rich life

Rich Life: Ramit Sethi’s Guide to Wealth and Well-Being

Becoming Rich as a UN Staff, is it possible?

Becoming rich in Switzerland is more than just making money; it’s about creating a joyful, secure, and fulfilling life. Switzerland is known for its accuracy, dependability, and steady economy. But it is one of the most expensive places to live in the world! On top of that, working is the UN means very low or no salary increase, no bonuses and very difficult to get promotions.

Nevertheless, Switzerland can be an ideal place for expats and UN staff to find success and happiness as long as you make wise financial decisions.

Inspired by Ramit Sethi, a luminary in personal finance, this guide explores the art of enriching your life in Switzerland. Sethi is renowned for his book “I Will Teach You to be Rich.” He also has a Netflix series titled “How to Get Rich.” He advocates balancing enjoyment with financial growth.

rich life on netflix

Adapting his strategies to the Swiss environment, this guide offers insights into smart spending, saving, and investing. It aims to steer you through the journey towards financial independence in Switzerland.

Sethi’s Rich Philosophy Tailored for Switzerland

Smart Spending: Sethi’s approach encourages indulging in what brings you happiness, such as enjoying lattes (or maybe a renverse in French speaking Switzerland) and avocados on toast. He suggests cutting back on unnecessary expenses (i.e. things that do not bring you joy).

In Switzerland, with its high living costs, this might mean choosing affordable housing. Similarly, it could also involve using the country’s efficient public transport. This way, you prioritize spending on experiences and items that truly matter.

Investing Wisely and Savings: Investing is pivotal in Sethi’s blueprint for richness. He advocates investing 10% of your take home pay. In Switzerland, we have access to index fund investing through brokerages like Interactive Brokers or Degiro. If you want completely hands off index investing, there is TrueWealth. Investing in an index fund is known for its ability to deliver solid returns while keeping risk low. This investment strategy aligns well with the Swiss penchant for precision and long-term financial planning. Sethi’s also advocates setting aside 5-10% to savings, this could be for a holiday or an emergency fund. I prefer using this to add on to my investments. So the total in this category is 20%.

Balancing Fixed Costs: According to Sethi, essentials like housing, utilities, food, and transport should constitute 50-60% of one’s budget. Out of this, the maximum one should pay for rental or mortgage is 20-28%. In Switzerland, smart management of fixed costs is vital. It is a huge chunk of our salary. So, it greatly affects one’s capacity to save and invest for the future. So the max in this category is 60%.

Guilt-Free Spending: Allocating 20-35% to guilt-free spending allows for a life rich in experiences. As such, Sethi’s formula ensures that living in Switzerland is enjoyable and sensible. So the max in this category taking into account the previous two is 20%.

My Personal Rich Journey

I have always tracked my salary, expenses and savings all my working life. I believe it is important to know where your money goes. So, I was super excited to see how I scored based on Sethi’s rich life principles. My monthly income is CHF 12,000, and below is my average expenditure broke down:

  • Fixed costs CHF4500: 38%, indicating a disciplined approach to managing essential expenses.
  • Savings and Investments CHF5500: 46%, reflecting a robust commitment to building wealth for early retirement and future financial health.
  • Guilt-Free Spending CHF2000: 16%, an allocation that supports both immediate enjoyment and mental health.

Sethi would likely commend the efficient management of fixed costs and the aggressive investment strategy but might encourage a slight increase in guilt-free spending to enrich the quality of life.

But I want to Retire Early and still be Rich

Achieving early retirement in Switzerland requires a thoughtful financial strategy, especially considering my personal goal to retire ahead of time. To reach this milestone, a careful allocation of income towards fixed costs, investments, and personal spending is essential.

