Money Management

Can you really skip these recommended steps if you want to get rich? 

There is a lot of advice out there about things you’ll need to do if you want to become financially comfortable. Some of these “must-do” tasks can be very challenging for some people, while others may not seem very desirable.

But do you actually have to adopt all of the recommended habits if you want a big bank account balance and lots of money in your brokerage account?

Finance expert Ramit Sethi doesn’t think so. In fact, he says there are five commonly recommended steps to wealth that you don’t actually have to take at all.

Ramit Sethi says you can skip these five things and still be a financial success

According to Sethi, it’s possible to be rich without doing these five things that finance experts often suggest are vital to wealth-building:

Checking account balances dailyOwning real estateStudying the marketsHiring a financial advisorBecoming obsessed with money

On Twitter, Sethi said, “You can avoid every one of those things and still live a Rich Life.”

Is Sethi right?

Reading this list might surprise you, especially if you’ve been looking for financial advice to help you become wealthier. A lot of suggestions surrounding wealth-building would require you to become obsessed with some aspect of money management. For example, if you’re making a detailed budget, allocating every dollar, and tracking spending, this could border on obsessive behavior. It may also sound so unpleasant that you decide to give up on the idea of becoming wealthy.

The good news is, Sethi is right that you don’t have to do this. You do need to make sure you are living on less than you earn — but you can approach this in a lot of ways that don’t require you to become obsessed (such as by automating your investments and bill payments and knowing you can freely spend anything that’s left over on whatever you want).

Owning real estate is also touted as one of the surest paths to wealth — and with good reason, as homeowners generally have higher net worths than renters. But Sethi is right that it is possible to become rich without getting a mortgage and buying a house. If renting is cheaper than buying, you could rent and invest the difference and still amass a fortune.

Sethi is also correct that you don’t need to hire a financial advisor or study the markets to grow wealth. You can invest in index funds with little or no investment knowledge, and you can easily figure out how to manage and invest your money without hiring a financial advisor simply by doing a little bit of reading and using a brokerage account.

As for checking account balances daily, this could actually backfire on you since you could make wrong decisions based on short-term trends if you get motivated by fear. It’s better to check in less often, especially if you’ve invested in index funds that have a solid track record of growth and present limited risk.

There are many paths to wealth

The bottom line is, Sethi is spot on. You do not have to do any of these five things if you don’t want to. You can create your own path to a rich life by taking the money management steps that actually make sense for you and feel good to you.

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The quick answer? It depends. 

Although my family orders takeout somewhat often (largely during periods when I get too busy to cook), dining at restaurants is something we tend to do sparingly. And a big reason has to do with the cost.

Most of the restaurants we frequent aren’t fancy. But recently, I took my three kids and husband out for lunch at a local diner and was shocked by the $75 credit card tab that ensued.

Of course, some restaurants offer a kids menu loaded with items that tend to be more appealing to younger diners. You might think that ordering off of the kids menu is a good way to save money on dining out. But in some cases, going with the kids menu might cost you more.

When a kids meal just doesn’t make sense

You might assume that it pays to order a kids meal due to its lower price point. But before you go that route, think about other options.

At a diner in my neighborhood, you can get a kids meal for $6.99 that includes an entree and either a soft drink or cup of juice or chocolate milk. But the thing is, my kids don’t need to drink something sugary when we’re dining out. And the inclusion of those drink choices adds to the cost of those kids meals.

Recently, instead of getting two kids grilled cheeses with chocolate milks for $6.99 a pop, or about $14 total, I asked my daughters to split an adult grilled cheese for $8.99. They got a comparable amount of food, and while they complained about not getting their sugar-laden milk, they settled for water when our waitress was kind enough to throw an extra lemon into each.

Crunch the numbers before you order

In some cases, you may want to stick to the kids menu at your go-to restaurant because the food choices are the most suitable for your children. Kids menus tend to cater to pickier eaters who prefer to stick to a certain food rotation. At Applebee’s, for example, the kids menu consists of chicken tenders, a corn dog, a cheeseburger, and a grilled cheese sandwich.

But often, the items you see on a kids menu can be found on the regular menu, and for not that much more money. So it may be possible to have two of your kids split a regular meal, or for you to even share your entree with a child.

Recently, I did this with my son. We were out to breakfast and rather than order him a kids’ breakfast of one scrambled egg with home fries, I ordered my usual omelet and gave him a portion. I then split my home fries with him since they give you a lot and I never manage to finish them in one sitting anyway.

All told, eating at restaurants is an expensive prospect. And if you’re trying to grow your savings account balance, it’s something you may want to do just occasionally. But even if your family only dines out once a month, it still pays to do what you can to keep your costs down. And in some cases, that could mean avoiding the kids meal trap and being strategic when ordering from the regular menu.

