No, it’s not about the latte – well, at least according to New York Times Best Seller entrepreneur and author Ramit Sethi I will teach you how to get rich. He says we shouldn’t be focusing on questions like how much to price our coffee, but instead, on the bigger question of whether we want to raise the bottom line. He writes on Twitter:
“In 2022, stop asking $3 questions and start asking $30,000 questions. Don’t worry about the coffee. Focus on: Increasing your savings rate, automatic investing, asset allocation, negotiating your salary/more income, fees (cc debt, interest rates, 1% advisory fee ). (Good news on that front, too: Many savings accounts now pay more than four years, and you can find the best savings account rates you can get right here.)
Pros say Sethi sticks to something — even if they don’t agree with everything he says. Cristina Guglielmetti, a certified financial planner at Future Perfect Planning, says Sethi’s example will have a bigger impact overall than cutting small expenses, but she recommends making a few changes.
“Houses and cars take up a large portion of people’s spending. Keep these manageable and not only do you free up money for savings or investments or debt repayment, but you set your expectations for your later life,” says Guglielmetti.
And if nickel and diming yourself and ignoring the options that will move the needle are mistakes, Guglielmetti advocates returning to a safe number for lower living expenses that you can afford. your greater purpose. “You need to spend some time figuring out that number, or have a plan to help you do it; The goal is not to have strict limits on different categories, but to effectively decide how to distribute your money,” said Guglielmetti.
When it comes to big-picture priorities, Greg McBride, chief financial analyst at Bankrate, says, “Increasing your leverage, increasing your savings rate and Proper allocation of investments is the key to building wealth over time.Decreasing fees will make it easier for you to keep more of those savings in your pocket instead of by depositing someone else’s Check here for the best savings account rates you can get now.
For his part, Chris Chen, a certified financial expert at Insight Financial Strategies, said that the two most important items in Sethi’s list are increasing the rate of savings and using money for him. “They are both related to the principle of compounding, so the money invested earlier will grow more than the money invested later,” Chen said.
In addition, Chen offers this simple advice to help people achieve this goal. “Increase your contributions to your retirement plan. It’s automatically added to your paycheck so you don’t miss out and you automatically add it to your investment options so it can grow. There are several studies out there that document that keeping automation and investment work for people,” said Chen.
But don’t completely ignore the little things, says Andrew Feldman, CPA of AJ Feldman Financial: “There’s a lot to be said for the balance between money and happiness and whether it brings you happiness. coffee or a little something special, there’s a big value,” Feldman said. Check here for the best savings account rates you can get now.
Not everyone agrees with Sethi. NerdWallet financial expert Kimberly Palmer says while it’s true that focusing on big financial choices like where you live and what home you buy can have the biggest impact on in your life, it’s the choices we make every day that also seem small. purchases and shopping habits have a significant impact on our finances over time. “Making small changes like cooking more instead of ordering groceries or replacing your expensive car insurance policy with a cheaper one, can have a big impact on your financial health,” says Palmer. .
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