Personal Finance: 10 Money Rules From Ramit Sethi

good evening tonight we are talking about my money rules and I have 10 of them and I'm gonna share with you and then I'm going to go into detail on them now first off let me show you what these money rules are and remember these are my money rules not yours I already know what's gonna happen I start talking about how I do this and that and then the first thing people say must be nice me oh stop it just stop these are my money rules I'm showing you them because I want to show you what I develop for myself and then I want to hear what your money rules are for yourself okay so here they are I'm gonna hold them up to the screen and I'll preach at them I'll link them or I don't know just screenshot yeah all right so that's so that's it that's the end of this video have a nice night no let's talk about him so I'm gonna read them off first and then I'm gonna go into detail as to why I came up with these rule number one always have one year of emergency fund cash rule number 2 save 10% and invest 20 percent of gross income minimum rule number 3 pay cash for large expenses like an engagement ring wedding dream honeymoon 20% down minimum on a house rule number 4 never questions spending on books appetizers health or donating to a friend's charity fundraiser rule number 5 business class on flights over 4 hours rule number 6 no limit for spending on health like a personal trainer or education like courses events etc rule number 7 buy the best and keep it for as long as possible rule number 8 earn enough to work only with people I respect and like rule number 9 marry the right person and rule number 10 prioritize time outside the spreadsheet okay just from listening to these rules 1 through 10 what do you notice what do you notice some of the things that I would notice if I were sitting in your chair might be first of all who the hell has money rules the fact that there are rules in and of themself is interesting and I wonder how how did this person come up with these rules so we're gonna talk about that I noticed that things like business class on flights over for hours that would have been inconceivable to me several years ago so these rules change over time ok and I also notice that some of these are a bit confusing like why why is this guy keep on mentioning appetizers what's up with that and marry the right person what does that have to do with money so these are some of the things that I might notice but my question to you is what do you notice before we start working down the list castes are there any comments on what people notice no there are no comments alright then I get to do the favorite my favorite thing which is I'll just talk I was put on this plane at 4:00 all right so I want to talk to you about how do I come up with them and then we'll work down our way down the list so I think that in life for the important things everybody should develop a point of view and I believe that a point of view is one of the rarest things on the planet and those important things in life might be money might be relationships it might be health it might be parenting but there's a few things probably fewer than 10 that are really important enough that you develop your own philosophy and every time I meet someone who has a philosophy on one part of their life I just love it I've met parents and they pair it in a style that's a bit surprising to me but I love hearing the way they think about it because they have thought about it and they have written down or encapsulated their beliefs into a few bullet points so with money which is part of my business that I will teach you to be rich I have developed my own philosophies about spending and say and so what this allows me to do by narrowing it down every day we wake up there's a million decisions we can make should I eat out should I buy this new iron we're going to grocery shop should I go to this store that store etc and by coming up with a few key beliefs suddenly I eliminate 99.9% of decision making and I can go back to the important things in life just to give you an example with number two save 10% and invest 20% of gross income the way that that flows into my life is if I am doing that then I don't really have to worry about spending at a general level why because I'm following my rule and these rules if followed correctly lead me to the right place for me so that means suddenly if I'm wondering should I buy this extra large salad or whatever I should never be asking that question instead that's a three dollar question I should be asking this thirty thousand or three hundred thousand or even more question am i correctly saving 10% and investing 20% that is a big question going for an extra large drink is a three dollar question okay so that is why I came up with this and that is why I would challenge you to come up with your philosophy or your own money rules you got some responses okay what do they say okay um first one they're personally tailored to your values and you they're not cookie cutter correct your rules are more about people than just money what's money for at a certain point you've covered the basics you got to use it for the things you love great observation your rules reflect your values and personal experiences yes and you can see that with for example books I love books I wrote books I love them so I'm gonna prioritize those more pretty much very few people will have books or appetizers in theirs just doesn't make sense but those are part of my heritage so of course they're important to me notice cats that I don't have anything about cars on here yeah I don't care I don't really care about cars and I don't have something like buy the newest computer every year in fact quite the opposite by their pens or headphones by the