Ramit Sethi, a bestselling personal finance guru turned TV star, has a question for you. What does your rich life look like? Perhaps it’s lounging in the Caribbean with a bottomless piña colada. Or front row seats for Taylor Swift’s Eras tour. Or maybe, like Sethi himself, it’s as simple as ordering any starter/appetiser on a menu without checking the price.
You’ve probably played this game before. But Sethi’s version has an unexpected twist, because he thinks we can all live our rich life with a few minor adjustments, no lottery tickets required. “Everybody in this room should be able to live a rich life,” he says, soon after we find each other at a swank lounge inside New York’s SoHo Grand. “Everybody in this room should be able to understand the basic language of money. And if they can do that, they can actually feel good about money.”
It’s easy to be leery of people who make their money by telling others how to manage theirs, especially in an era of food banks. But Sethi is not like those stock market gurus you sometimes see on TV heatedly waving their arms and telling us to “Buy, buy, buy!” In fact, he believes no one should invest in individual stocks and he thinks home ownership is a poisoned chalice. He knows society is stacked against a lot of people – women, especially, and people who look like he does. “You can simultaneously acknowledge the need for systemic change and acknowledge that we can take personal responsibility for the things we can change,” he says. “Those two can exist in harmony. There is a lot we can’t fix, but we can start to take control, little by little, over our finances.”
For the record, I’ve swallowed the Sethi Kool-Aid and I’m not going back. Few interviews have galvanised me as much, or left me feeling as riddled with regret for the cavalier way I’ve managed my income over the years, particularly during those years when there was still an income to manage. Where did it all go? Why didn’t I save more? Unless you’re Bill Gates, you’ve probably asked yourself the same questions.
I only wish I’d met Sethi at college, where he first discovered his innate gift for dispensing advice. It would have made me more mindful of using credit cards like a cash spigot. And more sceptical of my 17-year-old nephew’s hot tip for a gaming company that crashed soon after I had invested in it. I definitely would not have moved a chunk of my retirement funds into shares of Richard Branson’s Virgin Galactic (even Branson dumped most of his). What was I thinking? I don’t even like space.
Coming to Sethi late is a bit like shutting the stable door after the horse has bolted, dragging your retirement with it. I made mistakes when I had the money to make them. I could not afford to make those mistakes today. It’s why Sethi tells people to start young. The clock is ticking. A graph in his bestselling book, I Will Teach You To Be Rich, illustrates how paying $20 (£16) a week into an investment fund will be worth $15,672 in a decade. Imagine if that was $40 a week. Or more. Imagine if you were doing that at 21. By showing people how to save and invest even small sums regularly, Sethi helps people spend more on what he calls their “guilt-free” pleasures. That might be more time with your kids, flying business class, or unlimited cappuccinos.
Sethi is masterful at tapping into our shame and humiliation and confusion around money. On his podcast, and in his Netflix TV show, and even – as I get to witness closeup – in casual encounters in a hotel lobby, people slide into confessional mode with only the slightest encouragement. They want to talk and Sethi wants to hear them. His podcasts, part financial advice, part psychiatrist’s couch, have a fascinating fly-on-the-wall quality in which we eavesdrop on couples trying to reconcile their inimical approaches to money. Often, they have hit an impasse where divorce seems possible, maybe welcome. Sethi patiently helps them unravel what he calls their money psychology, almost always rooted in childhood when something overheard or experienced at home cemented their attitude to money. “Couples come on the show thinking the argument is about how much he spent on bagels every Friday last month,” says Sethi. “But the truth has nothing to do with bagels. It is so much deeper than that. And I know that because that’s what I discovered in my own relationship. When my wife and I started to talk about money, it started off great and then got challenging. That’s what got me thinking about talking to couples.”
What could have been so challenging for Sethi? “We started talking about a prenup. I walked in, like, ‘Oh, this is going to be easy, I’m the I Will Teach You To Be Rich guy. Little did I know.” As things turned ugly, Sethi’s fiancée, Cassandra Campa, suggested they talk to a therapist. “We were just not communicating at all,” says Sethi. “And the therapist turned to me and said: ‘When you think of money, what word comes to mind?’ And I said, ‘Growth.’ To me, it was so obvious. I’m seeing the compound interest float in front of my eyes. And then she turned to my wife and asked the same question, and my wife said, ‘Safety.’ It was like the record had stopped. And I looked over at her and said: ‘What do you mean, ‘Safety?’
“That was the beginning of us starting to really understand how we saw money, how we felt about money and that allowed us to connect so much more.” It was also the moment that Sethi realised there was a demand for support that he could supply. “I want to be able to give people the space to have those conversations, because when I started looking into how to talk about money, online the advice was ‘Have the conversation.’ I’m like, ‘What conversation? What am I supposed to say? And how do I say it?’”
