Ramit Sethi Says These Are the 3 Basic Money Skills You Need to Live a Rich Life

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Ramit Sethi believes the three secrets of living a rich life include being able to talk about money. Take a closer look at this secret and two others. 

The purpose of becoming financially successful is not just to have a lot of money in your bank account. Finance expert Ramit Sethi believes the goal is to live a rich life, which means spending on the things you enjoy the most that make your life worth living.

If you’re hoping to live that rich life Sethi talks about, he says there are three money skills you need to adopt. Here’s what they are, along with some advice on why these skills are so important and how you can develop them.

1. You should be able to talk about money

According to a tweet in which Sethi explained the essentials of being able to manage money, the first money skill you’ll need is being able to “talk about it.”

So, why is talking about money so important?

Being able to talk about money is essential. If you’re dating or in a relationship, you obviously need to be able to talk about money issues with your partner. This can help ensure you’re on the same page and able to work together toward shared financial goals.

You need to be able to talk about money in other situations as well. You shouldn’t be afraid to ask people for investing advice, talk to your coworkers about their salary, or ask questions about money issues you don’t know the answer to. If you can do these things, you can develop a financial philosophy that lets you use your money as wisely as possible to make your life richer now and in the future.

2. You need to know your basic financial numbers

The second money skill Sethi highlighted is knowing “your basic numbers.”

So, what exactly does this mean? Basically, you need to know some fundamental details like how much you’re earning, how much is in your investment account, how much you’re saving, and what fees your financial planner is charging.

Sethi warns against focusing too much on mundane details, like how much you’re spending on things like lattes, and instead paying attention to big picture stuff. And he’s right.

You need to keep an eye on the things that have the biggest impact on your net worth so you can devote your attention to what matters most and make sure you’re on track to financial security and your rich life.

3. You should develop automated money flows

Finally, the last important skill is having “automated money flows.”

If you’re not sure what that means, it’s simple: You want to make as much of your financial management as automatic as possible. This will reduce the chances of not following through with doing the right things with your money.

If you set up automatic transfers of your desired amount to your savings accounts and retirement accounts, the money is going to end up going in there unless you change it — which you probably won’t do. It’s easier not to, and you’ll have lots of opportunities to reconsider when you have to go in and manually reduce your contributions.

Likewise, if you set up automatic credit card payments and bill payments, you won’t forget to make one and hurt your credit score or end up carrying a big credit card balance. If you make smart money management automatic, you don’t have to spend time managing money or thinking about what to do with it — you’ll effortlessly do the right thing and can experience the benefits of not having to face financial stress.

For all these reasons, Sethi is right and you can live a better, richer life if you work on developing these three basic money skills.

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