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Sit back, relax, and automate your savings

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At any given moment I have three or four books going at once – usually novels, memoirs, non-fiction, and a personal finance book or two. Often the books I want are checked out from the library’s eBooks. So when I learn about a new book, I put a hold on it and get a nice present whenever my number comes up.

Podcast Recommendations

However, it can be challenging when two or three books come in all at once. That’s been the case lately. I received a novel I’d been dying to read, Celestial Bodies (a family saga set in the country of Oman) plus two personal finance books: I will Teach You To Be Rich by Ramit Sethi and The Millionaire Next Door, by Thomas J. Stanley and William Danko.

I first heard Ramit Sethi on this podcast from Bigger Pockets Money and he was hilarious. (The Financial Independence movement could use more comedy.) The daughter of the author of the Millionaire Next Door was also on this episode of Paula Pant’s Afford Anything. Her father died in a car accident just as he was updating the latest edition of the book, so she is now doing it for him. Those were both great podcast introductions to these two books, but I’m enjoying digging into the actual books.

Why We Need to “Set it, then forget it”

Ramit Sethi’s book is filled with humor and would be a great introduction to someone just learning how to increase their wealth. I knew a lot of what he was saying already, just from following the FIRE movement for a while now, but it still doesn’t hurt to hear these principles again. Plus, Sethi makes me laugh. He does talk about some things in a new and fresh way that gave me ideas I hadn’t had before, so I am learning a good bit from his book.

My number one takeaway from I Will Teach You To Be Rich is the advice to forget about your money and live your life. Once you’ve got your systems in place, look at them occasionally but don’t think about them all the time. Don’t obsess over whether your high interest savings account has lost a tenth of a point so you need to move your money elsewhere. Don’t watch your stocks go up and down, just “set it and forget it.” If you follow these ideas for having an intuitive budget, or Paula Pant’s anti-budget, you have set your good habits in motion, and now it’s time to do something else with your life.

This is such good advice, because there’s a tendency to get obsessed with money once you start learning about it. Sometimes we just need to go about our life business and trust that the money we’ve allocated for saving and investing is doing its work. Worrying about optimizing a penny here and there just takes time and mental energy away from reasons we want to achieve financial independence in the first place.

Instead, we should spend more time with other people, doing things we love doing. I always picture one of my favorite Christmas stories, Charles Dickens’ A Christmas Carol, when I find myself fixating too much on the subject of money. I don’t want to be like Ebenezer Scrooge, so obsessed with counting and hoarding his money that he could no longer see the people around him.

The Secrets of Millionaires

I’m still reading the Millionaire Next Door, but it’s in an older edition and is a little harder to relate to because most of the examples in the book are men. This book describes the frugal habits of millionaires. True millionaires don’t buy the latest cars and have the best consumer goods or clothes but are more likely to appear like everyday people when you meet them. Even though the men in this book are mostly the ones out earning the bacon, the women are home managing the money and are often more frugal than their husbands. Again, I think this would be a fresh read for someone not exposed to these concepts yet, but for me there hasn’t been a lot of new information so far.

This book is being updated, so I think some of the information has changed. (I seriously doubt American cars are still the preferred choice of today’s millionaires, but I could be wrong.) After hearing Stanley’s daughter on Paula Pant, I’m really eager to get a hold of the next edition to see how she updates things. Hopefully she’ll include more gender diversity in the process.

Immigrants and their Frugal Ways

My favorite takeaway from The Millionaire Next Door is the fact that immigrants are more likely to be millionaires than people born here in the United States. This is because they bring frugal behaviors with them that disappear within a generation or two, as their kids grow up in America and become accustomed to our crazy consumerist lifestyles.

I can identify with this, too, since my spouse is from another country. Since we met, he has taught me about the amazing things that are possible when you don’t blow your paycheck the minute it hits the bank. It is nice to be on the same page financially as your partner, and if anything, I’m sure I’ve been the spendthrift in our relationship who slowed us down on the path to financial independence without knowing it.

Photo by Jasmin Schreiber on Unsplash

The Lost Art of Making Do

I’ve spent a lot of time living abroad, and I have always been amazed at how people in other countries, particularly developing ones, don’t need a lot of stuff to be content. They are very resourceful in fixing broken things and piecing together what they need from limited resources. They also seem to spend more time interacting with friends and family than we do. This does not mean we should romanticize poverty. Just because people know how to make do with less doesn’t mean they are any less deserving of top-notch medical care, clean water, and enough money to have a comfortable life. But with that caveat, we can definitely learn from how people in other cultures live. Here’s one example – the story of a population in Pakistan that has become very wealthy but is still focused on frugality and their impact on the planet.

I think life used to be more like this in America – I could see it in the habits of my Depression-era grandparents. When I was growing up, I also remember that my parents gardened, fixed things, and did what they could to solve problems before outsourcing tasks. That way of life, however, has definitely become a lost art. So it makes sense that immigrants are more likely to be millionaires, since they’re accustomed to living more frugally and saving.

And now, back to grading the mountain of end-of-semester exams and papers I’ve got in front of me, and those library books, all waiting to be read.

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