I Will Teach You To Be Rich (Summary)
Most finance experts tell you to stop buying lattes. Ramit Sethi asks, 'How many lattes do you have to skip to save $1 million?' The answer is over 200,000, or about 547 years of daily lattes. The entire premise of cutting back on small joys is a mathematical dead end. Instead of focusing on $3 questions, this book teaches you to master the $30,000 questions, like automating your investments and negotiating your salary, so you can buy all the lattes you want.
Focus on Big Wins, Not Lattes
Most budgets fail because they focus on the minutiae of daily spending. Instead, get the five to ten biggest things right—automating investments, cutting fees, negotiating your salary—and you'll never have to worry about small, daily expenses again.
Instead of meticulously tracking every coffee purchase to save $50 a month, spend five hours preparing to negotiate a $5,000 raise at work. That one action is worth over eight years of skipping lattes. That's a 'Big Win'.
Put Your Money System on Autopilot
Willpower is a finite resource, which is why manual budgeting often fails. The key to consistent saving and investing is to create an automated system where your money flows to the right places without you ever touching it.
Sethi outlines a specific 'Conscious Spending Plan' where your paycheck hits your checking account, and then automatic transfers send money to your 401(k), your Roth IRA, and various savings goals (like a vacation or down payment). Whatever is left in your checking account is yours to spend, 100% guilt-free.
Spend Extravagantly on What You Love
The goal of money isn't to hoard it; it's to design your personal 'Rich Life.' This means identifying what you love and spending extravagantly on it by mercilessly cutting costs on things you don't care about.
If you don't care about cars, drive a 10-year-old Honda. If you don't care about designer clothes, shop at Target. This might free up an extra $1,000 per month, which you can then use to hire a personal trainer, fly business class, or buy the latest tech gadgets without a second thought.
Use Credit Cards as a Powerful Tool
Contrary to the popular 'cut up your credit cards' advice, Sethi argues that cards, when used responsibly, are the most secure way to pay, a critical tool for building your credit score, and a source of valuable rewards.
By putting all your regular monthly expenses (and paying them off in full) on a travel rewards credit card instead of a debit card, you might earn enough points for a free round-trip flight to Europe each year. This is essentially free money for spending you were going to do anyway.
