Personal FinanceJemal Countess/Getty ImagesJohn SeetooRamit Sethi is a NY Times bestselling author, a podcaster, and the host of the Netflix series, I Will Teach You To Be Rich, which was taken from his 1 million copies sold book of the same title. While much of Sethi’s practical money management advice is echoed by a number of other financial advice speakers and authors, Sethi’s approach is somewhat different. Both his Master’s and Bachelor’s degrees from Stanford include Psychology as a minor or co-major component. The psychological aspects of his advice likely stems from this academic training.
Financial advice author, podcaster, and Netflix TV series host Ramit Sethi listed a 4-way division that he had advised for managing take-home pay.
Ramit Sethi’s advice combines a blend of common sense management with an understanding of human nature to create better odds of overall success.
Offering suggested percentage ranges instead of fixed numbers in Sethi’s advice allows people to feel comfortable customizing his concepts for their own situations.
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Ramit Sethi’s 4-Way Take Home Pay SplitCanva | Icons8 Photos and Jupiterimages from Photo ImagesRamit Sethi advises 4 general areas for handling one’s take-home pay to build savings and wealth, stay out of debt, and not feel guilty for occasional splurges.With a widespread media presence, Ramit Sethi frequently shows up on social media with snippets of his advice culled from his longer format programs and guest appearances. On one video segment, Sethi was citing his advice on personal take home pay money management. In 53 seconds, he quickly listed a four (4) way division of money allocation for one’s monthly paycheck. The suggestion combines a disciplined approach while acknowledging the temptation faced by everyone for instant gratification.Fixed Costs – Sethi categorizes fixed costs as mortgage payments, rent, groceries, utilities, phone bills, wifi, medical prescriptions, and other regular recurring expenses. By and large, personal fixed costs are necessary and essential, and should take up 50-60% of one’s take home pay.
Savings – An emergency fund, money intended for a down payment on a home or a car, and general liquid cash accumulating interest in a savings account all qualify for this category. Sethi advises allocating 5-10% for savings.
Investments – Sethi indicates setting aside 5-10% for investment is fine, but the more that one can afford, the better, since investments are where true wealth is built.
Guilt-Free Spending – Here is where Ramit Sethi may d