Financial personality Ramit Sethi regularly teaches people how to build rich lives, but it’s not only about finances. While a high salary can make you happier, it’s not the only piece of the puzzle. There’s a growing trend of people who are living paycheck to paycheck despite earning $250,000 per year. However, there are also people who earn less than $100,000 per year who know how to manage their money.
Sethi encourages people to ask themselves one question that can help people live rich lives and potentially keep costs low.
“Question the things you spend money on,” Sethi explained.
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You don’t have to live like a pauper to become wealthy, but you also shouldn’t spend money like it’s water. This question allows people to arrive at a good middle ground and offers several lessons for people who want to improve their finances.
Do You Need A Lot Of Cars?
Sethi shared a thread in his X post that invited people to ask questions about how much they rely on cars. The financial personality invites people to wonder if owning fewer cars is a sign of more success.
Having fewer cars means lower monthly payments. Even when you pay off the auto loan, you still have to pay maintenance costs, auto insurance, and other expenses just to keep your car. The X thread also mentioned that a household can save $120,000 over a decade if you replace a car with an e-bike.
It’s not practical for everyone to live without cars, especially for family road trips and rainy days. Most suburban families need cars to get around, but making yourself less dependent on these vehicles can be good for your health. You’ll have to walk around more instead of sitting in your car as you go from place to place.
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Review Your Expenses
Sethi encourages people to focus on their housing costs before looking at the $5 cup of coffee. Auto expenses can also apply, but you should still review your recent bank and credit card statements to see where your money goes.
It’s easy to make impulsive purchases, but when you review your expenses, you get to look at each item with hindsight. Ask yourself if each purchase made you happier or if it didn’t make a difference in your life. Some people have unused subscriptions, while others have collected a lot of unnecessary items.
Checking your expenses can help you assess how you have spent your money and what changes you should make. Sethi believes you should continue buying a cup of coffee if it makes you happy and enhances your life. However, that same cup of coffee may not be good if it has been hurting your health and sleep.
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Determine What You Want To Prioritize
Reviewing your expenses and questioning how you spend money can help you identify what you want to prioritize. Some people may want to cut out the $5 cup of coffee and similar expenses if it gives them more flexibility to travel the world.
Other people may not get much value out of traveling and may prefer to spend their money in other ways. Knowing what you want to prioritize also identifies the spending categories that aren’t important. Anything that isn’t a priority for your discretionary spending shouldn’t make up a big portion of your budget.
Keeping most expenses away from your credit card allows you to focus on the few expense categories that bring you the most happiness.
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This article Ramit Sethi Gives Advice For Anyone Who’s Trying To Build A Rich Life: ‘Question The Things You Spend Money On’ originally appeared on Benzinga.com
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