8 Most Surprising Secrets of the Wealthy, According to Ramit Sethi
Wealthy people handle money differently than the average person — often in unexpected ways.
"I've spent over 20 years coaching millionaires [and] founders ... and what I've seen behind closed doors will surprise you," Ramit Sethi, author of "I Will Teach You to Be Rich," said in a recent YouTube video. "Lots of people are doing things so smart, so counterintuitive, that it will completely change the way you think about money."
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Here are the eight secrets Sethi learned by coaching rich people.
Secret 1: They’re OK Wasting a Little Money
Rich people don’t obsess over small expenses. Instead, they stay focused on the big picture.
"The wealthy people I'm talking to are not obsessed with optimizing every last dollar, because they know that their time is extremely valuable," Sethi said.
Even if you're not rich, you can implement this way of thinking about money.
“Stop focusing on $5 coffees," Sethi said. "Start focusing on the $10,000, $20,000, $30,000 decisions this year.”
Those include things like your salary, your housing costs and how much you are charging for your business.
Secret 2: They Buy Back Their Time (Not Just Things)
Wealthy people spend money to eliminate recurring decisions and inconveniences.
"Rich people are not always spending money on beautiful cars and clothes," Sethi said. "The people that I work with who are wealthy typically focus more on buying back their time."
If they're dealing with a persistent time-suck, they think, "What can I pay for so I do not have to think about this again?"
"That's because they have more money than time," Sethi said.
Secret 3: They Ignore Big Fees — and It Costs Them Millions
Not all of the wealthy's money behaviors are positive ones. As Sethi noted, being rich doesn’t mean being good at managing or growing money.
“Often, they are just good at making money," he said. "Managing it? They are not that good.”
High costs the wealthy often pay unnecessarily include assets under management fees to financial advisors and private equity investments that don't even beat the S&P 500.
"You can actually beat the returns of lots of wealthy people by paying attention to how much your fees will cost you over time," Sethi said.
Secret 4: They Use Money To Reduce Stress
Rich people use money to remove friction and uncertainty, and to lessen mental load. For example, one client Sethi worked with always called an Uber Black car instead of UberX.
"It's not about luxury — he told me it was about certainty," Sethi said. "He knew that he could just click at the top of the app. He didn't even have to scroll down. He didn't have to think about price. He knew that a nice, clean car would show up, they would drive professionally, and most importantly, he just didn't have to think about it."
As Sethi explained, rich people are willing to spend to smooth out friction.
"What they are buying is calm," he said.
Secret 5: They’re Actually Not Great Investors
Having a high income doesn't equate to being a skillful investor. As Sethi noted, boring strategies usually outperform flashy ones.
"Honestly, rich people invest in all kinds of dumb ... investments," he said. "Just because people made money does not mean they know how to manage it or grow it."
It's more important to be a consistent investor than to try to be a clever one.
"The boring investors … quietly crush them," Sethi said.
Secret 6: They Build Systems for Everything
Wealthy people rely on automation and systems as much as possible.
"Rich people do not want to have to keep looking at the weeds of every single decision in their life," Sethi said. "They know that systems equal freedom."
Sethi noted that anyone can utilize systems in their financial lives.
"You definitely don't need to check your investments every morning. You can set up a system, set up regular monitoring for it ... and move on. Then let the system build your wealth while you sleep," he said.
Secret 7: They Don’t Always Talk About Money
According to Sethi, there's little correlation between how much money someone has and how frequently they talk about money.
"Money does not become magically easier just because you have more of it," he said. "If anything, the stakes get higher, and the conversations become more fraught."
Sethi recommended starting to talk about money when you're just beginning your financial journey.
"The earlier you start talking about money … the more comfortable you are going to be," he said.
Secret 8: They Splurge Unapologetically on What They Love
Rich people spend aggressively within a few categories that they care about and cut spending ruthlessly everywhere else.
"They splurge unapologetically on what they love," Sethi said. "People who have a lot of money are pretty focused on spending in key categories ... There are other things they just simply do not care about."
Even if you're not rich, Sethi recommended sticking to this spending philosophy.
"Pick your one money dial, the thing that you love to spend money on, and turn that dial up this month," he said. "Cut mercilessly everywhere else. That is what living a rich life looks like."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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