Change Is Possible

Ramit Sethi

DailyWorth CEO Amanda Steinberg asked Ramit Sethi, founder of “I Will Teach You to Be Rich” about why it’s so hard for most people to change—and what we can do about it.


We all know things we could do to spend less and save more. Why is behavioral change so hard for people?
With money, you often say things like, “I know, I should really watch my spending,” and “This month, I’m going to figure out how to rebalance my portfolio.” Unfortunately, changing your behavior doesn’t work like that.

Here are two surprising findings about changing your behavior:

1.Willpower alone rarely changes anything.
2.Education alone—like reading yet another compound-interest chart—also rarely changes behavior.

Instead of making unrealistic promises, then feeling guilty about not doing them, you can use time-tested psychological techniques to change behavior.


Many people need save at least $1 million to retire comfortably by age 65. And yet, few of us are. What’s going on here?
By not taking the time to read even one good book on personal finance—and implementing the strategies—you’re losing hundreds of dollars per day (and adding to your guilt and insecurity about money). Here are typical excuses we use to justify not starting to invest:

    • “I know, I should do that…but I need to get my ducks in a row before I invest” (code for: I need to become an expert before I invest)


    • “I should have started 10 years ago” (code for: I already missed out…so it’s not worth doing anything)


  • “This fiscal cliff is going to kill us!” (code for: I’d rather complain about the macro-economy than read a good book and automate my money)

Those rationalizations sound absurd when you read them. But they feel very real. That’s why changing your behavior isn’t just about reading yet another piece on how important retirement is. It’s important to understand why we “know” we should invest…yet we don’t.


What’s the #1 behavior modification we could all make to have a positive impact on our finances?
Automate your money. Instead of relying on willpower—which doesn’t work—build a system, and then focus on what’s really important to you.

I spend less than one hour per month on my money, and it automatically goes where it needs to go—to fill up my sub-savings accounts (planning for vacations, a wedding—note, I’m not even engaged—and my “Stupid Mistakes” account), and automatic investing.

By the time I go out to eat with friends or take a trip, I can spend money guilt-free because I know I’ve built a system to be in control of my money.

Building an automatic system takes a few days. You’re still in total control of your money. And you can focus your time on the things that really matter—relationships, travel, and living a rich life.

I show you how my automatic system works in this 12-minute video. It’s free for Dailyworth readers. Check it out here.

Woulda, coulda. Do you wish you had better money habits? Which ones?