best and keep it for a long time I believe that I live that so great observations all right what do you say we work down this list and talk about why all right so rule number one always have one year of emergency fund in cash so I I'm more conservative in many ways when it comes to finances I want to make sure that I set myself up so that if something catastrophic happens I don't have to worry about my finances and we were seeing that happening right now now I typically don't I didn't recommend a one-year emergency fund for most people typically it was three to six months I have recently recommended that everybody have a one-year emergency fund you have to understand why I recommend that and you also have to understand the trade-offs so I chose a one-year emergency fund because I've built up enough income and net worth that I yes I might be sacrificing a little bit of returns but I'm doing fine in terms of investing I want to protect my downside okay downside protection for most people if they think about a one-year emergency fund it's overwhelming it's a lot of money and also there's a trade-off where they're just keeping money in cash and not investing it so that's a trade-off you'll need to consider although my recommendation is now for everybody to have a one-year emergency fund liquid I keep it in a high-yield savings account and you can do the same thing with yours the key principle here is to always plan for the best and the worst now if something bad happens like a global pandemic if you are laid off you have to remember you're not the only one who's gonna be looking for a job so is everybody else and so with a one year emergency fund that's liquid and you know that at least you're gonna buy yourself some time you can cut your expenses you can get creative with your earnings and you will buy yourself some breathing room so that is the reason and that is first because we always want to make sure we have a roof over our heads and enough to eat number two is growth it shifts very quickly into growth save 10% and invest 20% of gross income minimum okay what am I doing here so I want to save 10% because I can use that savings as I cover in my book for things like my emergency fund I can also use it for things like vacation things a down payment on a house things that I know will be coming up in the future invest 20% I'm investing more because especially if you're younger every dollar you put into investments is gonna be worth many many many times more so a lot of people who are new to money they save a lot and they feel really good but they're actually just treading water because the real money is generated from investments that is why I prioritize investments higher than savings in terms of percentages now why did I say gross income some people do percentages based on gross some do it on net net is what you have after taxes that's really up to you I like to live life in some ways on hardmode like I said I want to be conservative so it's like people who run with a weight vest you know you've seen some people they run with a weight fast or they train an elevation why because when they go back down to normal life without a weight vest or back in normal elevation it's a lot easier so if I'm choosing gross that means I have to save and invest more money you don't have to do that I just choose to do that because it forces me to get aggressive I also want to point out that if you run a business this number could be very different for you this is a little bit more of an advanced concept most people who have a nine-to-five job they let's just say that for easy they make $1000 a month so they could take 10% put in savings 20% put investments but a business owner might pay themselves a salary but once every year once every couple years they take a huge distribution so that distribution could actually pay for one two three four years of your contributions so again that's a little bit more of an advanced concept but business owners who are slightly more sophisticated will know what I'm talking about so what I'm saying is that my income could be lumpy that's okay I can figure it out on the backend all right Oh final thing why why am I talking about this if I save 10% and I invest 20% or more I know that I'm doing great on the income and growth side that is awesome and that means if it comes to sitting out at a restaurant and ordering a cheesecake or an apple pie I'll just get both it doesn't matter because I know that the big question that 30,000 or the 300 thousand dollar question is already being automatically handed and this is one of the most important rules here pick a rule where if you just follow this you are doing the right thing financially this is the crux of the rules it's really important okay that's rule number two rule number three pay cash for large expenses like a wedding honeymoon etc and 20% down minimum on a house I probably shouldn't have used the word cash because people think that I'm literally handing over you know like ten thousand dollars in cash no what I mean by cash is that I'm not going into debt right I'm still gonna pay with a credit card because I want to accrue rewards and consumer protection but it means that I have the cash available to be able to go and for example buy a ring or pay for a wedding or a honeymoon okay and with a house get very conservative 20% down minimum if not more now a lot of people will say well why would you pay that much down you know interest rates are low all that stuff fine you can choose maybe to put 5% down but have the remainder in cash but that's a very very advanced concept most people frankly choose to put 5% down cuz they don't have the cash you do not want to do that if you go to buy a house and you can't put 20% down you're not ready to buy a house can I talk about