17 May 2019 · 4 min
Ramit Sethi explains the money dial, a framework for identifying which spending category brings you the most joy. Find your dial by reviewing recent purchases, then cut low-value expenses and spend more on what matters most. This shifts you from guilt-ridden spending to deliberately allocating resources to your priorities.
This is Five Minute Friday. We got my man Ramit Sethi on who is a New York Times bestselling author of the book on personal finance called I Will Teach youh To Be Rich and the founder of growthlab.com he's also got the site Iwillteachyoutoberich.com which his information helped me get out of debt many years ago when I read his book. he's been a good friend of mine for about 10 years and just had some incredible times with him.
And what you just said is extremely revealing. Your money dial, I would be willing to bet, is relationships. Oh, yeah. Okay. So, so I have a friend Nick Gray. Nick Gray loves hosting people at his house. He, every day he's trying a different party, he's testing stuff, he invites people over, he does all kinds of crazy stuff. he loves relationships. That's his money dial. And a money dial, the reason I say it's a dial is you start off, you know, maybe you have a couple people out to dinner and as you start to get more money and more success, you turn that dial until you are totally dialed in. You have the perfect appetizer, you have the perfect icebreakers, you have maybe friends who have jets, you're really turning that dial. There's other money dials. The most common one is frugality. Most people actually focus on cost above all else. And you can tell because when they buy something, what's the first thing they say?
They look at the price.
They look at the price and they tell everyone else, I got this for 60% off. Okay, so that's-- that's brag about how.
Discounted they got it.
It's part of their identity. Whereas for you, dude, I see your photos, I see your conference, your identity is about relationships. Now there's a few others. There's wellness, which is more and more common. and you'll see people, they have the perfect diet, they have a chef, and I'm talking when they really dial it in. This is the point of it.
Yeah, full-time trainer.
This is the point of an advanced personal finance, which is you don't have to have a trainer when you start off, right? But you went and you searched for five hours, you found the perfect program. But as you have more money, you start to say, I want better results, I want faster results, and I have money, I'm gonna throw it at the problem. Mine, my money dial, is convenience. So I love convenience. And I wake up-- Everything's delivered to you. Everything's delivered. I have a chef. When I leave to travel, I have this thing called Travel Protocol that gets activated with my assistant, and my plants get watered, my email gets handled differently. I mean, it's like, I've been thinking about this for the last 15 years. I'm a psycho. But that's my money dial. And I love it.
So you'll pay a premium for that money dial.
Exactly. But I could not care less about certain other money dials. Other common ones that a lot of people watching probably have or listening is travel. So at a basic level, people say I like to travel. But imagine you've truly, truly become more advanced and you've become more successful and you want to throw a lot of money at the problem because you value it. Suddenly, maybe you're going three months a year. Maybe you are leading excursions. I mean, there's, you can just expand your mind as to what you could possibly do beyond the typical eight days of vacation a year. So I share this with everyone because I like to challenge people to do something. Take a look at your spending from the last two to three months and ask yourself, what is my money dial? And your money dial is the thing that you love to spend money on. It's the thing that gives you joy and it's the thing you could spend endless amounts of time optimizing.
And feel good about it.
And feel good about it. And so the reason, once you know your money dial, then it enables you to do two really cool things. One is you can cut back on stuff you don't care about. Okay, so if you just don't care about wellness or if you just don't care about travel, that's okay. You can cut the spend to that. But I think the cooler thing is it allows you to take that money and now spend extravagantly on the thing you love, which is your money dial. So if you're Lewis, suddenly you don't mind throwing a lavish dinner for your friends with a performer and all kinds of crazy stuff because that's your money dial. No need to apologize for it. So for everyone, especially the advanced folks who have money, you gotta think now you're at a different level. You're not just trying to cut your debt, you're not just trying to cut back, you actually can spend on the things you love and that to me is really exciting.
So figure out your money dial and spend more intentionally on those things as opposed to spending a lot on everything.
Exactly.
I hope you guys enjoyed this 5 Minute Friday with Ramit Sethi and make sure to get his book, the 10 Year Anniversary Expanded and New Chapters Teaching youg How to Be Rich. Make sure to check it out on Amazon or you can go to his website, I will teach you to be rich.com.
