Beth Pinsker
With “How To Get Rich”, Personal Finance Guru Helps People Make Better Money Decisions
If Ramit Sethi’s wishes come true, I will never use the term ‘financial literacy’ again.
“People want to be rich! They want to live a free life,” Sethi told MarketWatch. “We have to change the framework of how we talk about money.”
This has been Sethi’s mission for the past 20 years, ever since he started the blog I Will Teach You To Be Rich right out of Stanford University. It has turned into a New York Times best-selling book of the same name, a podcast, and a program of classes and seminars. Netflix’s (NFLX) new special, “How to Get Rich,” comes out April 18, and he estimates he’s reached 220 million worldwide.
“Nothing reaches the TV scale,” he says.
The eight-episode show is like a live-action adaptation of the popular podcast, educating people on money issues. Sethi is not a financial planner nor a licensed therapist. “I call myself a CEO and a writer,” he says, drawing his financial knowledge from a lot of applied research. He sees his specialty as the intersection of psychology and money rather than professional financial his planning.
But that doesn’t stop him from digging into the numbers. Whenever she meets a guest on the show, Sethi gets some minimum financial information, including debt, income, savings, and spending history, and works with them for six weeks to help them get over the block. A year after filming, Sethi is still in touch with the people he helped. “They were so surprised that I texted them out of the blue, and it bothered me,” he says.
There is only so much we can do for people in a short period of time. Progress is really up to the individual, but one of the show’s great lessons is for viewers to see what’s happening to other people and apply it. their own lives.
Here are some of the things you can learn about getting rich from Sethi’s new show.
look at the real numbers
Estimating and guessing won’t work if you’re trying to figure out what’s wrong with your spending. And if you’re working on financial planning, clichés and rules of thumb alone won’t cut it. Sethi pressures the show’s participants to see the real numbers, even if it’s painful.
“I’ve learned that if you’re someone you can trust, they’ll tell you everything,” Sethi says. I was so surprised.”
So the show calls people out for spending $2,000 a month on brunch, holding $400 a month storage units when the content isn’t worth it, or betting $80,000 on DraftKings stock. increase.
avoid industry traps
The financial industry can unnecessarily complicate money and it works against you. Sethi spares no sympathy for her financial advisers, who charge annual fees for assets under management, rather than fee-only planners who charge for what they actually do.
“You ask them: How much do you charge? And they can’t give you a straight answer. not.
Sethi is also brutal to online trading platforms like Robinhood that encourage people to take risks and trade individual stocks.
“I’ve been making names since the beginning,” Sethi says. “I think that’s why people trust me.”
But that still doesn’t convince some people to do things differently. One of her attendees on the show, Natalie, is determined to keep her own money by charging her planner a 1% commission, no matter how Sethi tries to show her math. claim. “You can save hundreds of thousands of dollars by doing the math yourself or paying by the hour. But the more I explain the math, the more they resist it,” he said. says.
See what’s really going on
When Sethi encounters an aversion to changing her poor financial habits, she doesn’t show charts or graphs, instead asking questions to find out what’s behind it. When they say, look at it and tell them I like to spend money on things too,” says Sethi. “Then I ask them what they think is going on.”
Sethi says most people have never been asked such questions about money and feel free to talk about where they nurtured their money values. start. “A lot later, when the numbers come out, I communicate in a simple way. It really helps them get the point across,” she says.
Find representations and model behavior
Sethi’s Netflix show shows shopping on Rodeo Drive, but that’s just a caveat. The people featured come from all walks of life and have all sorts of money problems — spending too much, earning too little, not paying attention to big goals — but most of them are like you. is not what people traditionally consider rich.
Sethi goes to great lengths to find a diverse group of people to put in the spotlight. By that I mean the spread of geography, ethnicity, race, economics, age and gender, and hopefully allow people to see themselves in the scenario in some way.
“Representation is really important. Getting a very diverse group of people has been a huge priority,” says Sethi. “Rich is not an old man in a top hat. Rich is the man next to him. Rich can be a schoolteacher.”
find your rich life
Sethi doesn’t come for your latte and avocado toast. “I’m not here to make fun of anyone,” he says.
Digging deeper into the psychology of money is about understanding how your emotions drive your financial decisions. That’s why Sethi asks each guest to define ‘rich life’. Whether it’s owning a house, being able to eat out at a restaurant without considering the cost, starting a business, or helping a parent retire. and said that his rich life would never have to go to fix his own house again.
Sethi knows that some people are ready to change and others are not, so she starts there. When launching the show, Sethi spoke to the producers about what she hoped from these encounters. Was it a big change, like doubling your salary? Not always.
“I’ve learned that some people just want to take a step forward, while others are not ready to change at all,” says Sethi. “We can all understand the desire to change, but it’s harder than it sounds. If you can tell that story, that’s great.”
April is National Financial Literacy Month. To mark the occasion, MarketWatch is publishing a series of “Financial Fitness” articles to help readers improve their financial health and offer advice on how to save, invest and spend money wisely. here.
-Beth Pinsker
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