Over the next few weeks, I am going to provide you some interesting takeaways from a book titled I Will Teach You To Be Rich by Ramit Sethi. This book sounds pretty awesome, and trust me it is. There are some great insights in this book along with some practical things you can implement to turn your financial life around. I want to start with The 85% Solution as I believe this can be a key motivator to getting started.
What Is The 85% Solution?
The 85% Solution will help you overcome your fear of starting to invest. We tend to think that we need to be perfect when it comes to managing our money. But we honestly DON’T have to be 100% perfect. We just need to take money management one step at a time. Our goal should be to be about 85% right in the way we manage our money. 85% is a hell of a lot better than 0%, so let’s get started.
Getting Started Is More Important Than Becoming An Expert
Don’t believe that you have to be an expert in order to manage your money. Honestly speaking, most self-proclaimed experts are not really experts at all. The most important thing right now is to get started learning. You have to raise your Financial IQ. It may seem like a long road ahead to learn and get to your 85% goal, but as Lau Tzu said,
“A journey of a thousand miles begins with a single step.”
It’s OK To Make Mistakes
You are going to make mistakes. I sure did and still do. It’s okay. You don’t have to be perfect and you will make mistakes. This is how we learn. Now, you want to be careful not to make any mistakes that cost you tons of money. If you are concerned about this, keep the things you do small, so any mistake is not devastating. One great thing about mistakes is that you can learn from them. Reflect on what you did wrong, understand it, and make sure it doesn’t happen again.
Ordinary Actions Get Ordinary Results
It’s hard to get something extraordinary out of doing something ordinary. I know there are some exceptions, but for the most part, extraordinary results come from extraordinary actions. If you want great results, you have to work hard. Put in the extra effort to learn and build your confidence. Go above and beyond. Put in an extraordinary effort to learn and to fail. This is how we get extraordinary results. Once you are confident in the things you know, you can step up your game big time!!!
There Is A Difference Between Being Sexy And Being Rich
It can sound really sexy to say you bought some stocks, shorted them, and made a bundle. And that does happen, but with very big risk. It is like gambling. If you hit it right, you will get a high and want to try it again. Eventually you will lose and probably lose big. Ramit says that his investment style is more boring. He bought a few good stocks five years ago and simply bought more when the price went down. Investing isn’t about being sexy. It’s about being rich. Avoid the appeal of day trading and shorting stocks. Pick a few good stocks and take the boring route.
I believe this also applies to general living. I am reading a book titled The Millionaire Next Door now. It pretty much says that a large majority of millionaires are your average guys/gals living in your neighborhood who live frugal lives. They don’t buy the expensive houses and cars, or live the sexy, lavish lifestyles. They are living more modestly and they are rich. Too many people live the lavish lifestyles and live paycheck to paycheck. They may look rich, but they are not.
Spend Lots On The Things You Love And Cut Costs On Things You Don’t
Instead of spending lots of money on everything possible, how about trying to cut your costs mercilessly on the things you don’t really need and spend more money on the things you love? If you cut the things that don’t bring you much joy, you will have more money to put into the things that do. This can be tough to do and requires you to do some homework, but it is worth it. Here is an example. If you watch TV on Hulu 90% of the time but have to sit through commercials because you don’t want to pay the extra money to remove them, consider cutting your spending on another streaming service you don’t watch as often. You can take the savings from the one and make your Hulu experience better without commercials. Put more money in the things you love and less into the things you don’t!!!
You don’t have to be the smartest person in the room to become rich, or at least make a positive change in your financial status. All you need to do is take some time and get started learning how you can make better use of the money you have. Investing can change your life. You may be thinking you don’t have any money to invest. I challenge you that you do. You just have to find it. Don’t leave money sitting in a bank account that could be making you money in the stock market. Take things slow and one step at a time. Remember you don’t have to be 100% perfect. 85% of the way is good enough!!!