10 Harsh Money Truths You Should Know, According to Ramit Sethi
Written by
Ashley Donohoe
Edited by
Jenna Klaverweiden
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If you’re struggling with decisions or uncomfortable with your financial situation, some ideas you have about money could be holding you back. The sooner you face important financial realities, the sooner you can get back on track toward meeting your goals.
Author and entrepreneur Ramit Sethi often shares examples of his money blunders and lessons learned. In a recent YouTube video, he went over a long list of money truths he wished he had known when he was younger.
Here are 10 of Sethi’s harsh money truths that you should know.
Also see Ramit Sethi’s 10 money rules to build life-changing wealth.
Your Time Is Limited
Whether you’re considering investing, switching jobs or building wiser financial habits, avoid feeling confident you have plenty of time to get started.
“The longer you wait, the harder it gets, so put in the work early,” he said.
Consider this example from Ramsey Solutions. If one person invested $2,400 every year from age 21 to 30, they would’ve invested a total of $21,600, which would’ve resulted in $2.1 million at age 67, factoring in an 11% annual return. If a second person invested $2,400 every year from age 30 to 67, they would’ve contributed $88,800 but would have only $1.2 million at age 67 with the same annual return.
Delaying money moves can lead to missing out on benefits, like seeing your investments grow for an extra decade. You also risk having life’s unknowns steal your opportunities.
You Need Cash for Opportunities
If you aren’t consistently saving money, you’ll have fewer opportunities to make decisions that get you to where you want. For example, your cash could eventually go toward your dream of starting a business or building a comfortable cushion for retirement.
Sethi also discussed past housing and stock market crashes, which presented attractive buying opportunities for those who were financially prepared.
You Don’t Have To Copy Everyone Else
“Whether it’s buying a house, getting married, having kids, traveling to the same place, buying the same car, you choose your rich life,” Sethi said.
Many people get stuck thinking they need to keep up financially with others or do what’s considered expected of them. But the truth is that you might waste money on things you later regret and miss out on doing what you truly want.
Credit Card Debt Isn’t Normal
A Federal Reserve Bank of New York press release noted that Americans owed $1.21 trillion in credit card debt at the end of 2024.
While it may seem that everyone you know has credit card debt, Sethi explained that doesn’t make it normal. Rather than being trapped with debt and extra costs, charge only purchases you can afford to pay back each cycle, and cut expenses to stretch your paychecks.
Discuss Money Early in Your Relationships
According to a recent Talker Research survey, 44% of couples who worried about discussing finances with their partner were concerned it would lead to disagreements. Plus, spending and saving decisions were common reasons for arguments.
Sethi recommended bringing up money early in relationships and admitted he personally failed at this. By discussing money early, you can be on the same page from the start, better understand each other’s goals and habits, and help reduce future arguments.
Buying Isn’t Always Better Than Renting
Buying a home can look appealing with opportunities to build equity, have more stability and enjoy more privacy. However, Sethi said looking at the numbers was important to make sure renting isn’t the better financial option in your current situation.
Considering that Zillow lists a $355,328 average U.S. home price and mortgage rates remain high, renting can make sense if you don’t already have substantial cash to put toward the home purchase. If you rent, you can still reconsider as the market and your money situation change.
Homeownership Doesn’t Guarantee Wealth
While a home is a useful asset, some people mistakenly think they’re profiting from owning one. The truth is that your expenses can go far beyond the mortgage payment you’re making and offset gains in property values.
“Most people, when it comes to their housing, do not understand phantom costs like fees, opportunity costs, inflation, etc.,” Sethi said.
Debt Hinders Generational Wealth
According to Sethi, debt payoff should happen before you focus on generational wealth. Not only is having debt hurting your net worth, but it’s also taking away opportunities to invest more.
In a blog post, Sethi suggested budgeting, picking between the debt avalanche and debt snowball plans, negotiating with creditors, and boosting income to escape debt more quickly.
A 9-to-5 Job Isn’t a Weakness
“9-5 jobs are not for losers — no matter how many entrepreneurs on TikTok tell you so,” Sethi said.
While it might seem less glamorous, a traditional job still provides money to use to build wealth, and you have the option to take on a side gig while working. Plus, the skills and experience from your 9-to-5 job are valuable if you eventually decide to run a full-time business.
Plan More for Bigger Expenses
Underestimating the cost of high-ticket items or experiences can leave you scrambling for cash at the last minute or turning to credit cards.
Sethi recommended assuming you’ll need two or three times the expected amount since hidden costs usually increase the total. If you end up needing less, you’ll have some cash to save.
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