How to ‘live a rich life’ may sound like a late-night infomercial, but the concept is a fun exercise in money psychology and lifestyle design.
Defining your “Rich Life” is a term that was coined by Ramit Sethi in his wildly successful blog, book, and now podcast, I Will Teach You to Be Rich.
Put simply, your rich life is living your ideal life. A life where your finances, relationships, and ordinary days make you think to yourself, wow, I’m living a fulfilling life.
What makes up your rich life could be many things:
- Giving and helping others, or something else deeply related to your core values
- Cooking dinner for your family
- Ordering an appetizer at dinner
- Buying groceries at Whole Foods
- And the list goes on…
When I first heard the Tim Ferriss podcast with Ramit Sethi, I’ll be honest, living a ‘rich life’ sounded cheesy to me. The episode ended up offering a new perspective on spending, however, and helped me to balance a few money habits of mine.
Defining Your Rich Life According to Ramit
Your rich life is not about being the most frugal person on the planet or living just to optimize your spreadsheet for retirement. It’s about spending time and money on things that build your ideal life, including investments, strategic spending, the types of jobs you work, where you live, etc.
Ramit is known for living extravagantly in areas of his life that he loves and enjoys and cutting costs mercilessly in areas that he doesn’t. He comes against the mediocre idea of spending and saving a little here and there across multiple areas of life because you’re supposed to, and instead wants people to ratchet up the “money dial” 10x in the areas they really do enjoy and cut costs in other areas that don’t matter.
If your ‘rich life’ includes travel, consider what you would have to cut or adjust so you could spend 10 times the current allocated amount on travel. This exercise may seem absurd, but the value in it is the idea of shaking up how we think about money and giving us a clean slate to begin operating from.
Living a Rich Life Isn’t All about Money
Money is a tool we use to live. Thankfully, we can also learn to use it intentionally to build a more ideal life. While it quite literally pays to know how to manage your money, it also pays to realize that this thing– money–is meant to facilitate your life, not the other way around.
Secondly, living a rich life could have nothing to do with money and everything to do with time and lifestyle. Of course, time is money, but you get the idea. Editing your life in a way that helps you spend your time well is arguably the bigger lesson in living a rich life.
In my case, I like to spend as much time as I can at home. So, I made it a goal of mine to land a job that would allow me to work remotely, even if the schedule was only remote part-time. A hybrid schedule is much better than a full-time in-office schedule in my book. The ability to work remotely has been a huge element of my ‘rich life.’
8 Rules for How to Live a Rich Life
I’m not going to pretend to fully understand Ramit’s whole methodology. So, let’s take a quick look at his 8 rules for how to live a rich life. You can find the full list here.
Rule #1 – Your Rich Life Will Look Different from Everyone Else’s
Before you sit down to brainstorm what your rich life is, you need to realize that what you come up with will not look like someone else’s definition. In fact, the things you choose to list will likely be very different from what your parents might pick or your significant other or your best friend.
Your rich life will be tailor-made to fit you and not anyone else. Rule #1 is learning to emphasize what you value and being unapologetic about how you choose to spend your time and money.
Rule #2 – You Are in Control of Your Rich Life
There are two sides to this rule. First, you have to realize that life isn’t a fairytale and no one is coming to rescue you. Your financial strategy shouldn’t count on others to bail you out*.
Second, the upside of being in control is you have a say in how to run things and can enjoy the benefits of that position. This position requires ownership and responsibility and a willingness to create and execute a money strategy.
*The obvious caveat is true hard times that occur outside of a lack of provision.
Rule #3 – Move Past Analysis Paralysis and Get Started
Everything doesn’t have to be perfect before you start creating and working on a financial strategy. If you don’t understand everything about setting up a solid money system, that’s okay. Even if you can implement 50% of a system, that is better than sitting in paralysis mode analyzing how you will do the absolute best when you do end up getting started. 50% is better than 0%.
Sparky says S. Pellergrino water all day for his rich life.
Rule #4 – Mistakes Are Okay
Trying new things means learning and failing. Making mistakes is okay so long as we are able to learn from them and move on. Money mistakes, relationship mistakes, and lifestyle mistakes are all part of growing and making changes as we go through life. Just make sure you are making measured changes and have counted the costs and risks so that you can handle the mistakes and bounce back. Be smart.
Rule #5 – Play Offense, Not Defense
When it comes to money and lifestyle choices, we can often find ourselves looking back retroactively at months past, the bills, the surprise expenses, and maybe even the penalties, and we assess and move on with our lives, living much in the same way.
With building a rich life, we have to make the switch to making moves on the front end. Play offense by setting up automatic payments, automatic investing, and following basic guidelines like saving and investing 20% of gross income, and things of this nature. The same goes for your rich life goals. Make moves to save and make those goals a reality. Take action instead of existing in a state of reaction.
Rule #6 – Live a Rich Life Now
You don’t have to wait until retirement age to live a rich life. Remember, however, part of living large in the areas that matter most to you means learning to significantly cut in other areas of your life that don’t matter as much. By doing this and taking proactive steps, you can live with the small or large luxuries that you’d really like to enjoy now instead of later.
Do you enjoy specialty lattes? Cancel that obscure streaming service and increase your allocation for $5 lattes, etc. The key is to approach your finances without preexisting money filters regarding what should be or how it has to be and to question it all throughout the redesign process.
Rule #7 – Focus on the Big Wins
This rule is simple, yet profound. Life is full of endless noise (and growing louder by the day). Instead of focusing on all the small details, like what size font to use with your resume, focus on learning how to negotiate your salary on the hire-in. This is a Big Win that will serve you well. If you can make it a practice to focus on a handful of big wins and let the 50 little things fall to the side, you’ll be better off.
Big Wins include landing your dream job, investing early, having a side hustle to earn money on the side, cutting costs mercilessly on the things you don’t care about, etc.
Rule #8 – A Rich Life is Generous
Put simply, when you organize your finances and time to afford yourself a ‘rich life’ it also means you can afford to give your time, money, and talents to others. Being generous is an important part of living a rich life.
So, tip $20 for a coffee, tip $100 for dinner, tithe, or give to someone you know who is in need or going through a rough time. Financial systems can afford you a comfortable life and enable you to be more generous.
Closing Thoughts on How to Live a Rich Life
I’m not going to pretend I’ve read Ramit’s book or fully understand his approach to money, but I have done an amount of reading and listening to his methodology to think it offers a valuable money perspective that many can benefit from.
Ramit’s approach to living extravagantly in certain areas is a refreshing approach to hear. In many financial realms, discipline and sacrifice make up the primary tone. While Ramit doesn’t neglect these things, his rhetoric is a little more palatable. And sometimes a listening ear is more than half the battle when it comes to making changes regarding finances.
How to Get Rich with Ramit Sethi: a Netflix Series
And if a blog, book, and podcast weren’t enough, Ramit is set to have his very own Netflix mini series launching soon. The series appears to follow Ramit as he works with regular people to get their money lives in order.
