7 Habits That Help People Stop Stressing About Money Every Day, According to Ramit Sethi
Personal finance author, speaker and I Will Teach You To Be Rich brand creator Ramit Sethi has experience across the financial spectrum. In a YouTube video, he told his 1.11 million subscribers that he’s worked with clients earning annual incomes ranging from $35,000 to more than $1 million.
His conclusion: “The difference between someone who’s stressed and someone who’s calm is surprisingly not income.”
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Instead, seven bad but breakable habits induce anxiety across all earnings levels. If you’re suffering from cash-related stress, Sethi suggested adopting these seven hallmarks of a healthy money mindset.
1. Automate Everything Important
Those who manage their money manually are on the hook for paying their rent or mortgage, credit cards, insurance, loans and utilities — with all their scattered due dates — while moving money to savings and investing each and every month.
“That’s a lot to keep track of,” Sethi said. “And, frankly, it’s keeping you small.”
The solution? Set everything you can to autopay for ongoing peace of mind.
2. Keep Fixed Costs Low
Sethi recommended putting a laser focus on your fixed costs — those that stay roughly the same every month under a contract, such as utilities, insurance, subscriptions, loan payments and housing.
While it’s not easy to reduce fixed costs, shopping around and making compromises like taking on a roommate or carpooling can make or break you, according to Sethi.
“If you have over 60% of your take-home pay and it's already spoken for before you can spend anything else, I can already tell that you feel stressed out about money because you're covering the basics, but there's not much left to work with,” he said.
3. Know Your Percentages
Next, Sethi explained how the difference between 23.5% and 25.1% “can mean tens of thousands of dollars in your pocket over time.”
He suggested making two calls this week — one to find out your credit card APR and another to see what you’re paying for your investments, especially if you have a financial advisor — and working to negotiate your rates down, even modestly, for potentially enormous long-term savings.
4. Build an Emergency Fund
Sethi continued by telling his subscribers to ignore the standard advice of saving three to six months’ income or expenses and instead aim for a 12-month emergency fund.
“At some point in life, one unexpected event is going to throw your finances off track,” he said. “This is a guarantee. It could be getting laid off. It could be having a car accident or a medical emergency. And when those things hit, if you are not prepared, that is how so many people get into financial danger.”
5. Don’t Sweat $3
Sethi also said to ignore another piece of conventional personal finance wisdom — sweating the small but enjoyable stuff. Common money advice says to cut out things like coffee away from home, Netflix and drinks with restaurant dinners. Sethi argued that if you control your fixed costs, you don’t have to feel guilty about small splurges.
“To put it bluntly, a lot of people's only relationship with money is feeling bad,” he said. “So every time you buy something that you actually should enjoy, there's this little annoying shrill voice in the back of your head telling you that's a bad decision.”
6. Normalize Money Conversations
Money conversations are difficult, which, according to Sethi, is why people tend to avoid them — but they do so at their own risk. Financial stress, after all, is one of the top relationship killers.
“People who are good with money talk about money all the time,” he said.
7. Live a Rich Life
Sethi said that when he asks his clients what it means to live rich, nearly all of them say it’s the ability to do what you want when you want. When he asks them what they want, very few of them can put their finger on it.
Identifying your idea of a rich life can help you pursue that dream and eventually achieve it.
“Without a clear picture of what you are building towards, no amount of money will ever feel like it's enough,” Sethi said. “If you want to live a rich life — not an adequate life, not an OK life, a rich life — you have to go on offense and design it.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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