this extensively in Chapter 9 of my book you will discover lots of phantom costs you never expected oh your roof oh the backyard landscaping on and on and on and if you've just been planning that your mortgage is it you made a big mistake so again play conservative be able to pay for the big things in cash that's my rule and therefore I'm already thinking 10 years ahead what are the expenses that we are likely to have in 10 years cats what do you think we might incur big expenses in 10 years oh definitely a car okay good one so we should probably think about ballpark what kind of car would we like to get when do you think we might get it in fact let's just do it right now let's say we're gonna buy a car I'm just gonna make the math easy let's say that it's going to be $60,000 okay I've never bought a car that expensive malicious pretend when do you think we're gonna get a car is it gonna be next year no no let's say five years from now mm-hmm that's 60 months away I can put $1,000 a month into a sub savings account and at the end of five years we are ready to pay for it in cash that's the way we would do it what might be some other big expenses mmm house I think we talked about a 10-year wedding anniversary oh yeah we're gonna do a big bash big one and we got really inspired and we were like let's let's really bring our whole family let's like make it big so we start putting some money aside for that every single month and the longer the time horizon the less you have to save in order to hit that goal all right so that's a more advanced way of thinking in the future and that's where you can put some towards as well in terms of savings and some really nice sweaters to that is a gift I'm not waiting 10 years for that talk about 10 days all right number four never question spending on books appetizers health or donating to a friend's charity fundraiser so I created this rule for myself because when I went to college I paid for Stanford undergrad and grad school with scholarships and one scholarship that I got was incredibly generous and they effectively said all of your books are completely covered they even set me up with an account at the Stanford bookstore and I would get any book I wanted I didn't even go to the normal register I went to some other desk and they had my account on file and it was free so I had free books for five years that's like it's like Willy Wonka you know that kid who has like the fat cheeks and he walks in he's like that was me in a book store for five years so any book I saw it felt like the most freedom I had ever had to be able to walk into what is my paradise and see a book on cults or see a book on personality psychology and say I'm gonna get that boom take it up read it it's mine and when I left college I wanted to continue that and I wanted to continue that freedom because it felt so good and I realized that in the grand scheme of life unlimited books is not that expensive it's really not and so I just made the policy for myself and now whenever I see a book I follow what I've invented cauldre meets book buying rule if I ever see a book that's interesting I click buy never hesitate never equivocate similarly appetizers when I was a kid we didn't we hardly ever ate out and we certainly did not get appetizers or desserts we got maybe two pizzas for our entire family two cokes to share and coupons we always use them now it feels extremely freeing to be a go and say yeah I'm gonna get that appetizer or which appetizer looks better this one or that one let's get them both and so Cassie do you know my policy when I take my co-workers out to eat however told you what it is mm-hmm what is it yeah they can order anything on the menu yeah the rule I tell them I tell my co-workers when we get a chance to meet in person I say I only have one rule which is whenever we eat out if there's anything that even remotely looks good you have to worry and for me the amount that I spend is small but the joy in personally being able to do that and to be able to do that for my co-workers is incredible so that part of your creating your own money rules is making them meaningful for you nobody else probably has this story so this wasn't make any sense for you but for me I am smiling ear-to-ear when I see one of my co-workers I don't know should I order this steak it's a little I've never had to get it please well so that's interesting how like when I grew up and even you know recently when I would hear the word rules I would think oh it's something bad something restrictive all that stuff but like the one you just shared with your co-workers about they could order whatever they want it's actually amazing and it's fun it's interactive so I think reframing the word rules great great insight yes rule these are my own rules so of course I want them to feel good and be empowering and give me freedom I think it's a great observation donating to a friend's charity fundraiser one thing that I have learned is that have you guys ever done a fundraiser a charity fundraiser most people have not but maybe at one point or another in your life you will maybe you'll do a 5k maybe you'll do a run for breast cancer whatever the case may be and I remember I've gotten these emails from my friends you know when I was in my early 20s and you know once in a while I would donate but most the time I wouldn't and then I started doing fun right and cast we did one together uh-huh we did a charity fundraiser to raise money for children being separated from their parents at the border and we sent an email out to our friends and I have to say that nobody really likes asking for money right I mean no one really likes to donate and no one really likes to do honey that well I was gonna get to that babe thanks a lot thanks for the punch line so I have