J. Arky
4 min read
Financial influencer and expert Ramit Sethi has helped many people increase their wealth, along with their knowledge of money and how to manage it.
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On a recent episode of his YouTube series “I Will Teach You to be Rich”, Sethi noted it’s not at $1 million (or even $100,000) that people start to feel like they have a solid financial foundation — it’s actually just $10,000. This is the number, Sethi described, “where people go from reactive to calm, confident and in control.”
Here’s why the biggest money transformation happens when you hit this amount, per Sethi:
There’s a difference between theoretically understanding the concept of having $10,000, and then actually seeing it in your bank account. Sethi explained that once you understand it can happen once, you start to realize that you are capable of generating that same amount or more in the future. At this figure, you understand you are in control, which brings you the confidence you need to take charge of your financial freedom going forward.
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Sethi pointed out that saving up 12 months worth of expenses in an emergency fund is not always feasible. What you really need, in his words, is “breathing room,” which $10,000 affords you, a figure much higher than the $1,000 Rachel Cruze suggested having in savings for unexpected and expensive bills.
Instead of panicking when an unplanned major expense pops up, you simply tap into your savings and pay it immediately. Sethi went on to say this opens up mental bandwidth to start negotiating your salary, start a side business or consistently investing.
To reach the goal of $10,000 in your bank account, you need to plan, have discipline and realize it’s OK to say “no” occasionally. According to Sethi, that initial savings is proof that your system works, which means you should do more of it with additional intensity and patience.
Before you reach $10,000, there is typically financial stress every single day as guilt racks up over every expense you make. Past that amount, you start to go from surviving to thriving and figuring out how you want to invest in yourself going forward. Using your money strategically involves “spending [it] on things that matter to you,” commented Sethi.
