10 Popular Personal Finance Tips To Ignore, According To Rami Sethi
Written by
Crystal Mayer
Edited by
Amen Oyiboke
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Rami Sethi never holds back when it comes to giving personal finance tips to his over 1 million subscribers.
In a recent YouTube episode, the best-selling author and podcaster explained what advice people take that really isn’t helpful. Here are 10 popular personal finance tips to ignore, according to the personal finance expert.
1. Sweating the Small Stuff
The founder of “I Will Teach You to Be Rich” said that advice that focuses on extreme frugality — like never buying coffee or eating out — often misses the point.
Instead, Sethi encourages people to follow what he calls the CEO method: Cut costs, Earn more, Optimize yourself.
Rather than eliminating every small indulgence, he suggests targeting your top discretionary expenses and cutting them by 20% to 50% over six months, making gradual, sustainable changes over time.
2. Using Budgeting Apps
Sethi’s next piece of personal finance advice, which most people can ignore, was using budgeting apps or other shiny things sold by influencers. Instead, he encouraged listeners to use his simple conscious spending plan. It is important to know fixed costs, which should be below 50% to 60% of take-home pay, he explained. Around 10% of the budget should be allocated to investments, 5% to 10% should be automatically transferred into a high-yield savings account, leaving 20% to 35% of take-home pay for guilt-free spending.
Most experts agree that setting a budget and sticking to it is critical for financial success. Unfortunately, many Americans do not have a basic emergency fund.
According to a study by Forbes, 28% of respondents did not have savings below $1,000. This means that in the event of an emergency, many people would have to turn to credit cards or other methods to pay for it. Setting a budget, no matter what strategy is used, is critical to ensure bills are paid and savings goals are met each month.
3. Move To a Low-Tax State
While many influencers encourage relocating to low-tax states, Sethi disagrees.
He noted that higher taxes don’t necessarily deter high earners and often fund essential services such as education and infrastructure. Additionally, as Money Digest reports, there may be hidden costs to moving to a lower tax state. For instance, states with no income tax may try to offset costs through other things, like property and real estate taxes.
4. Vague Mindfulness Tips
He also said you could avoid vague mindful tips from influencers, like morning affirmations and journaling. Instead of these, he told his listeners to focus on building a rich life plan. Write down specific goals and steps for how to achieve them.
5. Follow Your Passion
“Passion alone is not a strategy for making money,” said Sethi. Instead, he told viewers to commit to mastering something worthwhile. Basically, a passion will not necessarily pay the bills.
6. Shame-Driven Advice
Sethi said listeners can avoid shame-driven advice. Instead of feeling guilty about a purchase, he said to ask, “Can you afford it? Do you love it?”
Research indicates that people already feel enough shame about their finances, leading to self-distrust, which undermines financial wellness.
According to a report in Psychology Today, 80% of Americans have never received financial education. They are left to try to navigate a complex financial situation, and when a mistake is made, they carry the shame and guilt of it. These feelings can lead to self-distrust and become a burden to financial stability and success.
7. Angel Investing
While many influencers talk about getting rich through angel investing, Sethi said it is advice worth ignoring. He explained that it comes with a lot of risks, and 99% of the startups fail.
Instead, he told his subscribers to invest in index funds.
8. Trend Chasing
Sethi encouraged listeners to avoid trend chasing. He noted that past trends like SPACs and NFTs were more like gambling than investing.
He did note that for people with extra money, it was ok to invest in these speculative ventures after other goals were met.
9. ‘You Can’t Get Rich With a 9-to-5.’
While some influencers may push controversial methods of making money, Sethi still believes in the power of a 9-to-5. He explained that most income is generated through a regular job. The goal, however, should be to maximize earning potential.
Again, he advocated his CEO method of cutting costs, earning more and optimizing yourself. One way to earn more is by negotiating for a raise.
10. Buying a House
Finally, arguably his most controversial piece of advice was to ignore buying a house. He explained that the phantom costs of homeownership can add 30% to 50% to a monthly mortgage.
When asked by Forbes, 57% of experts said that owning a home is a “good investment.” One reason is that the net worth of a homeowner is significantly more than that of a non-homeowner on average. In fact, homeowners have a net worth 40 times greater than non-homeowners. The key, Sethi said, is ensuring the purchase truly fits your budget and long-term goals.
