If Ramit Sethi had his way, we’d never use the phrase “financial literacy” again.
“People want to be rich. They want to live a free life,” Sethi tells MarketWatch. “We need to reframe the way we talk about money.”
That’s been Sethi’s mission for the past 20 years, since he started a blog called I’ll Teach You to Be Rich when he was fresh out of Stanford. It turned into a New York Times best-selling book of the same name, a podcast, and a program of classes and workshops. It all led to the new Netflix
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special, “How to Get Rich,” which hits 220 million people worldwide on April 18.
“Nothing reaches the scale of television,” he says.
The 8-episode show is like a live-action version of his popular podcast, where he educates people about money-related issues. Sethi is not a financial planner, nor a licensed therapist. “I call myself a CEO and an author,” he says, and his financial knowledge comes from a lot of applied work. He considers his area of expertise to be the intersection of psychology and money rather than professional financial planning.
But that doesn’t stop him from delving into the numbers. Before each meeting with a guest on the show, Sethi gets the bare financials—debt, income, savings, and spending history—and then she works with them for six weeks to help them overcome their blocks. There are consequences, too, and a year after the shooting, Sethi is still in touch with the people he helped. “They’re so surprised that I send them a surprise message that I’m interested,” she says.
You can do a lot for people in a short time, and really, progress depends on the individual, but one of the big lessons of the show is for viewers to see what’s going on with other people and apply it. their own lives.
Here’s what you can learn about getting rich from Sethi’s new show.
Look at the actual numbers
Estimates and guesswork don’t work when you’re trying to figure out what’s wrong with your spending, and explanations and general rules will only get you so far when you’re working on a financial plan. Sethi forces people on the show to look at their actual numbers, even if it hurts, and they deliver.
“I learned that if you’re trustworthy, they’ll tell you anything,” says Sethi. “They forget that the cameras are there. I was pleasantly surprised by how honest people are.”
That means people on the show get called out for things like spending $2,000 on breakfast in a month, keeping a $400 monthly storage unit when the content isn’t valuable, and betting $80,000 on DraftKings stock.
Avoid industry pitfalls
The financial sector can make money unnecessarily complicated to your detriment. Sethi has no sympathy for financial advisors who charge annual fees for assets under management, rather than fee-only planners who bill you for what they actually do.
“You ask them, ‘How much are you paying?’ And they can’t give you a straight answer. I criticize the confusion, although I have nothing against financial advisors per se,” he says.
Sethi is also scathing about online trading platforms that encourage people to trade individual stocks at their own peril, like Robinhood, which he calls out on the show.
“I gave names from the beginning,” says Sethi. “I think that’s why people trust me.”
But all that still doesn’t convince some people to do otherwise. Natalie, a contestant on the show, insists on keeping her money with a financial planner who charges her a 1% fee, no matter how Seth tries to do the math. “You can save hundreds of thousands of dollars doing it yourself or paying by the hour. But the more you explain mathematics, the more resistant they become to it,” says Sethi.
See what’s really going on
When Sethi tends to change bad financial habits, she doesn’t show charts and graphs, but instead asks questions to find out what’s behind it. “If they say they spent $5,000 on an outfit, I ask to see it and say I like to spend money on things, too,” Sethi says. “Then I ask them what they think is going on.”
Sethi says most people have never been asked this question about money and find it can be very freeing to talk about where they developed their money values. They begin to see connections. “Much later, when we get to the numbers, I communicate in a simple way. It really helps them see the important parts,” says Sethi.
Find representation and model behavior
You’ll see shopping on Rodeo Drive in Sethi’s Netflix show, but only as a cautionary tale. The people featured come from all walks of life and have all kinds of money problems—spending too much, earning too little, not focusing on big goals—but most aren’t what you’d consider traditionally rich.
Sethi goes to great lengths to find a diverse group of people to focus on, and that means a geographic, ethnic, racial, economic, age, and gender spread that hopefully allows people to see themselves in their scripts in some way.
“Presentation is really important. Getting very diverse people has been a huge priority,” Sethi says. “Rich is not an old guy in a hat. The rich man next door. Rich could be a school teacher.”
Find your rich life!
Sethi isn’t coming for your lattes and avocado toast. “I’m not here to make anybody look stupid,” he says.
Delving into the psychology of money is more about how your emotions drive your financial decisions. That’s why Seth asks each guest to define their “rich life,” which is different for each person, such as owning a home, being able to eat out without having to worry about expenses, starting a business, helping a parent retire. Sethi recently joked on Twitter that in her rich life she never had to go into her own home renovations again.
Sethi starts there because he knows some people are ready to change and others aren’t, but before they do anything, they have to decide what success looks like. When he started the show, Sethi talked to the producers about what they wanted from these meetings. Was it massive transformations, like doubling their salaries? Not always:
“I learned that some people just want to take a step forward, and some people aren’t ready to change at all,” Sethi says. “We can all understand what he wants to change, but it’s harder than we thought. If we can tell that story, that’s a beautiful thing.”
April is National Financial Literacy Month. To mark the occasion, MarketWatch will publish a series of Financial Fitness articles to help readers improve their financial health and provide advice on how to save, invest and spend their money wisely. read more here.
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