Perhaps because he’s a millennial, owning stuff is not Sethi’s default setting, nor ostentation his style. He thinks banks are, by and large, out to crush us, and makes a convincing argument for why we should question whose interests are being served by 30-year mortgages and high-interest leases on status vehicles. He rents his home and drives a 2005 Honda Accord. He describes cryptocurrencies as the Crocs of the finance world. (“A lot of you think they look good, but they’re horrible.”) He is the rare one percenter who wants to pay more tax. In a recent newsletter, he castigated millionaires who congratulate themselves for moving to low-tax states: “Get a life!” he wrote. To a couple spending more than they could afford to lease a boat, he was admirably succinct. “Get rid of that fucking thing immediately,” he said. “Sell it tomorrow.”
On his podcast he is often unsparing. “Wells Fargo is a shitbag bank,” he told one couple who had an account with the “shitbag bank”, and had spent two hours arguing over who should wash the dishes. This was followed by a volley of allegationd and brutal statistics about Wells Fargo’s institutional racism, predatory behaviour and all-round shitbag-iness. When a friend of Sethi’s let him know his name had been placed on another bank’s internal list of influencers – negative influencers – he was delighted.
Shooting from the hip is part of Sethi’s charm. He wants to help people master their money without being a shill for big banks or credit cards, though he thinks some are better than others and will say so. Fans accost him in the street to ask for advice, pouring out their financial woes. He claims to reply to about 2,000 emails a day. At the SoHo Grand, he is interrupted by a passerby eager to press her case. “How do I get on your show, because I need help,” she says. Unlike many of his peers, Sethi is not afraid to share his political opinions on Twitter. “Stick to finance, I’m often told,” he says, “which makes me laugh, because finance is deeply political. The reason housing is so expensive is political. The reason healthcare is so expensive is political. The reason that people buy expensive trucks, though they don’t realise it, is political.”
He claims to love being trolled on social media. “In my day-to-day life, I don’t have a friend who will just barge into the room, kick over a table, and say, ‘Taxation is theft’,’ or ‘You should put 100% of your money in bitcoin.’ But online I’ll get those 25 times a day. And I like to engage, because it keeps me sharp.” If the mortgage industry has a blacklist, Sethi is probably on that, too. “Internet dudes will tell me that their number one ‘rich life’ goal is freedom and then drop 100% of their savings on a 30-year mortgage,” he says. “It makes no sense.”
But Sethi is no killjoy. He can do pleasure and frivolity like the best of us. When someone tweeted at him, “What’s the point of making money when you drive a Honda?” he shot back: “So, I can take all my money and spend it on luxury hotels and baby cashmere.” If a flight is longer than four hours, he’ll fly business. “It’s OK to spend extravagantly on the things you love,” he says. “That was something I didn’t learn growing up. We didn’t spend extravagantly. We couldn’t. And then as I got older, I learned, ‘Oh, you actually can, but you have to cut costs mercilessly over here.’”
A director looking for a scene to illuminate the origins of Sethi’s money psychology might start with this incident from his childhood: it’s a summer day in California circa 1990. Ramit and his siblings are in the family van listening to the radio while their parents are in the bank cashing a money order. “They came out laughing,” recalls Sethi. “And they said, ‘The bank told us that if we had $10,000 in our account, they’d waive the money order fee.’ They were laughing because it was preposterous for them to imagine having $10,000 in their account.” That $10,000 stuck with Sethi. He saw it as the dividing line between being rich and being not rich. “I learned how to be frugal, because we had to be,” he says. “We ate out maybe once every six weeks. And there was no mention of getting appetisers, which is why getting an appetiser feels so rich to me now, even though I can afford all of them.”
“When I talk to people on my podcast, every one has an equally vivid memory of something their mom or dad or a relative said around the dinner table,” he says. “We can’t afford it, money doesn’t grow on trees, we don’t talk about money in this family. And that sticks with you. I know, because the lessons I learned have stuck with me.”
What Sethi inherited from his mother, who had arrived in California from India to join her new husband with just $30 in her pocket, was an immigrant’s resourcefulness. “She taught me to be street smart,” he says. At high school, he made money as a soccer referee and at a pizzeria earning $4.25 an hour. He spent some of the money on individual stocks, two in firms that went bankrupt. The third was Amazon. “I still have that stock, it’s done very well,” he says. “But the lesson is not, ‘pick the next Amazon’, the lesson is that I got lucky. I should never have picked individual stocks.”
Aware of the debt trap of American universities, Sethi applied for 60 scholarships and got interviews for most of them. But he couldn’t ace the interviews the way he had aced the application and asked his father to replicate the process by asking him questions in front of a video camera. “To my horror, what I thought was this suave James Bond-style approach was extremely stilted, awkward and no smile. I didn’t understand how important it was to be able to connect. It’s so obvious now, in retrospect, but people have to trust you before they’re going to listen to you.”
