I Will Teach You to Be Rich

1. A Rich Life means you can spend extravagantly on the things you love as long as you cut costs mercilessly on the things you don’t.

Conscious spending isn’t about cutting your spending on everything. That approach wouldn’t last two days. It is, quite simply, about choosing the things you love enough to spend extravagantly on – and then cutting costs mercilessly on the things you don’t love.

Before you go further, I encourage you to think about your Rich Life. Why do you want to be rich? What do you want to do with your wealth?

The most important practical difference between checking accounts and savings accounts is that you withdraw money regularly from your current account, but you rarely withdraw from your savings account. Current accounts are built for frequent withdrawals: they have debit cards and ATMs for your convenience. But your savings account is really a “goal

4. There’s a limit to how much you can cut, but no limit to how much you can earn. I have readers who earn $50,000/year and ones who earn $750,000/year. They both buy the same loaves of bread. Controlling spending is important, but your earnings become super-linear.

When I do, I always ask two questions: ▪ Why do you want to be rich? ▪ What does being rich mean to you?

THE À LA CARTE METHOD takes advantage of psychology to cut our spending. Here’s how it works. Cancel all the discretionary subscriptions you can: your magazines, TV — even your gym. Then, buy what you need à la carte. Instead of paying for a ton of channels you never watch on satellite, buy only the episodes you watch for £2.49 each from iTunes. Bu

2. Focus on the Big Wins – the five to ten things that get you disproportionate results, including automating your savings and investing, finding a job you love and negotiating your salary.

Rather than earning a little interest, like most people do in their savings accounts, you can earn around 8% per year over the long term by investing. Over the twentieth century, the average annual stock market return was 11%, minus 3% for inflation, giving us 8%. To put that in perspective, let’s assume that you have £1,000 at age 35 to put somewh