to say that because I sell premium products and I have over 40,000 customers I have no problem selling and when I am doing it for a cause that I believe in this money was not going to me or to us it was going directly to people who needed it I'm shameless I told people look this is important I need you to donate and I watched what happened right I'm well versed in conversion and all these things and it is amazing to see when you're on that side of the table when you're asking for someone to donate money to something that is meaningful that you feel vulnerable and you wish people would just donate fast and donate early and donate more than you asked that's what I wished and I was really humbled and surprised some people came in big I'll never forget it some people didn't respond to the email or the multiple emails and I'll never forget that as well so my pledge from a few years ago was if someone is asking me for a charity fundraiser and they're a friend of mine or certainly a family member it's a guarantee I will always donate that is a rule because the money is not gonna change my life but just when you're on that side of the table and you're raising money it means everything that someone donates fast they donate the full amount or they donate more simple all right number five business class on flights over four hours this is simple it's something that I wanted and when I first started off in my early 20s I scoffed at everyone whose business got so stupid why they wasting money and then I realized Oh business class pretty nice and so because I could afford it and because comfort was important to me I just made a rule now the rule here eases my decision-making because I used to sit there and if it was a one hour flight or a three hour flight a six hour flight too many decisions so here's the blanket rule four hours or more my assistant knows my rule and she will she knows the exact seat and seat number that I want to fly in and she'll just book it no questions asked so that is a policy I've now put into place it's an awesome policy but it notice that it's also not first class or business class everywhere because I also don't mind sitting on any old seat if I have to if it's a short flight right I'm healthy I can do it so part of these rules is not always going hero 260 but finding when it's important to you alright that's that number six no limit on spending for health like a personal trainer or education courses events etc just like I see a book if I see a course or an event that looks good I'm in price is irrelevant I remember when I went to the Disney Institute course I've been eyeing it for years I finally was ready I picked a date I sent it to my assistant and I said could you please book this for me Orlando I don't even know what that cost I think it was three to five thousand dollars but it was important and there are some things in life I just don't look at the price for by the way you have that too everybody has it if you're a parent whatever diaper brand you like you could find a diaper brand for half the price but you still spend on the one you do if you like a certain type of organic food you could find something for half the price but you don't so all of us have something that is valuable and meaningful to us for me it just happens to be education and also health so when you know I wanted to get a personal trainer and I don't want to look on YouTube and I don't want to do it myself I want a trainer because I want better results I want faster results and I also want to go in and not have to think about it so that's important to me so I used my money to help me live a your life alright number seven by the best and keep it for as long as possible so I grew up in a family where you know we saved we had to save a lot of money we were a frugality based company because there were six of us and my dad was the one going to work and my mom was home with us but I did get glimmers of buying the best and keeping it my uncle had he was a photographer and he had a Leica and like us some of the best cameras in the world and the lenses are just beautiful they're they're functional pieces of art they're just amazing and he had given that camera to my dad I think in the 70s and that camera still works in fact that's the camera that I learned to take photos on and develop in the darkroom so I started to get a taste for what it's like to have the best but also to keep it forever that camera has been in our family for generations and it will continue to be and so I started realizing there are some things in life that I really care about I guess when I started off I couldn't really afford the biggest best car nor did I really care I bought a Honda Accord that's a good car that thing will last forever - it's been still there it's 20 years the thing runs like brand-new so that's it that's an example in that case I did not buy the quote best like most luxurious I didn't ball out on my car but I certainly did buy the most reliable one all right great Honda Accord I apply this to my life with when I bought my computer in fact cassis is something that I shared with you when you were thinking about what phone to buy I was like just get them out the most storage space yeah remember and it's see it's like 300 bucks more but you will keep it for years and what was your reaction at that time I was like what no I'm gonna get I'll get the newest model but there Louis storage space and but then I was always frustrated because they never have enough room exactly so for the things that you use day-to-day especially the things that are important your phone get the best but then keep it one thing I find is that people who buy the best often are just flipping it all the time now if you can afford to do that okay fine but a lot of times they'll say oh