Ramit Sethi: The money myths that quietly wreck couples

1. 0:00 – 2:03

   Intro

   1. RSRamit Sethi0:00

      How can you talk about renting? You're just throwing money away. BS. Should I just dismantle these arguments once and for all? Because there's some shocking math behind a mortgage and most people don't know this stuff. Let's get into it. Ramit Sethi, the financial expert and entrepreneur is back. To teach you how to take control of your money.

   2. SBSteven Bartlett0:17

      And confront the financial problems that hold us back.

   3. RSRamit Sethi0:19

      Most people fall into four money types that I've identified. Number one is avoiders, and they hate talking about money. But if your partner simply will not talk about money, that's a huge red flag. Because 50% of the people I talk to do not know their household income, 90% who are in debt do not know how much debt they're in, and 100% of the people I talk to in credit card debt also have trouble with ... That is shocking. Next up, optimizer. They can get you to a very good place. They'll be investing. We love to live in a spreadsheet, but it can be taken too far. And then the dreamer who believes that success is one deal away, and they tend to fall into crypto coin scams, like all this BS. Finally, worriers. They love to worry. Are we gonna have enough? What if we run out of money? Typically, they picked up worrying from their parents who said stuff like, "Money doesn't grow on trees." And the problem is, you could take it a little too far, and they become cheap and become so obsessed with $3 questions, like agonizing over buying a coffee. But everybody listen closely, 'cause I wanna break down how you can change any of these types. So ...

   4. SBSteven Bartlett1:18

      Ramit, the only investment most couples make is buying a house. What is the alternative?

   5. RSRamit Sethi1:22

      This is where real wealth is created. Let's simplify the whole thing, and I have four numbers that everyone should be talking about. The first off is your-

   6. SBSteven Bartlett1:32

      This has always blown my mind a little bit, 53% of you that listen to this show regularly haven't yet subscribed to the show. So could I ask you for a favor before we start? If you like the show and you like what we do here and you wanna support us, the free simple way that you can do just that is by hitting the subscribe button. And my commitment to you is, if you do that, then I'll do everything in my power, me and my team, to make sure that this show is better for you every single week. We'll listen to your feedback, we'll find the guests that you want me to speak to, and we'll continue to do what we do. Thank you so much.

2. 2:03 – 2:53

   Why People Should Care About This Conversation

   1. SBSteven Bartlett2:03

      Ramit, if someone's just clicked on this conversation, please explain to me exactly why they sh- should stay and listen to what we're about to discuss, on the basis that we're about to talk about the things you've written in this book.

   2. RSRamit Sethi2:19

      If you are single and dating, if you are engaged or if you have been married for 25 years, money is one of the central parts of our lives. And most of us think about money as something to be avoided. It's something we only talk about when things have gone wrong. What a terrible way to live. And there is a different way, which is, we can use money as a source of connection, possibility, and joy. And that is what we're gonna talk about today.

3. 2:53 – 4:38

   What Has Ramit Learned About Money And Relationships

   1. RSRamit Sethi2:53

   2. SBSteven Bartlett2:53

      I had a conversation a couple of days ago, actually, with, um, James Sexton, who's the divorce expert. He's a divorce lawyer by trade, but he knows more about divorce than anybody else. And he said to me there's two things which cause people to end up in his office going through a divorce. Number one is cheating, infan- infidelity, and the second thing is money problems-

   3. RSRamit Sethi3:12

      Yeah.

   4. SBSteven Bartlett3:12

      ... in the relationship. So I find it im- especially sort of pertinent to have this conversation with you about couples' relationship with money. Um, because clearly one of the things that is most likely to end my relationship, or, or I guess prevent me getting into one, is this financial avoidance that most of us engage in. You've interviewed hundreds and hundreds of couples about money on your podcast.

   5. RSRamit Sethi3:32

      Yeah.

   6. SBSteven Bartlett3:33

      What have you learnt about our relationship with money in relationships from that?

