DeepSummary
Rami Sethi explains the importance of understanding the basics of personal finance, which he calls the 'language of money'. He says most people lack even a basic understanding of money, akin to not knowing the rules of the road for driving. Sethi recommends tracking four key numbers: fixed costs (50-60% of take-home pay), savings (5-10%), investments (5-10%), and guilt-free spending (20-35%).
According to Sethi, these four numbers reveal a person's priorities and whether they align with their desired 'rich life'. He criticizes vague descriptions of a rich life like 'freedom' or 'doing what I want', encouraging people to envision their rich life in vivid detail down to the airline seat or restaurant.
Sethi believes that less than 1% of people have a clear, detailed vision of their rich life. He argues that this specificity allows people to intentionally craft a rich life tailored to their unique desires, even if it appears bewildering to others from the outside.
Key Episodes Takeaways
- Understand and track the four key personal finance numbers: fixed costs, savings, investments, and guilt-free spending.
- Have a clear, vivid vision of your desired 'rich life' down to specific details like travel, dining, lifestyle elements.
- Align your finances and spending ratios to enable your envisioned 'rich life'.
- Don't settle for vague 'rich life' goals like 'freedom' - get granular with your vision.
- Accept that your specific 'rich life' may seem unconventional to others.
- Spend extravagantly on things that align with your priorities while cutting mercilessly on lower priorities.
- Fewer than 1% of people have a truly clear, detailed vision of their 'rich life'.
- Understanding money basics is akin to understanding rules of the road for driving.
Top Episodes Quotes
- “I want them to go a lot deeper, is to say, I want to be able to travel for six weeks a year. I want to go to London. I want to go to New Delhi, I want to go to Thailand, because I want to visit my family. That's a good start. If we get even more specific, they tell me what seat on the airline they're sitting on. They tell me where they're eating. They tell me who they're bringing with them.“ by Rami Sethi
- “And in fact, the more you craft your rich life, the more bewildering it looks to the outside world.“ by Rami Sethi
- “I want that duality which indicates you are intentional about your rich life.“ by Rami Sethi
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Episode Information
The Diary Of A CEO with Steven Bartlett
DOAC
2/9/24
In this moment, personal finance expert Rami Sethi breaks down the 4 finance numbers everyone needs to know and what exactly a ‘rich life’ is. Ramit says that most people don’t have even the most basic understanding of money, compare this to other areas of life such as driving, where we need to know the rules of the road before putting a key in the ignition. However, personal finance is actually incredibly simple and Ramit says that the four numbers you need to track are: your fixed costs like rent and groceries, savings, investments, and guilt free spending. From these numbers, Ramit says that he can see what are a person’s priorities and outlook on life. But more revealing is someone’s idea of their ‘rich life’. This is what a person’s life would look like if they finally reached the level of wealth they are chasing. Ramit says too often people’s answer to what their rich life is vague, for instance, saying they want to be able to do what they want when they want, or to have freedom. These answers are so vague as people have never really thought about this question before, but Ramit say they need to think about this potential future deeply and in detail so that they can truly envision it.
Listen to the full episode here - https://g2ul0.app.link/hzKpXWPk1Gb
Watch the Episodes On Youtube - https://www.youtube.com/c/%20TheDiaryOfACEO/videos
Ramit- https://www.instagram.com/ramit/?hl=en-gb
https://www.iwillteachyoutoberich.com
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