How to Get Rich: Conscious Spending Plan, Money Dials, Money Rules (2024)

Creating my Rich Life: How to Get Rich

I recently read I Will Teach You to be Rich by Ramit Sethi, which is a popular book in the personal finance world—and for good reason. He walks you through every step of automating you finances, all so you can reach you financial goals, and most importantly, LIVE your Rich Life. This was a book I’d been wanting to read for a while, so when Korri received it as a gift last Christmas I took the liberty of reading it. I loved it so much that I purchased three copies and gave them to each of my three brothers this past Christmas, because I wish I had been their age when I read it (my youngest brothers are college-aged). I will say that you kind of have to be “in the mood”/ready to read a book like this, so I’m not sure my brothers will read it…but at least they have it for whenever they’re ready.

All that to say, I highly recommend reading it if you have any sort of interest in getting your personal finances in order! And I especially recommend it for those of you in college and grad school. Obviously, if you’re like me and reading it when you’re in your 30s (or later), that’s excellent, too! I know it feels like you’re super behind; I feel the same way. But the best time to start is now, right?

The main theme throughout the book is that of creating and truly living your Rich Life. You can define that however you want. I love that Ramit teaches you to ask yourself what you WANT to spend money on, and then he teaches you how to do exactly that, with no guilt. That’s the idea behind a Rich Life.

UPDATE: As of April 18, 2023, Ramit Sethi’s new Netflix show, How to Get Rich, is available to watch and follows the same themes as his book!

Currently, I envision my Rich Life looking like traveling frequently (and staying in fabulous accommodations), buying good food and having someone else cook it for me, not thinking twice about paying for whatever my cats need to feel comfortable and live their best lives, giving amazing gifts to my loved ones, hiring help, and donating abundantly to all the causes I care most about. I have other long-term goals including endowing at least one college scholarship (but ya need big $$$ for that, which I do not have right now lol).

Before I dive in, here’s where I’m at as a PhD-educated, partnered but unmarried woman with no children: I do not own a house (Korri owns the house we live in and I pay rent to him), I do not have any credit card debt, I paid off my car (last December!!!), and I can pay off the rest of my student loans whenever but I just requested a refund of the payments I made since last March and am crossing my fingers for forgiveness. If it doesn’t happen, it won’t be a huge deal to pay it all off before it starts accruing interest again. (But 🤞🏻🤞🏻 it’s forgiven!)

CONSCIOUS SPENDING PLAN

The best part of IWT is the fact that Ramit filled with actionable tasks to improve your financial situation and reach your goals. It starts with setting up a plan to pay off credit card debt, moving on to creating and contributing to savings accounts, opening and funding retirement accounts, and automating it all so you can live your life without worrying about how you’re going to pay for it.

There is a chapter in IWT about conscious spending, and it was enlightening to put together my own Conscious Spending Plan based on my current spending. It’s not where I wish it was; below I shared both my current spending and my spending goal (each category is shown as percentage of total take-home pay). Ramit recommends that 50-60% of your take-home pay goes towards fixed costs, 10% goes towards investments, 5-10% goes towards savings goals, and 20-35% goes towards guilt-free spending money.

As you can see, I tend to SPEND money. I’m not a natural saver. I see money, I spend money. That said, it feels sooo nice to watch my savings account and investments increase, so I think seeing that will help me migrate more money towards those accounts and less towards spending. I would also like to cut down on my fixed costs a bit; those are a bit tougher to lower, though (hence the term “fixed costs” ha). Wishful thinking here!

I want to get to the point where I’m maxing out my Roth contributions every year (I maxed them out in 2022 and will again in 2023!), rapidly increasing savings (for unexpected expenditures and things such as traveling when that’s happening again), and perhaps contributing more to my brokerage. I also need to open another retirement account.

MONEY DIALS

I highly recommend following Ramit Sethi on his social media accounts, Twitter, Instagram, TikTok, and YouTube. I’m also on his email list; he shares much of the same information on all three but email is longer form and easier to consume in some situations. He talks a lot about Money Dials, which are the areas where you naturally spend money based on your values. These dials can be turned up and down as you figure out what you love spending money on and what you don’t! Some of my Money Dials are currently:

MONEY RULES

Your money rules are the foundation to living your Rich Life. I know my rules will change as I figure out exactly how I want my Rich Life to look, but here are my current money rules:

Have at least 12 months of emergency savings (currently I’m at ~3 months or 5-6 if you ONLY consider my fixed costs and nothing else)
Carry no debt (plan/save so I am able to pay off credit cards every month, even if I make a large purchase)
Buy food I enjoy and that makes me feel good (don’t consider a price tag when buying food; splurge on takeout once in a while and don’t feel bad about it)
Buy items to last (thinking in terms of my phone, which I just upgraded after 3+ years due to battery failure, and my computer, which is 6+ years old and due to be upgraded this year; I’m also holding onto my car for as long as I can now that it’s paid off)
It’s always worth paying for continuing education (I spend a lot on blog-related education as mentioned above)
Pay for convenience (Green Chef and window washers as mentioned above)

Whew! That was a lot, but I’m glad I wrote it all down for future reference—and to hold myself accountable! Have you read IWT? Or watched How to Get Rich on Netflix? (If not, have I convinced you?!) Have you thought about your spending in these ways? I know I didn’t, but I so appreciate how Ramit taught me how to reframe my mindset around money. It’s not inherently BAD to spend money, I just have to be thoughtful about it and make sure I’m saving just as much as I’m spending, and spending it in the areas that mean the most to me.

