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I WIllTEAchYouTo BE
by
RAmIT SEThI
founder and writer of
iwillteachyoutoberich.com
“A unique voice on money,
one singularly attuned to…his generation.”
—San FranciSco chronicle
V i s i t i w i l l t e a c h y o u t o b e r i c h . c o m f o r d a i l y t a c t i c a l t i p s , b o n u s d o w n l o a d s , a n d i n t e r a c t i v e s p r e a d s h e e t s
No Guilt.No Excuses.No B.S. Just a6-WeekProgram That Works
216
I Will Teach You to Be Rich
I
’m always surprised by the e-mails I get rom people who haveoptimized every part o their investing strategy and are nonetheless
still
looking or more ways they can optimize their nances. It’s easy: Just ask people ve to ten years older than you what they
wish
they hadstarted earlier, then do that. You’ll get three answers right o the bat:
1.
CReate an eMeRgenCy fund.
An emergency und is simplyanother savings goal that is a way to protect against job loss, dis-ability, or simple bad luck. Most people in their twenties don’t needemergency unds because we can just borrow money rom our othersavings goals or, worst case, go home to Mom and Dad. But i youhave a mortgage or you need to provide or your amily, an emer-gency und is a critical piece o being nancially secure. To createone, just set up an extra savings goal and then unnel money to itin the same way you would your other goals. Eventually, your emer-gency und should contain six months o spending money (whichincludes
everything:
your mortgage, other loans, ood, transportation,taxes, gits, and anything else you would conceivably spend on).
2.
InsuRanCe.
As you get older and more crotchety, you’ll wantmore and more types o insurance to protect yoursel rom loss. Thisincludes home-owner insurance (re, food, and earthquake) and lieinsurance. I you own a home, you need insurance, but young, singlepeople don’t need lie insurance. First o all, statistically, we hardlyever die, and the insurance payout is useul only or people whodepend on your livelihood, like your spouse and kids. Beyond that,insurance is really out o the scope o this book, but i you’re trulyinterested, I encourage you talk to your parents and their riends,and search or “lie insurance” online to research the various options. You probably don’t need to buy a bunch o insurance options rightnow, but you can certainly set up a savings goal so when you
do
needthem, you’ll have money to use. One last thing: Insurance is almost
financial otins rSuer-Achievers: Make theTen-Year plan That few others d
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EASY MAINTENANCE
never a good investment, despite what financial salespeople (orclueless parents) will tell you. So use it as protection from downsiderisk—like for fires or accidental death when you have a family—butdon’t think of it as a growth investment.
3.
CHILDREN’S EDUCATION.
Whether or not you have children yet,your first goal should be to excel financially for yourself. I alwaysget confused when I see people on TV who are in debt yet want tosave for their children’s education. What the hell? Listen up, Momma:First, get out of debt and save for your own retirement.
Then
you canworry about your kids. That said, just as Roth IRAs are great retirementaccounts, 529s—educational savings plans with significant taxadvantages—are great for children’s education. If you’ve got kids (orknow that one day you will) and some spare cash, pour it into a 529.These are just a few of the things you’ll be forced to think aboutin the next ten years. The best way to prepare yourself is to talk tosuccessful people who are somewhat older than you and have their acttogether. Their advice can be invaluable—and can give you an edgeon planning for the next decade.
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