Save Your First $100K Using These 10 Secret Habits, According to Ramit Sethi
Written by
Lydia Kibet
Edited by
Zuri Anderson
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Saving $100,000 isn’t about luck or earning a fat paycheck. It’s about consistent habits and smart money decisions.
Ramit Sethi, the author of the New York Times best-selling book “I Will Teach You to Be Rich,” recently shared 10 underrated habits that can help you save your first $100,000 regardless of where you’re at with your savings goal.
Have Monthly Money Check-Ins
Sethi suggests setting aside one hour each month to review your finances to ensure that you’re on track with your vision of a rich life. These monthly check-ins will help you spot issues early and fix them before they cause more financial trouble. Review whether you’re overspending, not spending enough or falling behind on your savings or investments.
Prioritize Paying Off Debt Fast
High-interest debt, especially from credit cards, is a wealth killer. Sethi advises paying off high-interest debt as quickly as possible so that you can redirect that money to growing your savings and investments.
Always Be on the Hunt for More Money
If you want to build wealth faster, Sethi suggests that you prioritize looking for extra cash. He recommends the C.E.O. approach (cut costs, earn more and optimize spending). Review your expenses and cut those you don’t care about.
The financial guru encourages asking for a raise, switching jobs or industries and even starting a business to earn more. Finally, optimize your spending by negotiating your bills down or asking for a lower APR on your credit cards and loans.
Follow a Spending Plan
If you spend money on things that are not part of your rich life, then you don’t follow a spending plan. Instead of wondering where all your money went at the end of each month, build a conscious spending plan that pays yourself first. A conscious spending plan will give you more clarity so that you can cut back on things you don’t care about and spend more on things you love.
“Most people don’t want to take an honest look at their finances because it’s kind of uncomfortable,” Sethi said. However, doing so will transform your life.
Shift to Long-term Thinking
Sethi thinks that building wealth is like getting fit or learning a new language, which takes time. He advises thinking long-term and seeing the big picture down the road. Remember that every step you’re taking in the right direction will pay off.
Build a Financial Moat
A financial moat is like an emergency fund. Life happens, and having a safety net can give you peace of mind. An urgent medical bill, car repair, or sudden job loss can wipe out years of savings. You don’t want to be in a situation where you’re going into debt because of something you didn’t expect.
“A key to getting and staying ahead is to have a three- to six-month emergency fund,” he said.
Delete Your Bank and Credit Card Apps
Sethi thinks that having bank and credit card apps on your phone is unnecessary because more information won’t save you. As long as you’ve automated your savings and investments and do a monthly check-in on your spending plan, you don’t need to log into your banking app every day.
Invest in the Right Things
Timing the market is the worst decision you can ever make. Sethi recommends investing in low-cost index funds consistently and doing it automatically. Index funds have consistently outperformed actively managed funds for years, making them an attractive investment option.
Surround Yourself With People Who Find It Normal to Invest
“If everyone around you thinks that investing is weird, you’re going to think it’s weird, too,” Sethi said.
That’s why you need to surround yourself with the right people. Find a community where you’re all working toward the same goal, whether it’s hitting a specific saving or investing milestone.
Do an Annual Rich Life Review
Once a year, do a review of your finances and life. Review the money rules you created, and if any don’t apply to you anymore, do away with them or add new ones.
What went well this year? What didn’t go well? Where are you today with your goals? What would next year look like?
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