There’s a ton of advice out there on how to make more money and cut your expenses so you can “get rich.” Not all advice is good advice, though.
That’s why personal finance influencer Ramit Sethi recently shared a YouTube video all about the advice you should avoid while pursuing your financial goals. Here are his thoughts.
It’s tempting to try to reduce every little expense as much as possible to save money and grow your wealth. Sethi argued that’s a mistake. Putting too much time and energy toward cutting expenses like coffee and making homemade lunches every day will get in the way of looking at the big picture.
Instead, Sethi recommended gradually cutting your top two or three discretionary expenses by 20% to 50% over the next six months. “You can reallocate that to savings, investing, even guilt-free spending on something that you actually care about.”
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Similarly, Sethi suggested tools like budgeting apps and fancy spreadsheets can lead to agonizing over every small purchase. His recommendation is to instead focus on big things like your mortgage and debt repayment.
Sethi said he often gets comments from people earning around $60,000 to $70,000 annually about moving to a state with lower taxes to save money. He rejects this advice. Moving across states can cost over $8,000, depending on the distance, which will immediately eat into any tax savings you gain. Sethi told viewers to instead focus on earning more and on voting for the values they agree with.
Tips such as “do morning affirmations, get in a cold plunge, then a sauna, then drink 68 gallons of water, then journal” are everywhere online, Sethi said. But these are not necessary — he doesn’t do any of those things and is still successful. His advice is to focus on a rich life plan, instead, with specific goals for your future.
You’ll often hear people say to “follow your passion,” and the money will follow, but that’s unfounded. “Passion alone is not a strategy for making money,” Sethi argued. He turns the advice around to suggest that you develop skills related to something that is valuable to others.
Shame is a powerful influence, so it’s no surprise that many people online try to use it to affect others’ purchasing decisions. Sethi’s opinion on this is clear: “That’s ridiculous.” You don’t need to justify your purchases to people you don’t know. Avoid the “negative money spiral.”