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- I want to read all the books on my shelf this year, and I started with “I Will Teach You To Be Rich.”
- Some of the advice sounded simple, but I took away three great strategies that I plan to implement.
- I’m going to make my own money, invest in index funds, and break up with my bank.
One of my goals is to read every book on my bookshelf. Over 50% of the books in my collection are paperbacks from used bookstores or from friends that I haven’t read. I thought I would focus on each book and decide which to keep and which to donate to my local library.
I decided to start this goal on the first day of the year. I closed my eyes and grabbed a book off the shelf. I chose “I Will Teach You to Get Rich” by Ramit Sethi. My husband gave it to me, but I never read it.
Although the title made me think that the advice would be dangerous and unusual, I found out that it was quite the opposite. Many of the tips inside seem perfect for a beginner learning the basics of finance, such as understanding your credit score or the difference between a checking account and a savings account.
I found myself jotting down notes and actions to take on the next financial steps I needed to take ASAP. After reading “I Will Teach You to Be Rich,” I had three major takeaways.
1. Create a steady cash flow
I’ve spent a lot of time organizing my finances and creating a working budget, but I haven’t created a monthly gambling plan. In the past, I did everything manually, including moving money between different accounts, putting money into my retirement account, and paying credit card bills. with credit. This means I spend at least one hour a week dealing with my finances when I really don’t have to.
Sethi creates an automatic cash flow map that can be set up so that your income is automatically divided and deposited directly into multiple accounts.
His structure works like this: You can set up your salary with your employer so that a certain percentage is deposited directly into your 401(k) each month, and the rest can go into your account of inspection. From your checking account, money can automatically go into your savings account, any other retirement accounts like a Roth IRA, and pay off credit cards and any other bills.
While my structure will look a little different depending on my goals, creating a personalized flow makes managing my finances easier and more convenient.
2. Break up with your bank
There’s a line in the book about how sometimes people won’t switch banks because they’ve been a customer there for a while, or in my case – forever. That loyalty doesn’t pay off and in fact, can hold you back financially.
I still have checking and savings accounts with the first bank I ever opened accounts with. While I have moved 85% of the money in these accounts to a different bank with lower fees and higher interest rates, I cannot move all this money and close the accounts permanently.
This means I’m missing out on making a lot of money because my money is sitting in a bank account with 0.01% interest.
I also have regular monthly payments on my business account with this bank because my balance falls below the minimum required for that type of account. If I move my business account to another location, I can find a bank that doesn’t have the same penalties.
High on my to-do list is breaking up with the original bank I’ve been using for most of my life and getting into a relationship with a bank that looks after my money better.
3. Go for index funds, not stocks
A few years ago, when I first started investing in the stock market, I didn’t have much of a plan other than to buy stocks from companies that I supported or believed in. to do with them or to know when to sell them.
I have known for a long time that this plan is wrong. Reading the book helped me better understand the power of index funds than individual stocks.
Sethi explains that index funds are a collection of stocks that computers manage in an effort to match the market index. Choosing index funds over individual stocks allows me to be more hands-on rather than monitoring the 30-plus businesses I own.
This article was published in January 2022.
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