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5 Steps To Getting Rich (Read This First)

Ramit Sethi

In a big hurry? Download a New Free Ultimate Guide to Personal Finance.

Read below for richer details, though. Pardon the pun.

1. Know what you spend.
How much did you spend on food last week? What do you pay for housing (rent, repairs, utilities, tax, etc) every year? Without knowing how you’re spending money, you can’t begin to make any money. Here’s how to track your spending.

2. Start with little steps, like your bank.
You shouldn’t be paying any annual fees. You should have a good credit card. And you should know the tricks to save yourself money from the banks. You can start today by calling your bank, checking what annual fees you’re paying, and asking them to switch you to a free account. Details on how to save on banking.

3. Your money should earn more money for you.
At the end of the year, if you didn’t work at all and didn’t spend one penny, you should still have more money. Even when your money is just sitting there, it earns you interest. What’s even better is that, if you invest sensibly in stocks and other areas, you can see excellent and relatively predictable returns over the long term. Details on using your money to earn more.

4. Don’t let money run your life.
Certain things are worth spending a lot on if they make you happy. I love pens and salsa, even if they don’t make financial sense. The minute your rules start making you feel crazy, it’s time to re-examine your rules. More about not going money-crazy.

5. Don’t be stupid.
Everything I write on this site is centered around aggressive but sensible investing. That means investing for a 10-year outlook (better: 30) and ignoring the morons on CNBC every day. Buying and selling stocks every day also sounds sexy, but it’s actually very dumb.

It means having a goal and planning for it, not cashing out the minute things go bad.

It means recognizing that if you’re in your twenties, your tolerance for risk is enormous–you can make more aggressive investments, use compounds interest to earn tons of money, and ignore many lower-yield investments your parents have to make out of necessity. More about thinking aggressively.

Finally, Not Being Stupid means you can learn these things yourself, not pay someone else to do them for you.

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8 Comments

 
  1. Eric

    Ramit: Congrats on your 2 years running this blog! Keep up the good work.

  2. Jonathan

    Indeed, congrats on 2 years. And this was a good start!

  3. Gaurav

    Hi Ramit

    I am a regular at your blog for last few months and really enjoy & learn from your posts. Your style of writing is very impressive too. Keep writing and congrats on completing 2 years of the blog, hoping for many more years to come with lots of useful content.

  4. Fred

    This blog is very informational and congrats on the 2nd year!

  5. June Williams

    I enjoyed reading your website. I believe that the first rung is to borrow from friends and relatives. The first time I lived in prosperity was when my family and friends and the Federal Government owned Williams Printing Co.

    Right now I need to restart financially wealth building. I would like your assistance. I can be reached at Ph. 216 475 3144. I need to borrow some money at least or get more advice at best.

    Right now, my computer here is not registering some now time info I need. I wish you all the best.

  6. Will

    YES!
    I’m going through everything starting with post 1. How far you’ve come

  7. Abe Cherian

    Hi Ramit, congrats on your growth and thanks for all the info you are sharing. #3 (Keep money in a savings account that pays interest) is pretty funny.