial habits in their quest to get rich. There’s a lot of lessons to be learned from the series and I’m going to talk about a few of them today.
Changing bad financial habits
One of the key lessons from the show is how difficult change is, especially when it comes to personal finance. Over the years, we learn behaviors, both good and bad, from our parents, grandparents, friends, and of course, people we don’t know but we saw them on TikTok so it must be true!
Unpacking all of this bad information can be difficult, but not impossible. Throughout the show, Ramit stresses how important it is to take small, achievable steps. He specifically gives each of the shows participants some homework that will help them reach some useful conclusions about their situation. By the end of the show, 5/6 of the subjects were looking pretty good compared to where they started.
Today’s homework: do 5 minutes of scenarios on our compound interest calculator. By doing this, you can enter several different investing scenarios that will quickly adjust your expectations to reality – either for better or worse. After you know this valuable information you now have data to back up your next financial decision! Look at that, in just 5 minutes you could change the outcome of your retirement!
Good finance advice can be simple!
One of the biggest takeaways from the show is how simple personal finance can be. Most of the people that are featured on the show have a few issues including overspending, lack of a budget, excessive bad debt (remember, bad debt is things like credit cards, student loans, personal loans, payday loans, etc.), and the general lack of a plan. The good news is that all of these are fixable for the most part.
Do you have a credit card bill that you can’t seem to get rid of? Well, cut it up, TODAY! Once it’s gone, start attacking the monthly payment as fast as possible. While you’re doing this you’ll want to limit all other discretionary expenses so you can rid yourself of the bill as fast as possible.
Excessive student loans? Start paying off the lowest balance loan first to eliminate an entire monthly payment. Once you’ve done this, you’ll free up the amount of that payment that can now be applied to the next highest student loan balance. Yes, this may be miserable, but it’s necessary.
Lack a budget? Holy cow, this one is really easy! Take out a piece of notebook paper or even a napkin and write down you monthly income and expenses. You can now see exactly how much money you should have left each month after covering your bills. Doing this can be a huge eye-opener and can aid greatly in establishing a solid financial plan.
Personal finance advice can be so simple. For example, some people are putting money in a Roth IRA but not actually buying anything, so they’re not investing. If they somehow stumble upon the fact that they need to invest in the account it could earn them millions of dollars in gains over their lifetime. One small piece of really simple info could equate to millions of dollars. Think about that.
Live your rich life
One of the biggest things Ramit talks about is figuring out what your rich life looks like. This is different for nearly everyone which shows exactly why financial plans need to be done on an individual basis. Everyone is different and everyone wants different things in life. For me, I’d like to experience “Fu$k You Money”!
The moral of the story is that you should identify what you rich life looks like and then the steps you need to take to get there. Maybe you want to retire at 45? This would obviously require a pretty substantial accumulation of wealth. If you want to travel the world, this could possibly be achieved by finding a freelance job or an employer that offers extremely lenient remote work. Why not travel the world while working? Whatever your “rich life” looks like, you’ll obviously need to identify a plan to get there. Don’t get left behind because you forget about the simple steps!
