NYT Bestseller Ramit Sethi of 'I Will Teach You to Be Rich,' Rails Against Extreme Frugality: 'Money That Buys Back Time is Not Wasted'

New York Times bestseller author and personal finance expert Ramit Sethi criticizes the concept of extreme frugality, which he defines as an unnecessary restriction of spending. He argues that this approach is not beneficial in the long run. 

In a YouTube video for CNBC's finance show "Make It," Sethi slams extreme budgets and frugality, explaining that "life isn't simply about cutting back." 

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Sethi is known for his unconventional wealth-building methods. In the video, he reiterates his stance that cutting back will not build wealth like you think it will. Sethi further explains that the ends do not justify the means if you're living miserably. 

"One day, when you’re 2,000 years old, you can feel great — who wants to live like that?" Sethi said. 

Instead, Sethi goes against conventional advice and makes a case against extreme frugality and how it does more harm than good. Other financial advisers, like Suze Orman, also feel this way about restrictive budgets, likening them to extreme diets that can cause people to go on a spending spree later. Sethi feels that instead of saying "no" all the time and saying "yes," will give yourself treat days.   

In the video, Sethi talks about how there is a limit to how much you can trim your spending and how much that is going to save you. He explains that limiting yourself from the small pleasures is not going to work in the long run. 

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Sethi emphasizes this by giving a tongue-in-cheek scenario. If you stop spending $3 per day on things like coffee after 38,000 years, you'll have $100,000. But you're going to be miserable during the years, and by the time you've saved up an amount to justify that frugality, you're not going to get to enjoy that money. Sethi makes a case against the people "telling you everywhere you turn, you hear people telling you what you can and can't do with your money." Sethi adds, "Who wants to live like that?" 

So, instead of saving all your money in a little treasure for a vacation that, by the time you go on it, you won't be able to enjoy, Sethi advises automatically putting aside money into your savings so that you can use any leftover money guilt-free. According to the author of "I Will Teach You to Be Rich," you should be saving between five and 10% of your take-home income. A further 10% of that income should be invested. After putting that money away into savings, investments, and paying off expenses, anything leftover can be used to spend guilt-free on all the things you love, including that $3 coffee. 

In addition to saving and investing your income, Sethi encourages people to make use of money to buy back time. Because our time is so valuable, Sethi advises that we use our money strategically to buy back our time by using it to do the things we love and ignore the people telling us to cut back on those things. 

"This is a new way of looking at money," Sethi said. 

Sethi encourages people to try out simple things like buying precut vegetables from the store to buy back time. He explains that dog owners in New York can hire a dog walker, "You have a dog; you may not have time to walk that dog in the middle of the day. Boom, dog walker." If you're a frequent traveler, you should consider hiring an assistant to help you plan or fly business class so you can get straight back to work. Doing this will save you time and ultimately save money. 

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