I'm gonna buy these really nice pants or really nice this and they wear it for one season and it's over when they get the new phone or they get in a new house or car that's a quick way to really spend a too much money when you buy the best if you amortize it out over three years five years seven years sometimes fifteen years the cost is quite affordable however the problem is you have to do the second part which is to hold it for a long time also with that because I see this with clients and their clothing and wardrobe so when you buy the best - you also have peace of mind that it's not going to give out in one wash or two washes like you know that you're gonna have it forever and it's reliable - I totally agree and I I can speak to that with my own clothing so having bought really nice sweaters and pants and then also I don't need everything to be perfectly nice I've bought some things that are more budget but when you really put them through wear and tear you can see the difference but I think peace of mind goes even beyond that I had a I've referred before to my cashmere sweater pants that are probably my favourite piece that I own and they're just like they're totally over the top they feel amazing I've worn them for what it's been like three years I've worn them thousands of times the drawstring frayed and I took it back to the store and I asked them can you guys give me another drawstring it's a very particular type of drawstring it it's visually it has an appeal to it and they said okay it's gonna take us a few months to get it from Italy and I was like can you guys do something else and they had a tailor there he goes hold on a second he comes back upstairs he pulled a shoelace out of one of the shoes he goes let me try this I go what he goes just give me five minutes he put it in as a drawstring he's like I will style it so it looks exactly the same and he they messengered it back to me like three days later mm-hmm I was like even though it looks really good yeah it looks amazing so again why am i obsessed and why am i smiling so much over these sweatpants it sounds ridiculous but to me I love them I know that these things make me happy when I put them on I've worn them for years I bought the best and I also have peace of mind that if something goes wrong I'll be taken care of yeah and they fixed it so quickly - it was it may you're not doing that at Uniqlo correct yeah okay number eight earn enough to work only with people I respect and like notice that this really only tangentially touches on money but it's about the fact that I want to wake up in the morning and be happy with my coworkers I don't want to have to work with someone where when I look at my meeting invite on the calendar the first thing I do is oh and I think some of us have had people like that in our life where they're just a downer or they're actually abusive at work I will not stand for it I have fired senior people at my company when I found out that they were being not nice to their other co-workers and so I won't stand for it and in my life I want to earn enough to know that I can always work with people that I love people that I respect love and/or trust and so that feels amazing to know that money gives me the ability to to use my values and work with people who I enjoy working with so that's that number done marry the right person cast you got any comments about this yes so this one is the number one most confusing one to pee they frequently say all those make sense that sounds awesome however Mary what does that have to do with money and I think that question is crazy because in my opinion the decision on who you marry if you choose to get married is one of the most important financial decisions you ever make is your partner aligned do they think about spending and saving in generally the same way have you saved up 30 percent your income and they have $75,000 in credit card debt if so you have a huge problem do they get nervous or scared are they abundant or scarcity minded like this is your gonna be thinking about this every single day for the rest of your life and I remind you of somebody who Instagram DM me and said my husband spends way too much on iced tea he spends $5 a day and I'm like wow five that's a lot of money by the way what's your household income and then she said six hundred thousand dollars so just think about that they argue about money every day because they see it totally differently so when I see Mary the right person it means that money like it or not is an integral part of your relationship it's everything from what kind of bread do you buy do you care about spending extra on the organic one with the nuts it is where are we gonna send our kids to school public or private or are we gonna spend on a tutor what hotel are we gonna stay in how often are we going on vacation and are we bringing our family these are big questions that will haunt you if you don't think about them or they can provide you join if you do that's number nine marry the right person and finally number 10 prioritize time outside the spreadsheet at a certain point you've done the I will teach you to be rich system at a certain point you have your money automatically being saved you have your conscious spending plan you're in vesting everything's good you won the game now it's time to turn the page and live life outside the spreadsheet that means family it means loved ones it could mean being single enjoying dating it might mean health it's not sitting and looking at Excel every day and saying oh this is so cool said LD 32 I love them I love the ratios know you one move on a rich life is lived outside the spreadsheet and that is why that is my rule number ten why what's the ROI Oh what's my ratio uh get a life there's so much more interesting things