The cost of living crisis and inflation are some of today’s tough financial challenges, leading many of us to turn to friends, family or financial advisors for guidance.
But millions of people are also turning to streaming services that are producing a lot of financial self-help content, not least Netflix, which recently launched a program called how to get rich,Unexpectedly Entered the Netflix Top 10 Worldwide.
So what’s new here? The show is hosted by Ramit Sethi, a California-based personal finance coach with a bestselling book and podcast. He offers a personal finance version of decluttering guru Marie Kondo’s formula for happiness: his basic philosophy is to “spend a lot on the things you like, and cut mercilessly on the things you don’t like.” “.
Sethi, 40, began his financial journey at Stanford University as a “dormitory playboy” after losing half his college scholarship in the stock market. He recommends budgeting and recommends low-cost Vanguard funds for investors. He warned against day trading, telling a young high earner on his show that his £100,000 loss trading on Robinhood was a gamble, not an investment. Plus, he’s great at how to have the money conversations we all need, especially when you’re a couple who disagree on fundamental principles.
This is common sense stuff, explained eloquently. For example: “We’re going to spend our lives fretting over the $3 problem and completely ignoring the $30,000 problem. A cup of coffee a day won’t change your life. But, are you paying a 1% fee to your financial advisor? It actually does. A 28% fee deducted directly from your earnings?” But that’s hardly rocket science.
Part of the show’s success comes from our inner voyeurs — viewers want to see colorful case studies of how much money is made and spent. From an indebted drag queen to a divorcee with a trust fund, plus a glamorous couple saving for their dream wedding, we get harrowing details about their bank balances and money troubles.
But the series title is misleading. It’s not about doubling your money overnight, or growing it even faster. And, at a time when energy bills are skyrocketing, Sethi’s repetitive and tiredly enthusiastic mantra of “saying YES to affluent living” is a little hard to swallow. Maybe I’m too British.
I think Sethi won over his audience because he offered what seemed to be the opposite of traditional money advice. Instead of focusing on saying “no” to saving, he encourages people to say “yes” to spending when their finances allow it.
This focus on enjoying the money you have – “thinking big” in order to “feel rich” – is fun. His three main points center on the psychology around meaningful consumption, changing patterns ingrained in childhood, and shifting from saving to spending.
I caught up with him to dig deeper. He explains: “Having money can mean traveling for two months a year, wearing a nice cashmere coat, and picking up the kids from school every afternoon. The key here is that your ‘rich life’ is yours and no one else’s.
“The biggest surprise is that people don’t think about it at all. Most of us get up, have breakfast, go to work, answer some emails, come home and watch TV, it’s a good day. But when I ask people ‘what is it for? ?’ I get answers like ‘retirement’. In fact, when I ask ‘what would you like to spend more money on? ’ There’s usually no answer.”
Sethi recalls a guy in Washington who said if he was going to quadruple his spending, it would be eating out. He initially joked: “I might have to watch my weight because I’m going out to eat four times a week.” But after thinking about it, he said: “I’m going to take my family to these Michelin-starred restaurants because They can never afford to go by themselves.”
For Sethi, this realization is “the beautiful part of money”. “In the infancy of personal finance, it’s always about ‘what.’ Is there anything I can get? Can I get that jacket? I don’t have any doubts about that. It’s always about who. Who do I bring? Who can I surprise with generosity?”
He recommends that we all create a wish list for a month, a year, or even 10 years—and figure out how much it costs. “It’s important that you find a way to use your money to get the excitement, not simply pay the bills.”
Sethi recognizes that our childhoods greatly influence how we think about money, but he believes those perceptions can be changed.
“When I talk to people who have amassed a lot of money but are still anxious about spending it, we usually take the time to retrace the conversations they remember sitting around the dinner table with their parents when they were six years old, and they realize that they were overwhelmed by their parents or even Troubled by what my grandparents said.”
He argues that the hallmark of people who are good savers but have trouble spending is that they simply haven’t taken the time to develop the skill.
It is important not to miss out on spending opportunities, especially in the prime spending age group between 40 and 60. “Before 40, most people don’t have that much money.” After 60, there are potential health challenges whether it’s you, your partner, or the family you want to care for. So, if you imagine this major consumption between the ages of 40 and 60, you start to ask yourself, “Wow, I have a window period during which I may only be able to do some of the things in life right now. ” “
Ouch. This is very important. I’m in my 40s, so I’m starting to discuss our 10-year spending plan with my husband.
Do I feel richer after talking to Sethi? No, would I let him dissect my financial life and look at my bank balance? maybe not.
But I’ll watch his next series, if only to learn from other people’s stupidity. And maybe a little smug that my financial situation, while not perfect, is better than they should be.
Moira O’Neill is a freelance money and investing writer. Twitter: @MoiraONeillinstagram @MoiraOnMoneyemail: moira.o’neill@ft.com