I’d love to know how you approach personal finance and what your Rich Life looks like! ALSO—do you use any specific budgeting apps? I’ve heard great things about You Need A Budget but the price tag feels too high for me…would love to hear your thoughts if you use it!

READ NEXT: Rich Life Audit + Money Diary

This post was last updated April 2023.

How to Get Rich: Conscious Spending Plan, Money Dials, Money Rules (2024)

FAQs

What are the rules for a conscious spending plan? ›

First off, decide what percentage of your take-home income you want to put into each category. As I mentioned earlier, a good rule of thumb is 50% for needs (e.g. rent, groceries), 20% for savings (e.g. 401k, savings goals), and 30% for wants (the stuff you feel guilty about spending money on).

Read On ›

What is the 50-30-20 rule of money? ›

Key Points. The 50-30-20 rule is a simple guideline (not a hard-and-fast rule) for building a budget. The plan allocates 50% of your income to necessities, 30% toward entertainment and “fun,” and 20% toward savings and debt reduction.

Discover More Details ›

How to get rich ramit sethi budget? ›

Sethi's Conscious Spending Plan

Fixed Costs. According to Sethi, 50-60% of take home pay should be put toward fixed costs. ...
Investments. 10% of your pay should go to investments. ...
Savings. 5%-10% of take-home pay should go toward savings. ...
Guilt-Free Spending.

Jan 13, 2024

What are the three rules of spending money? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.

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What is the 70 spending rule? ›

Living expenses should consume 70% of after-tax income, covering necessities and discretionary spending. Savings and debt repayment are prioritized at 20%, focusing on high-interest debts and building emergency funds.

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Can you live off $1000 a month after bills? ›

Getting by on $1,000 a month may not be easy, especially when inflation seems to make everything more expensive. But it is possible to live well even on a small amount of money. Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money.

Tell Me More ›

Is $4000 a good savings? ›

Ready to talk to an expert? Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

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How to budget $4000 a month? ›

How To Budget Using the 50/30/20 Rule

50% for mandatory expenses = $2,000 (0.50 X 4,000 = $2,000)
30% for wants and discretionary spending = $1,200 (0.30 X 4,000 = $1,200)
20% for savings and debt repayment = $800 (0.20 X 4,000 = $800)

Oct 26, 2023

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How to create a conscious spending plan? ›

You can create a conscious spending plan with a simple exercise. Track down every expense over the course of a month. At the end of the month, categorize the purchases into different categories, like eating out or entertainment.

How much net worth is needed to be rich? ›

To be considered very high net worth, one might need assets ranging from $5 million to $10 million, while an ultra-high net worth status could require $30 million or more. These figures underscore the subjective nature of financial classifications across different thresholds of wealth.

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Is Ramit Sethi a millionaire? ›

Although that can feel both exciting and overwhelming, Ramit Sethi, a self-made millionaire, author and the host of the “I Will Teach You to Be Rich” podcast, says there's one relatively “simple” step new grads can make that will set them up for future financial success.

Read The Full Story ›

What is the golden rule of money? ›

If you always spend less than you earn, your finances will always be in good shape. Understand the difference between needs and wants, live within your income, and don't take on any unnecessary debt.

See Details ›

What is the 3000 cash rule? ›

Funds Transfer and Travel Rule Requirements

Treasury regulation 31 CFR Section 103.33 prescribes information that must be obtained for funds transfers in the amount of $3,000 or more.

Get More Info Here ›

How to truly build wealth? ›

While get-rich-quick schemes sometimes may be enticing, the tried-and-true way to build wealth is through regular saving and investing—and patiently allowing that money to grow over time. It's fine to start small. The important thing is to start and to start early. Earn money and then save and invest it smartly.

What are the 5 steps in the spending plan process? ›

These five steps can help you save more and work toward your bigger financial goals.

Step 1: Map your income and spending patterns. ...
Step 2: Budget for “essentials” and cut back on “extras” List. ...
Step 3: Enroll in Direct Deposit and turn on activity alerts. ...
Step 4: Automate with Bill Pay and never miss a payment.

What are the 3 main components of mandatory spending? ›

Mandatory spending is simply all spending that does not take place through appropriations legislation. Mandatory spending includes entitlement programs, such as Social Security, Medicare, and required interest spending on the federal debt. Mandatory spending accounts for about two-thirds of all federal spending.

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What are the key components of a spending plan? ›

There are four steps to preparing a spending plan:

Keep track of your daily spending.
List your monthly income and expenses.
Find ways to decrease spending.
Find ways to increase income.