As an avid reader of all things financial, I stumbled across Ramit Sethi’s book I Will Teach You to Be Rich years ago. I confess that I didn’t give it a chance. The title sounded like a scam pitch, and as a CFP® professional, get-rich-quick schemes are simply not on my agenda. But when the second edition came out this year—and I saw that it had become a New York Times Bestseller—I decided to give him a second chance. I started following him on Instagram, and I tuned in to his interviews on a handful of financial podcasts. It was there that I was introduced to his ideas about “money dials” and understood that the way he defines “being rich” is quite different than most personal finance gurus. The title of his book may sound cliché, but his ideas are pretty great—especially for anyone who is committed to building a balanced and “rich” financial life.
So what are “money dials” and why do they matter?
In short, your money dials are the things that you are willing to spend extravagantly on by cutting back mercilessly on the things you don’t care about. I think of it like using the gas burners on my stove: there’s only so much fuel to go around, so what do I want to crank up to the highest heat, and what am I willing to slow cook, or even not cook at all. Your money dials are the things that matter most to you.
If you’ve never really thought about your money dials, you’re not alone. In my work with my clients, I find that even people who do a great job at budgeting haven’t really taken the time to figure out what they want to be spending on—and what they don’t. If you have your basic financial plan in place—meaning that you’re saving and investing for the future (Sethi suggests saving 20-30% of your income toward that goal alone) and have reduced your debt to a reasonable level—now is the time to put some real thought into your personal money dials.
As soon as I read the list, I knew my #1 money dial immediately: Travel. No question about it. I grew up in a very middle-class family, so I’ve never felt a need to live in a big house, drive a new car, or wear the latest fashions. My needs are pretty simple. What I do cherish, however, is traveling to new places to experience all the things they have to offer. I’m more than willing to sacrifice other things to make that happen. But that’s just me. What are your money dials?
Sethi’s explanation of how LeBron James uses money dials is a great illustration of how they can work in the real world. He shares that LeBron James spends $1.5 million a year on health and fitness. From world-class equipment and trainers, to cryotherapy, to private chefs and masseuses, he spends extravagantly to keep his body on the court. And in 13 years, he has never missed a playoff game. He spends on his priority, and that investment pays off for him. Want to play the game like LeBron? Identify your top priorities, and then align your spending accordingly.
I guess it’s true that you can’t judge a book by its cover—or at least its title! When it comes to money dials, I think Ramit Sethi is 100% spot on. Young or old, wealthy or not-so-flush, identifying and balancing your personal money dials is a great way to start building your own “rich” life today. And if you need a hand to make it happen, please reach out. We’re always here to help!
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