Your Cheat Sheet to Financial Freedom

Every 25th of the month is a ray of hope and a chance to start new. The day when the graceful paycheck makes its way to my bank account is truly a blessing. Yet, I shouldn’t feel this way about a paycheck. This unhealthy and toxic relationship. I found myself living paycheck to paycheck, and zero in my savings account. I needed help quickly to save me from my money management disaster.

That’s when a friend recommended the book “I Will Teach You To Be Rich” by Ramit Sethi, and after finishing the books almost all of my money problems disappeared. It also proved to me that being rich doesn’t mean you need to come from a wealthy background or graduate from the top schools — instead it’s about how well you can manage your money.

He starts off his book by asking his readers what does it mean to be rich, because everyone has a different definition of being “rich”; and once you know what it means to be rich it’s easier for you to come up with a money management strategy that works for you. If being rich means financial freedom, then you know what your priorities are.

Once I determined my priorities, I could see the bigger picture and it made applying his strategy in my life easier. The three main takeaways I got from his book are: starting early, budgeting is useless, and being frugal.

• Starting Early — I always thought that it was way too late for me to start rearranging my finances, but to my delight it’s not. It’s always better to start early, but Sethi reassured me that it’s better late than never. Just by setting up an automated transferring system or creating a savings account is one step further towards my financial freedom. You just need to start small ;) .
• Forget Budgeting — Budgeting has been the solution for most people when managing their finances, and it’s constantly recommended by other people — unfortunately it’s not the best solution. The “daily tracking system” sounds logical and it sounds so simple, but nobody ever does it. Instead of budgeting, create a “Conscious Spending Plan”. The plan consists of four major spending categories: Fixed Costs, Investments, Savings, and Spending Money. Then you contribute a certain percentage of your income to those four categories. Just like that your finances are managed and organized.
• Don’t Be Cheap. Be Frugal — You might be wondering if the two are the same, but being frugal is nothing compared to being cheap. Frugal people care about the value, they think long-term, and they will spend money on something that they truly care about. While cheap people care about the cost, think short-term, and are very unreasonable. For example, cheapskates will count every single penny, and they will put themselves through uncomfortable situations just so they can save money — yet most of them aren’t sure why they are saving in the first place. With frugal people, they have reason and they find a way to live a normal life while saving money.

This book doesn’t sugarcoat anything to its readers, Sethi lays it all out in the beginning of the book and calls us out on our spending and saving mistakes. He doesn’t use big fancy words to explain the technicalities of money management. Sethi’s simple explanation is what makes him stand out from other financial self help books. If you’re drowning and need help fast, read I Will Teach You to be Rich, and like magic your money management issues will disappear.