My friend Ramit Sethi lives an extraordinary life. Like me, he graduated college in 2004. While a student he consulted for big companies, and then, after graduating, co-founded a hot technology start-up and launched a writing career. Today, his full time job is running the web site I Will Teach You To Be Rich, which offers no-bullshit personal finance advice for young people.
His path is a great example of lifestyle-centric planning. He knew what he wanted his life to be like — flexible, financially sound, engaging, based in a big city — and then started making moves to make it happen.
Learn From the Master
I’m telling you about Ramit for two reasons. First, his new book, I Will Teach You to Be Rich, was just published. I review it later in this post, but let me give you a spoiler: buy this book if you want to save a lot of stress in your life over the next 10 years.
Second, Ramit and I recorded an hour-long podcast about his story and his advice for students looking to go from college to an extraordinary life. Among other topics, we cover a simple trick for guaranteeing admission to graduate school, cultivating great mentors, picking work that matters, and dominating your peers.
My full review of his book continues below…
Book Review: I Will Teach You To Be Rich
Here is why I endorse Ramit’s book: The content is targeted like a laser beam and solves a real problem. Specifically, it describes a six-week program to help young people get their finances in order. Ramit doesn’t get bogged down in caveats and asides; he simply gives specific clear advice for constructing a solid financial life with a minimum of hassle.
Let’s get specific. Here’s what the six weeks in his program cover…
- Week 1: Get the right type (and number) of credit cards. Learn your credit history.
- Week 2: Setup the right bank accounts; including a no-fee, no-minimum checking account and a high interest online savings account like ING Direct.
- Week 3: Open the right investment accounts. For a young person, this probably means pay into your 401(k) up to your employer’s match — if available — and then put the rest of your investment money into a Roth IRA.
- Week 4: Adopt a conscious spending plan. Forgetting budgeting or guilt about buying a latte, Ramit’s approach is simple: as long as you’re clear about how you’re going to spend your money, you can spend it however the hell you want.
- Week 5: Use clever hacks to automate your entire finance system so it requires minimal effort from you to keep running.
- Week 6: Choose the right investments for the percentage of your income that you invest.
Financial anxiety is by far the biggest source of stress encountered by young adults. If you buy this book and follow the plan inside you will eliminate this stress from your life. In other words, the ratio of reward to effort is high.
I’m not trying to cheerlead. There are no miracle cures in this book. Ramit is stuck with his somewhat hyperbolic title due to the success of his longtime blog which boasts the same name. As one Amazon reviewer suggested, a better title might be: “I will teach you how to have common sense about your finances.” Or, as I suggested to Ramit as he was writing the manuscript: “I will teach how not to be an idiot about your money.” These are probably more accurate titles, as this is what the book teaches — not some super secret investment strategy. But let’s be frank, even if it’s not sexy, it’s a lesson that most of us young types need.
Here’s the bottom line: if not being an idiot about your money is on your post-grad to-do list, spending $14 on this book is probably the easiest path between here and checking off that task. You could find the same information trolling through blog archives or picking the relevant chapters out of more general finance advice guides, but seriously guys, we’re talking $14, don’t waste the time.
Thus endedth my sermon…