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Finding your path to the millionaire club is key to financial independence. 

Becoming a millionaire may seem like a pipe dream — especially if you’re coping with credit card debt or other financial worries right now. But it is theoretically possible for many people to amass a seven-figure net worth if they make the right financial decisions.

If you want a big brokerage account and freedom from major financial worries, there are a few different options to make that happen. Finance expert Ramit Sethi outlined four different paths you could take. Here’s what they are, along with some tips on figuring out which path is right for you.

Here are four ways Sethi says you can get to $1 million

According to Sethi, there are four different ways you can end up with $1 million invested.

Your first option is to let time work for you. Sethi explained on Twitter that if you invest around $400 per month every year for 40 years, you will end up with just over $1 million, assuming you earn 7% average annual returns.

As Sethi explained, this option is “very conservative because it does not factor in income growth or marriage.” It doesn’t require a large monthly investment from you, so it should be doable for many people — if you start early enough.

Income is your second option. With this approach, you’d invest $1,666 on average every month for 22 years. That obviously requires you to earn much more money in order to have this much extra cash to invest. But, as Sethi explained, this is an average over time. “At 20, this would be difficult for most people,” Sethi said. “As you grow in your career, this becomes more possible for some. A good reason to focus on income.”

Starting with money is a third option, and one Sethi acknowledges is rare but could work for those who have a lot of money in a checking account, or for people who sell a house and walk away with a profit. This approach would involve starting with a $150,000 initial deposit, and then putting another $10,000 per year into investments for the next 20 years (either on a monthly basis or on whatever schedule works for you).

Finally, the fourth approach is a combination of all of the other three. If you start with a $150,000 investment and make $25,000 investments each year for 15 years, you’d hit your millionaire goal in just 15 years.

Which of these approaches is right for you?

The best approach to becoming a millionaire is going to depend on where you are financially right now, as well as where you expect to be in the future.

Obviously, if you are not very young, then investing very small amounts over time probably isn’t going to be sufficient to amass a seven-figure brokerage balance. So you may need to opt for a more aggressive investing approach, ideally by increasing your income to free up money to invest.

The important thing is to pick which option is feasible and then start working toward it — even if that means finding a way to boost your earnings to make your millionaire dreams happen.

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It’s more than possible. Here’s why. 

At this point, it’s pretty fair to say the problem of COVID-19 is not going away. Granted, there are protections in place that make the virus less of a major health threat. These include widely available vaccines and approved medical treatments. Plus, many people, at this point, have some amount of immunity to the virus, and while that doesn’t eliminate the risk of severe infection, it might lower it to some degree.

But while society is certainly learning to cope with the presence of COVID-19, the reality is that the virus has the potential to change the life insurance landscape. And that’s something future applicants should be mindful of.

Will COVID-19 make life insurance cost more?

Life insurance companies take on a certain amount of risk when they write their policies. And any time a given candidate presents as a higher risk, life insurers tend to respond by demanding higher premiums to put coverage into place.

This makes sense. If a given candidate presents with multiple health issues, the likelihood of them passing away and a life insurance company having to pay out a benefit is greater. But now, with COVID-19 in the mix, life insurance companies might face challenges when writing policies. They’ll have to figure out how much general risk to account for, given the fact that the virus seems to be here to stay.

CNBC, citing data from the American Council of Life Insurers, reports that U.S. life insurance companies paid over $90 billion to life insurance beneficiaries in 2020, representing an increase of 15.4% compared to 2019. Payouts then increased nearly 11% in 2021, rising to over $100 billion.

The mortality rate associated with COVID-19 during the early stages of the pandemic isn’t necessarily reflective of the virus’s long-term mortality rate. After all, in 2020, vaccines weren’t in the picture. And they certainly weren’t widely available for some of 2021.

Plus, treatments have evolved since the early stages of the pandemic. So all told, the hope is that in time, COVID-19 will become less of a threat and more of a nuisance virus to deal with.

But still, because it’s such a relatively new virus, it’s hard to determine how it will impact mortality rates. And there’s also the long-haul aspect of the virus to consider when writing policies.

Long COVID symptoms can wear on immune systems over time and cause health problems. And long-haul symptoms could also cause major depression, potentially leading to an uptick in sufferers taking their own lives.

So many unknowns

At this point, it’s too soon to put a definitive number on what COVID-19 and its associated symptoms and backlash will cost the life insurance industry. But it’s fair to assume the presence of the virus will be taken into account when writing future policies.

That’s something applicants will need to prepare for. And they may find that their costs are higher as a result.

Of course, there are steps life insurance applicants can take to keep their premium costs down. These include shopping around, improving their health, applying at a young age, and opting for term life insurance over whole life policies, as those tend to come at a far more affordable price point.

But all told, the cost of putting life insurance in place has the potential to rise. And consumers need to be ready for that.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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