Ramit Sethi, author of New York Times best-seller "I Will Teach You To Be Rich," thinks people should focus on what money can accomplish for them, rather than focus on restriction.In an exclusive interview with Business Insider, Sethi outlined the path to guilt-free spendingone that doesn't involve worrying about little purchases that bring about happiness.Click here for more BI Prime stories.When it comes to personal finance, we're all taught to spend less and save more. That's nothing new.Yet Americans seem to have a really hard time adhering to this strategy. In fact, about 20% of Americans have absolutely no savings, and four out of 10 Americans can't handle a $400 emergency expense.That's where Ramit Sethi, author of New York Times best-seller "I Will Teach You To Be Rich," comes in. He's trying to reshape the conversation around personal finance."I think we should start from a place of saying 'yes'and saying 'what money can help us accomplish,'" he told Business Insider in an exclusive interview. "If your entire personal finance philosophy is based around something people don't want to doit's based around restriction, and it doesn't take into account human psychologythen it's no surprise that it doesn't work."Sethi's main gripe with personal finance gurus and conventional wisdom is that it focuses on what you can't do with your money. To him, his way of thinking is antiquated, ill-founded, and not motivating at all. It involves too much attention geared towards cutting back on small expenses, and not enough attention on big money issues and the psychological aspect of parting with ones dollars.He continued: "There's no vision of growth when the entire road they can see ahead of them is one of deprivation."Sethi's approach to the matter is completely different than most. He doesn't want you to worry about cutting spending on trivial $3 or $4 dollar purchases. He wants you to identify big goalssomething he refers to as "your rich life"and shape the conversation around that.The notion of a rich life is going to vary amongst individuals, but the overarching takeaway is to shift your psychological money mindset away from one of scarcity and towards one of accomplishment. The more specific the better.Sethi provides a few common "rich life" goals that he hears on a recurring basis:Doing what I want, when I want.Paying off my debt.Wanting a million bucks.This is a crucial pillar of Sethi's philosophy. It gets people thinking about what they would actually do with their money, and out of of the "frugality philosophy that says no, no, no.'""That's my philosophy: A rich life is lived outside the spreadsheet," he said.Once your rich life is identified, Sethi advocates for spending in places that you love to spendeating out, entertainment, travel, health, and convenience if that's your thingand cutting back mercilessly in places you dont. It's a way to consciously spending money without having budget. But there are guidelines.He calls this concept a "money dial,"something you can turn up or down depending on how high or low your affinity is for spending in a certain area.Once those big questions are answered, the path to guilt-free spending becomes clear. It revolves around putting systems in place to make your money automatically go where it's supposed to.Here are quick rules of thumb Sethi advocates for:50%-60%fixed costs (rent, mortgage, utilities)10% (at a minimum)investments (long-term retirement investments)5%-10%Short-term savings (gifts, travel, down payment on a house)20%-30%Guilt-free spendingThis puts spending, saving, and investing on autopilotand you're on your way to your rich life.But Sethi's personal finance advice doesn't end there. In the newest version of his book he tackles: conversations with loved ones about money, credit card perks, anecdotes of success stories, and much more.It's a far cry from the usual "try to eat at home more often" advice that's touted by personal finance gurus.SEE ALSO:'You don't have to be the smartest guy in the room': A self-made real-estate expert who's increased his net worth 100 times by flipping houses explains how he does itJoin the conversation about this storyNOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption
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