Ramit Sethi doesn’t believe in penny pinching.
Instead, he wants people to build a “Rich Life” by “spending extravagantly” on the things they love, and “cutting costs mercilessly” on everything else.
The New York Times bestselling author, host of Netflix’s How to Get Rich, and popular podcaster holds degrees in psychology and sociology from Stanford University. He speaks about finance in a way that resonates with Millennials and Gen Z, by showing them how to cultivate an “abundance mindset,” and giving them “permission” to spend money.
Sethi’s philosophy is light-years away from the conventional wisdom of older-school pundits like Dave Ramsey and Suze Orman, whose personal finance advice tends to emphasize restriction and frugality. Instead of obsessing over every dollar spent, Sethi focuses on setting aside a fixed percentage of your income for investments and savings — and spending the rest intentionally.
And in today’s world of rising interest rates, rampant inflation, and steep car insurance premiums, this kind of advice feels especially relevant.
“Everybody… should be able to live a rich life,” he told The Guardian. “Everybody… should be able to understand the basic language of money. And if they can do that, they can actually feel good about money.”
@ramit.sethi What does “Rich Life” mean to you?
♬ original sound – Ramit Sethi
What is Ramit Sethi’s ‘conscious spending’ plan?
Sethi’s “Conscious Spending” plan divides a person’s take-home pay into four categories:
- 50–60% of your income should go to fixed costs, like rent, utilities, and insurance.
- 10% should be allocated towards your 401(k) or IRA investments, for “future you.”
- 5–10% should be sent directly to your savings account to create an emergency fund.
- The remaining 20–35% can be used for “guilt-free spending.”
Sethi considers car insurance a necessary expense, placing it in the “fixed costs” category of his conscious spending plan.
Sethi also acknowledges that car insurance rates are on the rise, and he understands how imposing that can feel on your budget.
But just because you have to have car insurance, Sethi argues, that doesn’t mean you can’t shop around for the best coverage.
With these things in mind, Sethi has created a 4-step plan to regain control of your car insurance costs and keep living your best “Rich Life.”
1. Figure out your coverage needs
On his website, Sethi provides a state-by-state list of car insurance minimum coverage requirements. (Note that coverage is now required in every state; Virginia used to give drivers the option not to purchase coverage for a $500 uninsured motorist’s fee, but that changed on July 1, 2024.)
In addition to selecting the minimum coverage for bodily injury (person and total) and property damage, Sethi recommends selecting collision, comprehensive, and liability coverage.
2. Find the plan that’s best for you
Now that you know what’s required by your state, do you actually know what you’re paying for?
This may seem like a silly question, but most drivers don’t.
“If you don’t have your current plan in front of you, how can you know how to lower your car insurance?” Sethi asks. He even provides a list of the largest car insurance providers in case you need a new copy of your policy.
Related: Suze Orman’s 5 best tips to lower your car insurance premiums in 2026
3. Shop around
Now that you know how much coverage you need, and you have your current policy in front of you, it’s time to shop around. Sethi provides a tool to compare rates from different insurance companies.
More from Ramit Sethi:
- Ramit Sethi’s 5 most important insights for homebuyers
- Ramit Sethi’s top 5 ways to get out of debt fast
- Ramit Sethi’s 5 best financial insights for building a rich life
Sethi also recommends talking to insurance reps by phone to see if they can give you a discount on your premiums, which is the price you’ll pay for your policy on a 6-month or annual basis, or to raise your deductible, which is what you pay out of pocket in the event of an accident.
Raising your deductible will lower your monthly car insurance bills, but he advises doing so only when you have a substantial emergency savings fund in place, because in the event of an accident, a higher deductible could mean you pay more out of pocket.
4. Negotiate a better deal
Sethi makes it easy to try to score a discount by providing 10 scripts you can use to talk to insurance reps. He gives away some great tips on negotiating for better rates, opening a new policy, and even what to say if the rep shoots you down.
“This is the work that 99.9999% of people out there won’t do, which means your returns can be substantial if you do them,” Sethi says.
Related: When to buy a home instead of continuing to rent, according to Ramit Sethi