How Generic Advice Can Keep You From Living ‘Your Rich Life,’ According to Ramit Sethi

©Ramit Sethi

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Ramit Sethi is all about living a “rich life.” As author of the book “I Will Teach You To Be Rich” and head of the brand that grew from it, Sethi helps people learn that their money should serve them — not the other way around.

In a video on his YouTube channel, Sethi explains that most financial advice on the internet is one-size-fits-all. To reach as many people as possible, banks and financial institutions have developed standardized benchmarks for where you should be at a certain age. However, generic advice, according to Sethi, can keep you from living a rich life.

The Problem With Generic Money Advice

In the video, Sethi discussed the problems with generic money advice, saying it can inhibit people from living a “rich life.”

Guilt Is Not the Goal

Sethi talks with many people who come to him feeling frustrated and guilty about their financial situation. They haven’t met the benchmarks they’ve seen online, and they assume it’s their fault. Falling into a self-denial pattern, they second-guess every dollar spent.

Sethi said he doesn’t want people to feel bad about money. He urged his audience to take generic recommendations with a grain of salt at best because those websites don’t know anything about their specific needs.

Ask the Questions

Sethi pointed his viewers to Fidelity’s online retirement guidelines to show what he means. The top-of-page content says you should save 10 times your income by 67 to be comfortable in retirement. Read a bit further, and you’ll see benchmarks for each age milestone: Save twice your income by 35, four times your income by 45 and so on.

Sethi reminded audiences that these websites don’t know any individual’s financial situation. They don’t know your money history, current situation or long-term goals — the three factors that truly matter.

Achieving True Personal Success

To Sethi, living a “rich life” means having the resources to say “yes.” You get there by following your benchmarks — not those of someone who doesn’t know you.

Know Your Situation

Sethi believes in clarity as the key to a “rich life.” You need to know how much comes in, what your lifestyle costs and what you need to achieve your goals. 

“This is one of the most important topics in your life,” Sethi said. “You need to know your numbers.”

That doesn’t mean tracking every penny — which is unsustainable for most people, according to a blog post from Sethi. It means understanding how much goes into each of four basic expense categories: fixed costs, savings, investments and guilt-free spending.

The other component is knowing your net worth and where you want to be. Sethi believes everyone should calculate their net worth — assets minus debts — and use that number to plan for the future.

Understand Your Priorities

If you create a budget based on your needs rather than generic advice, you can make spending decisions that feel good.

For example, generic advice often tells you to say “no” to a nice dinner out. If you put that money into a savings account instead, you’ll be better off later. 

That might be the right choice, but what if eating good food with friends is part of your “rich life”? As Sethi explained in a recent podcast episode, only you can decide whether that expense is worthwhile. If you can afford it and you’ve accounted for the cost, you should be able to go for it guilt-free.

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