This Is the Worst Financial Goal, According to Ramit Sethi

Ramit Sethi is the star of How to Get Rich on Netflix, and he talks to people from all walks of life about money. In a recent interview with Men's Health, he was asked what the worst financial goal is. He had an answer you might not expect, and he says it's the response he gets from 90% of the people he talks to about their rich lives.

Here's what Ramit Sethi calls the worst financial goal

Sethi says that when he asks people what their rich life is, most tell him "I want to do what I want, when I want." Many of us are probably guilty of thinking this way about personal finance. When we imagine being rich, the first thing that comes to mind is often the freedom that money provides.

The problem is that this goal is as generic as it gets, and generic goals rarely work out well. Sure, if you have enough money, you have the freedom to do what you want. But what exactly is it that you want to do? Without a clear idea of that, it's going to be hard to figure out the right steps to get there. Even if you could, generic goals aren't exactly great for motivation.

Sethi says the reason so many people have this answer is because "most of us have never actually thought about what we truly want with our money." That's why he recommends vividly detailing your rich life, meaning one where you use your money as a tool to build a life that you love.

How to build a rich life

If you want to improve your financial goal setting, start by getting specific about what you really want. Deciding you want to travel more or spend more time with your kids is too vague. Compare that to specific goals like:

• Spending a week at a five-star resort in Puerto Vallarta every year.
• Having the time to take your kids to school every day (at least until they're old enough that it gets embarrassing for them).
• Buying season tickets to your favorite sports team.

Those are the kinds of detailed goals that give you something to get excited about.

Here's why it's so important to do this -- when you know exactly what you want, you can make sure you're using your money on things that bring the most joy to your life. You can start planning what you need to do to have your version of a rich life. And you can cut back heavily on expenses that don't matter as much, giving you more to spend on what does.

For example, I love to travel, and to be as comfortable as possible along the way. I always imagined what it would be like flying in business class to Europe, staying in nice hotels, and eating at high-end restaurants.

Because I know exactly what I want, I set aside a solid portion of my money for travel expenses. I'm able to do that because I've cut back my spending in a lot of areas that don't matter to me. Case in point, I don't own a car, even though I could afford one, because it's not something I need or want. I also learned how to travel with credit card points. Then, I opened travel credit cards to help me save on flights and hotels when possible.

Your goals could be completely different. What's important is that you take some time thinking about what those goals are, so you can find the best ways to use your money.