If you had known Ramit Sethi, a self-described “skinny Indian kid”, studying technology and psychology at Stanford University in the early 2000s, you might have been lucky enough to score an invite to one of the free financial sessions he offered to fellow students. Whether you turned up was another matter. “I would overhear friends talk about their fourth overdraft fee at the bank and I’d be, like, ‘Hey, I have this one-hour thing I do, just come on Tuesday night.’” Sethi would hustle to get everything ready – his talking points, his printouts – only to turn up to an empty lounge. “Everyone was very interested, but they would never show up,” he says. “This went on for a year and a half.”
Frustrated, he considered giving up. But then he had a better idea. He launched a blogfrom his dorm room called I Will Teach You to Be Rich. It was 2004, the same year Mark Zuckerberg founded Facebook at Harvard. Although Gawker had launched a year earlier, and HuffPost would launch a year later, most blogs then were based on personal musings. Sethi’s was no exception, blending anecdotes on investing with observations on human behaviour gleaned from his psychology classes. He took a day job with a Silicon Valley startup, and spent his evenings crafting chatty blogposts that are his signature.
For a while, Sethi felt he was speaking into a void – it was six months before he received any comments, and three years before his blog made so much as a cent. To fix that, he took a leaf from his parents and hustled, sending regular emails to the Wall Street Journal with links to his posts. The hustle worked. When the Journal ran a feature on personal finance bloggers, they reached out to Sethi. Thousands of new users signed up. Seizing the moment, he wrote a 30-page ebook, Ramit’s 2007 Guide to Kicking Ass, and sold it at $4.95 a pop. A flood of orders was followed by the quickstep of publishers sniffing potential. A printed book from a bona fide imprint (Workman), came out 18 months later, and has since sold over 1m copies (a second edition was published in 2019). What did Sethi offer that previous finance guides did not? Part of it was just his breezy, jargon-free voice that makes his book, like his newsletter, seem conversational, rather than homework. “I wanted to speak in a language my friends understood,” he says. “You know what they do in chapter one of most financial books? They go, ‘Alright, pull out all your spending, and let’s make a budget,’ and the reader politely replies, ‘No thanks,’ and puts it away.”
Instead of budgeting, Sethi invites his readers to decide what they want to spend their money on and then helps them figure out how to get there – separating their fixed costs, investments and savings to arrive at their “guilt-free” spending. “Sometimes, I’ll ask people, ‘What is your rich life?’,” he says. “And they’ll have this answer, like, ‘Well, you know, one day I’d like to have a beach house, it’s not like it has to be big. It doesn’t even have to be near the beach. In fact, it doesn’t even have to have a roof.’ I go, ‘Why are you minimising your dream? Make your rich life bigger. And let’s figure out if we can get there.”
All this can sound awfully, well, American: dream big or go home. But wouldn’t it be liberating just to vanquish our financial anxieties if we could? Soon after meeting Sethi, I did three things. I changed the monthly payment of a credit card from the minimum due to the maximum; I checked my retirement account and set up a modest monthly contribution, and I called my bank, Chase, to ask why I was being charged $25 in fees every month. I was told it would be waived if I maintained a minimum monthly balance of $15,000. Like Mr and Mrs Sethi that long-ago summer, I burst out laughing. When finally I had regained my composure, I recalled Sethi’s advice, and asked if I could have some fees refunded as a courtesy. I got back $50.
Under the circumstances, I considered it a victory.
Living your richest life: Ramit Sethi’s tips to help you take control of your money
1. Aim to spend less than one hour a month on your finances. Whether you’re solo or in a relationship, set up a regular monthly meeting to review your key numbers.
2. There are four numbers that matter in your finances: your fixed costs (50-60% of takehome pay); savings (5-10%); investments (5-10%, and even higher is better), and guilt-free expenses (20%-35%). Hit these numbers and you’re in the right neighbourhood.
3. There’s a limit to how much you can cut, but no limit to how much you can earn. Manage your expenses, but don’t forget about the income side of your finances, which can involve negotiating your salary, starting a side business, or switching industries entirely.
4. There’s no virtue in living a smaller life than you have to. The point of money is not to hoard it. The point is to use it to live a rich life.
5. Ask $30,000 questions, not $3 questions. Most people agonise over coffee, but the real $30,000 questions are areas like your investment fees ($50,000+), asset allocation ($50,000+), negotiating your salary ($25,000+), and paying off your mortgage interest early ($50,000+).
6. A rich life is lived outside the spreadsheet. Once you automate your finances and know your key numbers, close the laptop and go live your rich life.
