Ramit Sethi is a young and extremely successful psychology student-turned personal finance sage/author. His site offers financial advice like "the $28,000 question: why are we still hypocrites about weddings?" and "why your friends don't save money, eat healthier or clean their garages"are popular for their practical, humorous and effective advice. One of his teachings I'll never forget is that identifying your monetary priorities is terribly important so that saving on things that are low on the list, leaves room to splurge on your determined necessities.

This bit of advice reveals Sethi's background in psychology and how much it applies to basic micro economics.

In one of his examples (as if he was writing to me directly) he says if you really think you need that $4 latte to get you up in the morning, get it. As long as you save on things that don't matter as much (in my case, any hair product, almost any makeup, haircuts, most household cleaning products), the money is not lost.

In addition, and something Sethi mentions, is that as well determining the order of importance for these necessities, I try to attach a monetary value to the product or service that represents how much it's worth to me. Back to the latte example, is $3.54 a justifiable amount to spend on a grande cup of glory?

Yes. Not only does the latte energize me to get through the morning lull at Newsy, but also its warmth is comforting on cold days and its flavor reminds me of London. Also, the latte is fulfilling enough that it usually constitutes my breakfast. 

So, there you have it. Now make your lists and start spending on the stuff that matters to you.

On a separate note, Sethi was cool enough to give me advice on my very first MSN article. I was a bit starstruck.

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