How to Automate Your Finances and Save Money, Explained in One Picture
Personal finance is easy, but it is not easy. Our greedy brains try to fight us every step of the way, which is why automating your finances is such a great way to save money. Ramit Sethi, author of I’ll Teach You To Be Rich , puts everything you need to know in one simple graph.
Automating your money works because you pay yourself first: if you automatically contribute a certain percentage of your salary to your savings, 401k and other investments, you won’t be tempted to spend it later. As Warren Buffet put it , “Don’t hoard what is left over from spending; spend what is left after saving. “
The Sethi diagram (which is quite old, but we just discovered) is a graphical step-by-step process that he has explained many times before, both in his book (which we love ) and in a video that we published many years ago . But if you’re more of a visual learner, this diagram makes things easier. Just adjust the interest to suit your budget and set up automatic withdrawals and bill payments as described below. You will save money in no time.
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