Ramit Sethi: Why It’s the ‘Big Wins’ That Matter in Building Wealth

©Ramit Sethi

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When it comes to building wealth, are you still counting pennies and skipping your morning latte? Well, personal finance guru Ramit Sethi thinks you might be barking up the wrong money tree.

The author of “I Will Teach You to Be Rich” and star of Netflix’s “How to Get Rich” has a different take on how to grow your wealth – and it doesn’t involve giving up your daily caffeine fix. Here’s why Sethi says focusing on “Big Wins” is the real key to financial success.

The Latte Factor? More Like the Latte Fallacy

We’ve all heard the advice: cut out small expenses like your daily coffee and watch your savings grow. But Sethi’s not buying it. In a recent newsletter, he pointed out the flaw in this thinking:

“If you were to cut out that morning coffee expense, at the end of the month you’d find yourself deprived of that daily joy, battling a severe caffeine withdrawal headache and staring at a bank account balance that looks almost exactly the same as it would’ve anyway!”

When you put it that way, saving a few bucks a day doesn’t sound so appealing, does it?

So, What Are These ‘Big Wins’?

Instead of nickel-and-diming yourself, Sethi advocates for focusing on what he calls “Big Wins.” These are financial moves that can have a massive impact on your wealth over time.

Specifically, “Big Wins” can include:

• Negotiating a higher salary
• Finding a job you love (and that pays well)
• Automating your finances
• Making smart investments

And the beauty of Big Wins? “You do the work up front — and get rewarded for the rest of your life,” Sethi wrote.

The Million-Dollar Negotiation

Let’s break down one of Sethi’s favorite examples: salary negotiation. According to him, “one $5,000 salary negotiation in your 20s can be worth over $1 million over your lifetime.”

A million bucks from one conversation? Well, here’s how the math might shake out: Let’s say you’re 25 and negotiate a $5,000 raise. If you invest that extra $5,000 each year (assuming a 7% annual return), by the time you’re 65, you’d have about $1,035,000. And that’s not even accounting for future raises based on that higher salary.

Now, how many lattes would you need to skip to save a million dollars? (Spoiler: It’s a lot.)

Why Don’t More People Focus on Big Wins?

So if Big Wins are so… well, big, why isn’t everyone doing this?

Sethi explained his theory, “For most people, the answer is nowhere,” he said. “They spend their lives never addressing their stress about money, not enjoying a ‘Rich Life’ and always thinking about the next stack of bills on the counter waiting to be paid.”

In other words, we’re so caught up in the day-to-day money stress that we miss the forest for the trees. Or in this case, the mansion for the lattes.

Learning To Spend Money (Yes, Really)

Here’s where Sethi really flips the script on traditional financial advice. He doesn’t just want you to save – he wants you to learn how to spend money. 

Think about it: How often do you see advice on how to spend money wisely? As Sethi points out, we rarely learn the following:

• When it makes sense to buy something just because you want it
• How much you can safely spend each month
• What other people in your situation are spending their money on

Without this knowledge, we end up in a cycle of guilt and anxiety around spending, never fully enjoying our hard-earned cash.

Putting It All Together: The ‘Rich Life’

This all adds up to what Sethi calls the “Rich Life.” It’s not a complicated idea, but for many it’s revolutionary.

Living a rich life isn’t about saving money from a place of constant financial stress; it’s about making smart financial moves that give you the freedom to spend on what truly matters to you.

And there’s no judgment on what it is that matters to you – it might mean you want to fly business class or it might mean that you want to buy the latest e-bike. It’s personal.

When you focus on Big Wins, you create the financial breathing room to enjoy life now, and not just in some far-off retirement. Sethi said this is what’s valuable and important — with or without lattes.

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