Ramit Sethi is an entrepreneur, and the founder and CEO of personal finance website I Will Teach You To Be Rich.
During the pandemic, he recommends people find new ways to cut down on their highest expenses, which are typically rent, eating out, and discretionary spending on material items.
Sethi also strongly advises people to ramp up their savings and work towards building a one year emergency savings account — the key to this, he says, it automating your savings each month.
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How can you save money during a global pandemic? Individuals and businesses alike have found themselves coming up against this issue.
To learn some of the best strategies, Business Insider spoke with personal finance advisor and entrepreneur Ramit Sethi, who is a New York Times bestselling author and creator of the platforms Earnable and I Will Teach You To Be Rich.
Under what Sethi calls the “CEO strategy” — cut costs, earn more, and optimize spending — he advises people to first focus their energy on cutting costs.
“For individuals, cutting costs with your money is in many ways like flossing — we all know we should do it, but most of us never get around to it,” said Sethi. “We often feel guilt because we know we should have done it a long time ago, and we feel overwhelmed because there are hundreds of things we could cut back on.”
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Where should you cut back? Focus on your top 3 expenses
For most people, Sethi says it’s wisest to reevaluate your top three expenses that you have the ability to cut back on. This will often be rent, which you can try to negotiate down during this time, eating out, and sporadic spending on clothing and material items that you may want, but don’t truly need.
“There’s no need to go rummaging around to save on $3 expenses, because you can get the bulk of your cost-cutting wins from those three big items,” Sethi shared.
During the pandemic, it’s easy to cut down one a big-ticket item: eating out. Why? Because most restaurants and bars are closed.
“What’s amazing is that it almost seems effortless at this moment to save money on it,” Sethi said. “That tells us that cutting back is not so much about willpower, as it is about setting up the right systems long term.”
Instead of aiming for overnight perfection, use the ‘85% solution’ to get started
Sethi shared a lesson from his book that he calls the “85% solution.” If you’re targeting an area of your finances that you want to improve, it’s better to get 85% of the way there and move on, …read more
Source:: Business Insider