- Ramit Sethi is a self-made millionaire and author of New York Times bestseller " I Will Teach You to Be Rich ."
- He writes that he used to think people splurging on unnecessary things, like antique cars or first-class flights, were suckers wasting money.
- But now, he understands why people spend the way they do: priorities.
Growing up in Sacramento, I remember a lot of guys who loved buying old cars and spending tens of thousands to repair them huh??
Why would anyone spend their hard-earned money to create more work for themselves? I just didnt get it.
Along the same vein, I used to see people paying for first-class flights and think that they were suckers. After all, were all going to the same place anyway.
Over time, Ive come to change the way I think about how people spend money. Ill never buy an old car to repair, but I do fly first class and now I understand why people do both: priorities.
The most successful people I've met are all very conscious and intentional about how they spend their money. That doesn't mean they don't spend. It means they choose how to spend and are unapologetic in allocating significant resources to make their lives more convenient, more efficient, more organized, and generally just better in whatever area of life they need to maximize the most.
If I looked at your spending for five minutes, I could tell where your priorities lie because people go to where their time and money go. For example, health-conscious people spend time and money on being healthy. Fashionable people spend time and money researching the latest fashion trends and shopping.
The most fascinating thing is that many of us are misaligned in our priorities and where we allocate our money.
For instance, some people claim that they care about fitness, but if you were to look at their spending for 10 minutes, they may prioritize everything else but fitness. Then if you really looked at where they were spending their money, you could instantly know what is their priority.
I spent years talking to people about their spending habits, and I boiled them down to something Ive termed money dials called such because you can turn them up or down, just like a dial.
I love this because once you understand your own money dial, and you accept it, you can zoom in on what you love and makes your own life better by turning the dial all the way up. Here are some examples:
- Convenience: This money dial is anything that makes your life more convenient. Think travel apps, Ubers, pre-cooked meals, food delivery, personal trainers, etc. This is my own number-one money dial ( how I spend $50,000 every year on convenience ). If you turn the dial all the way up, it could mean private chef, personal trainer, assistants even private jets!
- Travel: People with the travel money dial prioritize spending on travel above all else. If you turn this money dial all the way up, it means traveling for months every year; splurging on high-end travel experiences like a safari, Inspirato membership, or multi-generational travel; and developing strong perspectives on travel, including which friends to invite or specific parts of the world to return to.
- Fitness: Taken to its logical extreme, the fitness money dial can mean annual yoga retreats, always checking restaurant menus before you go, or joining social groups based on fitness. Ive added this as another of my money dial in the last few years.
Finding your money dial your true priority in your life currently can be intimidating and at the same time liberating.
Do you know what you naturally gravitate toward spending on? Most of us dont. Weve never thought about it. But as Tony Robbins says, Success leaves clues. And spending leaves clues, too.
These money dials are an easy way to diagnose what you claim is important versus what is actually important. It will change the way you think about spending money.
It allows you to comfortably say, Hey, this is important to me and thats not. I encourage you to check out my post on money dials to learn about what your money dial might be.
Ramit Sethi is the author of the New York Times bestseller " I Will Teach You To Be Rich " and writes for more than 1 million readers on his websites, I Will Teach You To Be Rich and GrowthLab . His work on personal finance and entrepreneurship have been featured in The New York Times, The Wall Street Journal, and Business Insider.
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SEE ALSO: I spent years agonizing about wasting money until I realized successful people have a completely different mindset