Ramit Sethi: 4 Budget Areas That I Put No Spending Limit On
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Mary Green
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Molly Sullivan
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When you sit down to create a budget, are you pinching pennies and giving yourself lots of strict spending limits? According to personal finance expert, Ramit Sethi, you may be going about your money management all wrong.
Sethi, the star of Netflix’s “How to Get Rich” and the author of “I Will Teach You to Be Rich,” has some unconventional views about budgeting. Instead of fretting over every dollar you spend, Sethi recommends that you spend freely in certain key areas.
Keep reading for a look at the four spending areas that Sethi never puts a limit on — and why you shouldn’t either.
Comfort
We’ve all heard the cliches about avocado toast and lattes. If you manage to eliminate the little luxuries, you’ll supposedly be in a better position to save money. But the truth is, nobody ever got rich just by cutting out avocado toast.
As Sethi told an interviewer, “Do you know how many avocado toasts you’d have to forego to get just a 20% down payment? Is it 100? Is it 1,000? No, it’s over 2,500 avocado toasts.”
In other words, you’re not going to achieve financial freedom simply by forgoing whatever luxury you usually indulge in. If anything, Sethi says that you shouldn’t deprive yourself. For him, a little bit of luxury is a non-negotiable part of a good life.
“I indulge every now and then when it comes to comfort,” the finance guru explained.
In his case, that includes flying business class whenever he takes a flight that lasts four hours or longer. For you, indulging in comfort might mean buying French-milled soaps or fine-quality chocolate. Whatever it is, don’t miss out on the little things that make life worth living.
Health
Spending money on your health by buying a gym membership or sessions with a personal trainer can yield incredible benefits in the short and long term.
You’ll have more energy and more stamina, as well as better mood management skills. You may even become more creative thanks to those energizing workouts — and all that creativity could earn you a hefty bonus or a salary bump.
Education
When it comes to education, Sethi calls for no-limit spending. That’s because this is an area that can have a tremendous impact on your well-being and future.
Education allows you to build new skills, which you can then use to get a better job or a promotion. For example, if you invest in a class on data visualization, you’ll have an attractive and highly lucrative new skillset at the end of the course.
Books
Sethi has a simple rule for himself, which he calls, “Ramit’s Book-Buying Rule.” Whenever the financial guru feels like buying a book, he does. No questions asked.
For him, the no-limits rule on books is all about giving himself permission to live a joyful life. Because books add meaning and depth to his life, he doesn’t reign in his spending in this area either.
But of course, everyone is different, so Sethi advised his followers to “choose a few things that make you happy and fill you up.”
Then, as far as your finances allow, indulge that love. Let yourself spend without limits in that area, and don’t feel guilty about it.
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