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Step 2: Move Toward Auto Pilot Comments

  • By MP Dunleavey
  • August 31, 2010

gears This week, let's work together on 5 small steps that will enable you to worry less and feel more in control—so that it takes less effort to manage your finances this fall.

Putting your money on automatic pilot is the deceptively simple principle that underlies Ramit Sethi's financial philosophy, embodied in the "I Will Teach You to Be Rich" blog and best-selling book.

You've heard the "make it automatic" mantra a thousand times, but why does it work? We asked Ramit:

People love to believe the "If I just try harder" idea. "If I just try harder, I can save $100 more per month..." or "If I just try harder, I can lose those last 10lbs."

But if you look at the past three months, or the last year, has that worked?

A better way to manage your money is to create an automatic money flow. This means you channel your money to automatically go from your paycheck to your savings account, investment account, and even to pay your bills.



We are "cognitive" misers, which means we have limited attention and willpower.
 

Identify one payment you're making manually and automate it. Let us know how you did.


Ramit Sethi is the author of the New York Times best-seller," I Will Teach You To Be Rich," which shows you a step-by-step way to automate your finances in 6 weeks.

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