Personal finance is intimidating, especially since many Millennials graduated when the economy crashed and started off their adult lives in debt. Ramit Sethi will teach you to be rich. His book I Will Teach You To Be Rich is a step-by-step plan for setting and forgetting your finances. I got really into it with my brother and geeked out making a spreadsheet based on Ramit’s Framework.
Please keep in mind our spreadsheet is a compliment, not replacement, for Ramit’s book. The percentages and dates are samples and are different for my personal budget.
- Read Chapters 1-4 of I Will Teach You To Be Rich
This spreadsheet specifically refers to Chapter 4 (39% way into the book) but the first three chapters are important setup. This book is especially great on Kindle. Even if you’re usually a paperback person, having it on the computer like a reference document, using the Kindle Desktop App, was helpful.
- Make a copy of the spreadsheet
File> Make a copy
- Only edit the cells in highlighted in blue
- Input numbers from your paycheck (Cells B13-B17)
The numbers on your payslip tell you how much money you earn, and thus how much money you can spend and save.
- Adjust your savings percentages (Cells C2-C9)
These percentages help you decide how much money you can allocate to different categories of spending. In my spreadsheet I made a new row for each of my savings goals. This will then calculate how much to auto-transfer to a high yield savings account every month. Add or remove as many rows as you like as long as the percentage equals 100.
- List your fixed expenses (Cells B23-B27)
Enumerate each expense you have every month. Now compare the Monthly calculated total (B23) with D2 (Monthly fixed cost). Adjust the numbers so they come close to matching. Ramit offers many specific tips to lower your monthly expense (and how to get a raise).
- 50-60% Fixed Costs (rent, utilities, loans, etc)
- 10% Investments (401k, Roth IRA, other investment funds)
- 5-10% Savings (gifts, house, down payment, unexpected expenses)
- 20-35% Guilt Free Spending (dining out, music, burning man, etc)
- Bonus activity
- Money in savings (B23)
If you want help re-allocating your existing money into higher yield accounts, list the amount of cash you currently have here.
- Target date (G4-G9)
What is all this saving for? You may not know if you want to get married, have children or buy a house. However, if it’s something you’re considering, this can help you estimate how much saving you need to do now for possible big expenses in the future.
- % from savings (I2-I10)
Looking at raw numbers can be overwhelming. Allocating savings by percentage makes it easier to parse and prioritize numbers. This column can help you re-allocate any cash you have that you want to redistribute into high-yield savings or investment accounts.
- Total (K2-12)
This column shows you how much you will have saved by your target date (existing savings + future contributions). It does not account for interest.
- Money in savings (B23)
Good luck, have fun, and stay positive. You may be pleased with how much money you have or disappointed by how expensive it is to live in today’s world. But rest tonight knowing you are ahead of the curve by having awareness and approach for your finances.