Last week, the second edition of Ramit Sethi’s bestseller I Will Teach You To Be Rich (IWT) hit the market, and I’ve gotten a great kick out of listening to all Ramit’s interviews as he goes around promoting its launch. Ramit is a character, and I of course mean that in the best way possible. This is the first time I’ve listened to the audiobook version of IWT, and Ramit nails his performance throughout reading his audiobook. You’d almost think he wasn’t reading at all!
Throughout many of these interviews, Ramit has talked about this idea of a Rich Life and how his views have somewhat evolved since the first launch of IWT ten years ago. One common example he’s used several times is how this young guy and his wife worked really hard to retire very early and travel the nation in an RV. Ramit would never consider that to be his Rich Life, and I imagine most of you wouldn’t either. (Personally, I wouldn’t want to make that my whole life, but doing that for a month or two when I’m older sounds appealing.)
Let’s talk about this Rich Life. What it is, what it isn’t, and how to start thinking about money differently.
First, what it isn’t. A Rich Life isn’t accumulating as much money as you possibly can just because you can. Oddly enough, money itself doesn’t have any intrinsic value. It’s just a piece of paper or piece of metal. The only person (well, duck) I know who gets a kick out of the physicality of money is Scrooge McDuck and his swimming pool-like vault.
Money is this thing we’ve arbitrarily given value toward to enable people to focusing on doing what they do best. Consider the old days of having to barter goods. If you were a farmer, it wouldn’t be in your best interest to hold onto things with a very limited shelf life. Like apples. You can’t hold onto apples for months at a time to utilize as currency later down the road when you actually needed another bartering good. Apples go bad. Enter in money, and now you can give up your entire crop immediately for this thing we’ve given arbitrary value to that you can comfortably use six months later, no need to worry about rotten apple cores or building a side business to support the deficit times.
What we don’t necessarily consider is how money is inherently limited at peak capacities. It probably goes without saying, but money can’t make the impossible possible, in a very literal sense. Consider Bill Gates. For all intents and purposes, he has an infinite amount of money. But does he live a life that’s quantifiably different than our own? Does he fly around in a jetpack, walk through walls, or read people’s minds?? Of course not! In fact, we probably have nicer smartphones in our pockets today than the top of the line thing he could buy back in the 1990s.
I’ve written in other posts this idea that money doesn’t necessarily bring happiness. Don’t get me wrong, money can quantifiably make things much, much easier, especially if you go from making $20,000 a year to $80,000 a year. But you start hitting a threshold of diminishing returns at some point when money is just… money. As with Bill Gates, he can give away a billion dollars (and he has) and not make a dent in his wallet or personal well being.
The idea of a Rich Life, then, is taking into serious consideration the things that will maintain an elevated sense of well being for you throughout your life. Ramit will say that you should then craft your saving / investing / spending patterns around your Rich Life, and I 100% agree with that.
But I don’t want to focus on the money aspect here. For that, I recommend going to check out Ramit’s new edition of I Will Teach You To Be Rich. He does a MUCH better job about talking about those money dials than I would ever be able to give justice.
Instead, I want to focus on things you should consider when crafting your idea of a Rich Life. Before getting into that, I think it might be helpful to share what my idea of a Rich Life is today with a few basic principles.
- Having the freedom to be able to work where I want to work without feeling like I can’t leave because of money
- Having the time to do side projects, like this blog
- Keeping my electronic devices up-to-date within at least two product generations (Somewhere, my wife is sighing)
- Maintaining my optimal level of health while still freeing myself up to enjoy when somebody at work brings in Krispy Kreme donuts
- Living in a big enough house that my girls can each have their own bedroom and I have enough space for my workout equipment (Which actually isn’t a big house at all; my current house is bigger than I care for it to be)
- Living within a few minutes’ drive or walk from nature (Not hard to do in downstate Illinois!)
