Advice for Everyone Who’s Confused About Money Right Now

Advice for Everyone Who’s Confused About Money Right Now
MY TWO CENTS FEB. 10, 2022 By Charlotte Cowles

Ramit Sethi’s no-nonsense book, I Will Teach You to Be Rich, became a New York Times best seller in 2009 and spawned an eponymous podcast, newsletter, and range of personal finance courses that have made Sethi very, well, rich. It’s easy to be skeptical of what Sethi is selling, but dig under his bold promises and you’ll find approachable, empathetic advice on saving, spending, and organizing your money.

He’s also something of an anti-finance guru in that he eschews jargon and doesn’t lecture people about credit-card points and other minutiae. Instead, he has a talent for breaking down big-picture financial concepts into real-life steps. Which is why I wanted to talk to him right now, at a time when money seems especially complicated (Inflation! Interest rates! Crypto!). Here, we discussed why moments like this can be ideal for taking charge of your finances, and what that process can look like. 

It’s a confusing time to be making decisions about money. The economy is all over the place, the pandemic is still happening — it just seems impossible to plan for the future. What’s your advice on how to make sense of this moment, financially?

I get over 2,000 messages a day, from people of different ages and different socioeconomic backgrounds. Over the past two years, I’ve heard from people who have lost jobs, had loved ones die, had to cancel their weddings — people have had a total disruption in their expectations for what they thought life was going to be like.

But there has also been this rare opportunity for people to take control of their money. I’ve seen a huge growth in interest in personal finance. Savings rates were at a historic high. People actually saw the value of things like an emergency fund. Especially back in March and April of 2020, they started to realize, “Oh my God, I know I should have saved, but I never actually did it. Now, I understand. What do I do?”

Right. It was a moment of reckoning.

There are several pivotal moments in somebody’s life when they decide to take control of their money — when they’re graduating from college, getting married, having children, getting divorced, getting a new job. There’s a few others. But usually it’s a time with high stakes, where there’s an external force that gets them to take stock.

It’s the rare person who just wakes up and goes, “I’m going to sit down and make a long-term plan with a low-cost investing strategy.” That almost never happens. Instead, something external causes us to say, “I’ve got to do this now.”

When that moment happens, what’s the best way to harness it? I think a lot of people try to dive in and then get overwhelmed and give up.

Well, you can read a book. I mean, the majority of people who complain about personal finance, who worry about personal finance, who feel guilty about personal finance, have never read a single book on personal finance. It’s pretty straightforward. A lot of people ask, how do I get confident with my money?

The way you get confident is through competence. In order to be competent, you have to learn the basic language of money. This is not complicated stuff. The words are a little unapproachable. If it were me, I would not have called it a 401(k). The reason most people do not engage with their money is simply that money is talked about in a restrictive and unappealing way.

I personally hold a lot of the financial media to account for this. They tell people all the things you can’t do with your money — “No, you can’t buy jeans. No, you can’t go on vacation.” No wonder people are turned off.

I want to use money to say yes. I want to tell people that they can spend extravagantly on the things they love if they cut costs mercilessly on the things they don’t. That gets into prioritizing, and designing and crafting what a rich life looks like to you, which is different for every person. As you start to dial in on this concept, it gets exciting and appealing, and it makes you want to read about IRAs and investments.

How do people actually go about determining what they actually want, though? It can be hard to figure that out — financially and otherwise. And it can change.

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https://www.thecut.com/2022/02/money-advice-confusing-times.html