after you get the eighty-five percent solution implemented you get your target date fund or your index funds tweaking around is not going to change anything in a big way what's really gonna change is you picking up a hobby it's you calling up your old buddy from college it's doing things outside of the spreadsheet that's where a true rich life is lived cast do we have any questions that you should address yeah we have a few okay on to questions if you have questions type it in the question box on the lower portion of the screen do not type it in the comment box I'm not reading those well thank you okay question number nine marry the right person reprimands your rhiness oh man where'd it go okay I'm looking I'm looking let's see okay I hope that in this silence as you find this question one thing I would ask people is really think about what your rules are and it should actually be confusing to other people the more you dial in on what is special that's why when people say appetizers what's that about it makes me smile because that's how my rules are mine they are individually built like a beautiful suit custom-made they're made for me that is what a truly cohesive set of money rules will feel like and sound like to you for me I've left your book any plans on another one soon I recommend it to all my clients ooh I'll tell you what I appreciate that thank you very much and thanks for spreading the word if you have ideas about what you would like to see please send me a note you can email me you can DM me but if you have ideas of what you'd like to see next I would love to hear them so send me your ideas and I'll be listening do you have any couple money rules we do actually yeah okay so I remember a cast let's see if we can go back and forth because I didn't prepare these but I do remember one of our rules is I'm gonna talk about the wedding ones when we go to a wedding we are the first people out on the dance floor yeah and we never want to be the couple where people have to worry about where they see us yes now these two rules came from our own wedding planning where of course we want people out on the dance floor and we noticed that people who are just out there just like having a great time and then you know there's people who are like really hesitant we noticed that we also notice when you're doing seating planning you have people who you can put anywhere you rank every single person you yeah you have to feel you know like these people can just mix it up with anybody you could put it next to an old auntie and they'll have a great conversation or you can put them with a young group and they'll be fine there's others where you have to put them with people they know because they'll be uncomfortable and we resolve we never want to be that so we want to be a couple where they can put us anywhere work it mm-hmm yeah okay one that we I think we discussed I don't know if we've landed on it was taken from your role about the business class was it four or five hours what are we talking about when we fly over four hours oh yeah I think you wanted to institute that for us but I was like I don't know oh I think we need to have further discussion on this so I want people didn't know that it's like an ongoing discussion though it's not like we got married and then okay we have 10 rolls right because we both come from different money backgrounds and all that stuff I'm actually glad you brought that up because that rule is interesting so I said I want to do that for us yeah and you said no why did you say that um just because I I've never done that yeah and so I was like it was just outside of my realm yeah and I automatically went to cost right whereas you were like no it's comfort like we'll be rested all that sort of stuff totally so this yeah this is and we should pick this discussion up later but this is a great one we're like you know I'm used to flying above for hours because I've been doing it while I was single for years but I also know that we have to discuss it because I can't just keep doing what I've been doing because now it's us as a unit that was a good one how about travel we made a rule for ourselves which is a really big move oh yeah the travel at the end oh yeah so so it's we want to take a big trip every year mm-hmm and that big trip is usually well we've done it twice it's been six weeks each time very like we go to crazy places we go high-low and we eat in people's houses and cook with andhis but we also stay at these amazing hotels and I think that part of that was we also prioritize our family so we said we want to bring our family as parts of which we've done both times mm-hmm that was good yeah and someone asked in the questions if I have rules so I'm currently working on mine and taking inspiration from her meat all right next question let's see okay I'm still looking looking don't worry take your time I know there's not supposed to be silence I will talk about money rules in a couple the suggestion I have for you to make is to make money rules is to first start with something that is really really fun your first money rule should not be restricted your first money rule should be every year we are going to take one day and go eat at some crazy restaurant or we're gonna try one type of food that we have never tried on this specific date something that gets you both kind of exciting that's when you can start to shift money rules from the predominantly negative restrictive view to something positive now I will say that Castrol we started talking about our day to day spending plan you remember that I said look my big thing is I want us to be saving X percent mm-hmm and if we do that the rest of the spending is relatively like whatever but if we do that we start there we're good and that was a way to really