Here’s a breakdown of my ideal financial plan:

My ideal rich journey allocation
  • Fixed Costs (38%): In Switzerland’s high-cost environment, keeping essential expenses like housing, utilities, and transportation to 38% of the budget is challenging. This needs careful planning and possibly lifestyle adjustments to manage without sacrificing too much. This should be automated – pay your rent/mortgage, utility bills, subscriptions etc. from your bank with automatic deduction. This would simplify your life and avoid late fees.
  • Savings and Investment (50%): Allocating half of my income, approximately CHF 6,000 monthly, to savings and investments is central to my early retirement plan. This strategy focuses on growing wealth through index funds for solid long-term returns. This should be automated – send this money to your brokerage account every month as soon as your salary arrives.

In addition to these commitments, it’s important to balance the present with the future:

  • Savings and Guilt-Free Spending (12%): Setting aside 12% of my income, or CHF 1,450 monthly, allows for enjoyment now without compromising future financial goals. This portion ensures a harmonious lifestyle that values both current pleasures and long-term aspirations for early retirement. Most of this will go towards eating out in restaurants and travel. If you don’t spend all of it then it can either be accumulated for the next month’s spending or simply invest it.

Why am I so aggressive in savings and investments?

This chart is from Financial Samurai shows that the more you save, the less working years you need to retire. For example, if I am able to live on 50% of my salary and I can save the remaining 50%, I only need to work 17 years before retiring.

However, if I spend 80% of my salary and save only 20%, it means that I need to work for 37 years!

savings towards retirement

By sticking to saving 50% of my salary, the goal of retiring early in Switzerland becomes more tangible, striking a balance between diligent saving and investment and enjoying life’s present moments.

Let’s consider the worst case scenario and I lost my job

I would need to at least cover the basics to get by. Really, I only need enough for my fixed costs. This means paying for rent, transport, utilities, and grocery. Other stuff like putting money into investments, savings, or guilt-free spending (restaurants, travel, shopping) could be put on hold.

Right now, my fixed cost comes to CHF 4,500. But, to keep things simple, let’s say it’s CHF 5,000 a month or CHF 60,000 a year. Following the 4% rule, or multiplying yearly expenses by 25 (which is 12 times CHF 60,000), I would need CHF 1.5 million invested with at least 60% in an index fund or ETF to cover these basics.

So this is another reason why I am saving aggressively at 50%. It gives me a peace of mind in case anything were to happen.

Easy Saving Money Hacks

Growing your income by getting promoted or applying for a higher paying post is always the best option. But sometimes being a UN staff, you may end up spending decades in the same grade and position. The important thing is not to lose hope or feel depressed. No matter how much you earn, you can lead a good and balanced life by diligently saving and investing.

Here are some of my easy money-saving hacks that have helped me keep my finances in check while enjoying life in Switzerland. These simple strategies make saving money straightforward and effective, allowing for a balance between prudent financial management and living fully.

Rounding Tactics: When tracking expenses, rounding up, and rounding down income can create a small buffer that enhances savings over time.

Mindful Online Shopping: Adopting a wait-and-see approach to online purchases can prevent impulsive buying, ensuring that spending aligns with true desires and financial goals. Don’t buy things you do not need!

Matching Expenditure with Savings: For every purchase, mirroring the amount in a savings or investment account fosters a balance between enjoying the present and securing the future.

Conclusion: Crafting a Rich Life in Switzerland

The journey to getting rich in Switzerland transcends mere financial accumulation; it’s about building a life that’s rich in experiences, security, and happiness.

By integrating Ramit Sethi’s financial wisdom with the unique opportunities Switzerland offers, expats and even UN staff can have a sustainable journey towards prosperity that’s both enjoyable and sustainable. Whether it’s through smart spending, strategic investing, or leveraging local tools for financial advantage, the key to a rich life in this prestigious nation lies in informed, intentional financial practices.

With this comprehensive guide as your roadmap, the journey to financial richness in Switzerland is not only achievable but also a rewarding adventure that promises both immediate satisfaction and long-term wealth.

Please subscribe to the Money Monkey!

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *