After reading 'I Will Teach You to Be Rich,' I'm automating my money, changing my investments, and breaking up with my bank

While the title made her think the advice in "I Will Teach You to Be Rich" might be risky and unconventional, she found it quite the opposite.

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• I want to read all the books on my shelf this year, and I started with "I Will Teach You To Be Rich."
• Some of the advice felt generic, but I took away three good strategies that I plan to do myself.
• I'm going to automate my finances, invest in index funds, and break up with my bank.

One of my personal goals is to read every single book on my bookshelf. More than 50% of the books in my collection are paperbacks from used book stores or hand-me-downs from friends that I never read. I figured I'd give each book attention and then decide which ones to keep and which ones to donate to my local library.

I decided to put this goal into motion on the first day of the year. I closed my eyes and grabbed a book off the shelf. I picked "I Will Teach You to Be Rich" by Ramit Sethi. My husband gave it to me, but I never actually read it.

While the title made me think the advice was going to be risky and unconventional, I found that it was quite the opposite. A lot of the tips inside seem perfect for a beginner who is learning the basics of key financial fundamentals, like understanding your credit score or the differences between a checking account and a savings account.

I found myself jotting down notes and actionable takeaways that streamlined some financial next steps I needed to take ASAP. After reading "I Will Teach You to Be Rich," I had three big takeaways.

1. Create an automatic money flow

I've invested a lot of time into organizing my finances and creating a viable budget, but I have not automated a monthly money game plan. In the past, I have done everything manually, including moving money between different accounts, depositing cash into my retirement fund, and paying my credit card bills. This means I spend at least one hour a week handling my finances when I don't really have to.

Sethi maps out an automated money flow that can be set up so that your paycheck is automatically split up and directly deposited into multiple accounts.

His structure works like this: You can set up your paycheck with your employer so that a certain percentage is automatically deposited into your 401(k) every month, and the rest can go into your checking account. From your checking account, the cash can be automated to go to your savings account, any additional retirement accounts like a Roth IRA, and then to pay credit cards and any additional bills.

While my structure will look a little different based on my goals, creating an automated flow makes managing my finances standardized and easier.

2. Break up with your bank

There's a line in the book about how people sometimes won't switch banks because they've been a customer there for a while, or in my case — forever. That loyalty doesn't breed rewards and in fact, can hold you back financially.

I still have checking and savings accounts at the very first bank I ever opened up accounts with. While I've moved 85% of the money in these accounts to a different bank with lower fees and a higher interest rate, I can't bring myself to move the rest of this money and close out the accounts forever.

This means that I'm losing out on making more money because my cash is sitting in a bank account with 0.01% interest.

I also incur frequent monthly fees on my business account with this bank because my balance falls under their required minimum for that type of account. If I moved my business account elsewhere, I could find a bank that didn't have those same penalties.

High up on my to-do list is to break up with the original bank I've been using for most of my life and enter a relationship with a bank that nurtures my money more.

3. Go for index funds, not individual stocks

A few years ago, when I first started investing in the stock market, I didn't have much of a plan except to buy stock in companies I supported or believed in. That left me with a lot of individual stocks and no strategy for what to do with them or how to know when to sell them.

I've known for a while that this plan is flawed. Reading the book helped me better understand the power of index funds over individual stocks.

Sethi explains that index funds are collections of stocks that computers manage in an effort to match the market index. Picking index funds over individual stocks allows me to be more hands-off instead of monitoring the 30-plus businesses that I own stock in. Instead, I can invest in collections of hundreds and thousands of stocks and bonds.

This article was originally published in January 2022.