reduce the world down mm-hmm so those are two things to think about what the couples start from a place of fun and also next when you get to your spending pick up savings and investing goal what if your partner does not conform to 50 percent of your money rules how do you compromise we still owe we should do that an episode on love and money okay let's do that another time yeah there's gonna be a lot of Tears on that so first of all they don't have to conform to 50% and you're probably never gonna agree on all your rules that's fine Cass do you even agree with all of my rules no no like so do you spend unlimited on appetizers or books no yeah so you have to understand that your partner has a different worldview that's okay your partner depending on you know how you combine your money might also just have a different amount of money or different ways that they like to spend it this is so common I hear people saying that their partner spends way too much on video games and another one will spend too much on hair and nails or clothes and those are just the most common examples but there are of course many others eating out drinks etc what matters is that overall as a couple you've decided on a few key rules we want to save this percent we want to invest that percent we want to make sure that after we hit our major goals we each have some money that we can do whatever we want no questions asked but the fact of the matter is if you actually looked at how they're spending that money you're probably gonna be horrified that's okay what I do think is important is that you get aligned on the big ones things like are we having kids what kind of lifestyle do we want for our kids are we gonna buy a house what type of house how much do we want to spend if you can't agree on some basics like we should be saving money then you have larger problems and I would definitely recommend a therapist mm-hmm okay let's see do you invest differently for different goals like a house or car vacation using a conservative asset allocation a good question actually very sophisticated question so in general if I am going to need the money in less than five years I don't invest it I just keep it in savings why because what am I gonna make an extra few percentage points but open myself up to me massive downside risk no thanks I already won the game no need to keep playing I will tell you that I once recorded a video I had saved up enough for it payment on a house and caste you and I talked and we decided we're not gonna buy a house in the next ten years when we decided this so I put the money in the market I said look over ten years the money is likely to more than double and that allows us to either get a nicer house or put more down than 20% so that was like a very very long-term goal that I had already saved up for in general that's fairly unusual but to answer your specific question no I want to keep things simple in my financial life I got enough complexity so either it's staying in cash or it's getting invested in my usual asset allocation I'm not creating a separate asset allocation for different time horizons I could but why bother just keep it simple that's not the 85% solution so savings or invested that's it okay I noticed a lot of people aren't asking about like how much to say for emergency funds for our one case where can they find that information I will teach you to be rich thank you I have the exact percentages in the book so you can find out exactly what percentage you can even find out what percentage I recommend for like eating out and discretionary fun stuff saving investing basic necessities like your rent all of that is in there with clear benchmarks as well as the best accounts to use even the phone numbers even the words to read off to get your fees negotiated just get the book also you've posted a lot of really awesome videos on YouTube right yes youtube.com slash remits 80 I go into more detail with some of these videos and of course they can join my newsletter at IWT com okay last question how often do you really ate your money rules I would say once every couple of years I spent a while coming up with these right and a lot of it was just bubbling up and I would you know for example I just felt so good when I would be able to order an appetizer and I didn't sit there the first time I ordered an episode this is gonna be one of my money moves I don't even know what my money rules were but when I sat down to think of them that was a months-long process where I would think about what makes me happy what makes me feel secure what gets me excited and then I thought is this money play a role in that or not and also what do I just not care about you know there are things people expect me to care about like ramita why haven't you bought real estate in New York why have other things I care about more so once I set those though they fit pretty well they fit like a really nice glove so every couple of years I'll relook at them and think about them but I assume when my lifestyle changes and when our lifestyle changes will probably reevaluate them but for now they fit great mm-hm great all right so thank you for watching that was a little background on my ten money rules again those are my rules not yours I would love for you to leave a comment and tell me what are one two three of your money rules and then tag a friend to ask them what their money rules are let's get this started so in the comments tell me what are one

Channel: I Will Teach You To Be Rich

Views: 32,711

Rating: 4.9446368 out of 5

Keywords: ramit sethi, ramit sethi fireside, ramit sethi I will teach you to be rich, ramit sethi interview, personal finance, personal finance 101, personal finance tips

Id: DLU2o96tOu4

Length: 45min 35sec (2735 seconds)

Published: Fri Apr 17 2020