   7. RSRamit Sethi3:37

      I've learned that 50% of the people I talk to do not know their household income, 90% of the people I talk to who are in debt do not know how much debt they're in, and 100% of the people I talk to in credit card debt also have trouble saying no to their children. Isn't that shocking? Each of those things, 50% do not know how much income they make because most of us are simply living by looking at our checking account, and that's it. The debt part kind of makes sense, why would you wanna know how much debt you owe? You don't really wanna think about it, so you ignore those emails and envelopes. And the credit card debt part, that is really interesting, the idea that if you can't say no to spending, so you've racked up a bunch of credit card debt, the same principle applies to saying no to kids. For me, when I discovered these, I find them absolutely fascinating, but the good news is you can also change these things.

4. 4:38 – 6:08

   Differences Between Men And Women's Spending Habits

   1. SBSteven Bartlett4:38

      And what's the difference between men and women in terms of spending habits in a relationship, secrecy-

   2. RSRamit Sethi4:43

      Mm-hmm.

   3. SBSteven Bartlett4:43

      ... avoidance, arguments?

   4. RSRamit Sethi4:46

      Well, let's start with the roles. Men always describe themselves as providers. Always. That's what we are taught. It exists in culture. The problem is, of course, what happens when they are not the top earner, which is happen- happening increasingly more now. So when I often ask them, "Who are you, financially speaking, if you're not a provider?" And they're just stumped. But there's got to be something more than simply being a provider. You can be a provider and you can be a nurturer. You can be a provider and you can be a helper, a leader. There's so many different ways. Um, often what you'll see with women is discussions about a secret bank account. Keep a little money aside just in case. We have to remember that, in the US, many grandmothers were not allowed to open up their own bank accounts. That happened in two generations ago. And so there has been a rightful message that has been passed down orally, keep a little bit of money aside just in case, whether it be physical abuse, financial abuse, divorce, et cetera. And I totally respect that message. I don't think you should have a secret account. I do think you should have an account that is yours only...... but no secrets in our relationship.

5. 6:08 – 7:42

   What Are The Sources Of Arguments In Relationships

   1. RSRamit Sethi6:08

   2. SBSteven Bartlett6:08

      What about arguments as it relates to money and relationships? What are the- the cause of the arguments? Is it someone's spending too much? Is it hiding money? Is it something else?

   3. RSRamit Sethi6:17

      It's usually not hiding money. That's very small extreme. The biggest phrase that I get from couples is, "He or she's a spender and I'm a saver." So it's creating this identity that, "They're a spender, I'm a saver," or, "They don't want to talk about money ever. Why can't I get them to finally sit down with me and get on the same page?" That's a phrase that's tossed around everywhere. When I ask them, "What is getting on the same page?" The answer is, "I don't know. I just want to talk about it." So when it comes to money, yes, there are the numbers that we need to understand, of course. But what I often tell people, "The way you feel about money is highly uncorrelated to the amount in your bank account." That is why I speak to so many multimillionaires who still worry about money. They think, "If I just had 50,000 more, 500,000 more, $5 million more..." Well, guess what? I've had all those folks on my podcast and they still worry about money. That means there's two things you need to do to master your relationship with money. One, you gotta know your numbers. This is a language you have to learn the basics of personal finance. Two, you have to master your money psychology. That means you need to change the way that you talk about money and behave with money so that you can ultimately change the way you feel about money. You do those two things, you're gonna have a very healthy relationship with money.

6. 7:42 – 12:15

   Women Earning More Causes Problems

   1. RSRamit Sethi7:42

   2. SBSteven Bartlett7:42

      We'll go into all of those things and how you do them. Um, on this point of gender roles, obviously society has changed in the last couple of decades in terms of equality and more women are in work, higher level positions in corporations, in the C-suite, earning much more money. This has caused a shift, I should say, in the sort of typical gender roles and assumptions of w- what each gender is supposed to be doing in couples. And I'm wondering now, with more women earning more money, in many cases, they're going to be earning more than their husband in heterosexual relationships. Have you seen new dynamics and new issues created because of this, in terms of, like, I don't know, insecure men feeling emasculated or the woman not being happy that she's contributing more? And I ask this because I had someone on my podcast a couple of, uh, months back who said to me that, I think it's 70% or 80% of women expect that their romantic partner will earn more than them. But that gap is closing now because women are earning more and more money. I'm just wondering if you've seen in those couples scenarios where the woman earns more and it's causing problems.