- Not worrying about spending any amount on education (Which, for the most part, consists of $10 books)
- Driving a Tesla Model X (pretty much the only frivolous thing on this list)
Okay, now let’s get into the principles I considered when writing that list.
1. Your Rich Life might not have to do with money at all.
If you comb through what my idea of a Rich Life is, you’ll notice that I don’t have to have that high of a salary to maintain all those things. (We’ll swing back around to that piece about the Model X in the next point.) What I tell people all the time is that my Rich Life is paved as a “freedom path.” I don’t want to be shackled to do anything I hate, so that first bullet on my list is number one for a reason. (And that should tell you all how I feel about my current employment.) Once you start considering that maybe your Rich Life doesn’t actually cost all that much money, it’s much easier crafting a financial plan that will suit your desires.
2. Your Rich Life today might not be your Rich Life tomorrow.
Okay, let’s come back around to that last point! I threw that one on there as a tiny bit of a joke. Genuinely, I do want to drive a Model X, but I am also totally okay with driving my Kia Soul today. And if Tesla doesn’t get their money matters in order, there might not be a Model X for me to buy in a few years.
But more importantly, people’s desires change over time. I do not at all consider myself to be the same person I was ten years ago. Taking a page from Ramit’s book, he shares that top performers plan before they even need to plan. For that reason, it’s always a good idea to craft a financial plan that’s flexible enough to accommodate certain things as they arise in the future. (More on this in our last point.)
3. Be relentless about cutting out / tamping down the things that you don’t consider to be a part of your Rich Life.
Taking another tip from Ramit, don’t spend money on things you don’t care about. That should come as a no brainer, but I’ve seen way, wayyyy too many people lock themselves in something like a mortgage on a giant house just to keep up with the Joneses. Notice anything lacking in my idea of a Rich Life? There are probably lots of things, but the one thing most people might put on here is travel. I just don’t care to travel. I’m not opposed to family vacations, especially as our girls get older, but at this point in my life, I don’t have a strong desire to travel long distances. (But this could change, and as noted in our last point, I would definitely want to stay flexible in case I change my mind on this later in life.)
4. Consider how your idea of a Rich Life fits in line with your partner’s idea of a Rich Life.
This one is really, really important, especially if you’re dating somebody and plan to get married in the near future. Transparently, my wife and I didn’t discuss this when we got married, and it made certain things difficult early in our marriage. Timing of when to have kids was a very hot point of contention. That issue is settled now that we have kids, and I’m not proud at all to say that I won that debate. (She wanted kids much earlier in our 20's.)
Now, we try to settle things before they happen, and I’m glad to say we’re on the same page with most things. It’s much easier to consider our Rich Life together now while we still have our full lives ahead of us. I wouldn’t dare want to think about the consequences if she thought a Rich Life was retiring in our mid-40’s and then getting to that age only to find… that’s not going to happen. Yikes.
5. Don’t expect something you’ve never experienced to bring you happiness.
Segueing nicely into our last point, most people would put things they’ve never experienced on their Rich Life list that they might end up hating once actually experiencing. For example, I grew up knowing a guy in our church who worked and worked and worked to retire in his mid-40’s. He thought it would be awesome to not have to work anymore, but once he finally reached his goal… he was a bit miserable. This was because all his friends (like my dad) were still working, so it’s not like he could hang out with them. Similarly, he got bored pretty quickly after lounging around all day. I’m pretty sure he ended up going back into the workforce after about a year.
Fortunately, there are ways to “practice” your concepts of a Rich Life early. In his interview with Ramit, Tim Ferriss brings up that it’s much better to rent a fancy sports car for a month than to buy one to see if you really do want to pony up all that money to buy a sports car. Similarly, if you really wanted to retire early, save up a month or two of paid time off and take an extended vacation. If you find yourself bored after a week, then early retirement probably isn’t for you.
Wow, that post got long! But it was a fun one to write, and like always, I hope you got something out of it. What is your idea of a Rich Life? I’d love to hear, so sound off down in the comments. We’ll see you in the next post!