   3. RSRamit Sethi8:49

      I've seen it all the time. I've seen it all the time. I think that we see different gender dynamics. Um, I recall one episode where I spoke to a- a young woman and her boyfriend. She was around 40 years old. She made way more than her boyfriend. Care to guess how much she makes per month?

   4. SBSteven Bartlett9:09

      $20,000?

   5. RSRamit Sethi9:11

      $200,000 per month. She has a business. It's doing very well. She's around the age of 40. Now, her boyfriend was never taught about money when he was growing up. Most people are not. He never learned about investing. Certainly, no one was telling him about a Roth IRA when he was 12 years old. And he had started his own business and he was on the upswing, he's making a few thousand dollars a month. Good for him. She's making 200 grand a month. Her parents started talking to her about investing when she was five years old. So here we already see a difference, not just in gender, but in socioeconomic status, okay? And over time that progressed. So they come to me and she says, "I want him to pay for dinner occasionally." Fine, super reasonable. He even said, "No problem, I want to." So he would take his credit card out and he would offer to pay and she would say, "No, I want you to contribute more to your IRA." So in many ways, she wanted him to pay, she wanted to feel taken care of, which is totally reasonable. But when he offered, she said no. So this is the kind of thing that I often see, which is, "I think I want one thing, but when I get that thing, I don't actually want it. It doesn't make me feel the way I thought it would. I want to earn 50K more, I think that'll make me feel safe. Oh my God, I am earning 50K more, it doesn't actually change the way I feel." So I worked with this couple and I helped them understand why they both felt this way about money. And, you know, from the outside, it's like, "This is so irrational. Y- if you make more, just pay more. If I were in that situation," et cetera, et cetera. None of that stuff matters. When you are in the couple, in that relationship, you will feel a certain way, and we gotta work with you individually, not what everybody else says. In the end, the conclusion that they came to was, she wanted him to occasionally pay for dinner, but she also wanted him to fill up his IRA. So this is what they did. Every so often before they went out to dinner, she would give him her credit card and she would say, "Here, I want you to pay for tonight." And he said, "Cool." He understood it. They went out and that's what they did. Now, to us sitting here, we're like, "This dance makes no sense. Why don't they just do it this way or that way?" Guess what? Every single one of us has some irrational thing we do with money. Every single one of us. And I think that we are ready to actually have conversations about how we are irrational. Money is not just dollars and cents on a page. That's why you don't feel good about money even when you have more than you ever thought you would. That's why you worry about money, but you have never read a single book on personal finance. We are all irrational, including me. And when you get into a relationship, you gotta acknowledge that, and then you gotta say, "Hey, what is our vision of a rich life together? Let's build that. If it means we do a little dance about the credit card once every two months, fine. Do we both feel good? Is it fair?"... then I'm good with it.

7. 12:15 – 14:46

   You Don't Need To Buy A House To Be Successful

   1. RSRamit Sethi12:15

   2. SBSteven Bartlett12:15

      What's going on there with her? Because it, it sounds like there's this battle between her mind and maybe her heart, or it's almost like the social expectation is coming in, but then-

   3. RSRamit Sethi12:25

      Yeah.

   4. SBSteven Bartlett12:25

      ... her, her brain is saying, "No, invest in the IRA." And an IRA, for anyone that doesn't know, in, in other parts of the world-

   5. RSRamit Sethi12:29

      It's a retirement account.

   6. SBSteven Bartlett12:30

      A retirement account.

   7. RSRamit Sethi12:30

      Yeah.

   8. SBSteven Bartlett12:30

      So she's saying, "Invest in the future, but also buy my dinner."

   9. RSRamit Sethi12:33

      Well, it's the sa- it's the same. We all have these things that society has told us, but then we don't quite agree and we're not sure what to do. Last time I was here, we talked about how you don't necessarily need to buy a house in order to live a rich life. And in my case, I have rented for the last 20 years by choice, and I made more money renting and investing the difference than I would have by buying a house. And this is shocking to people. Like, we saw the comments last time. People went berserk! "How can you talk about renting? You're just throwing money away on rent." And this is something we have been fed constantly for generations, that in order to be successful, you must buy a house. So when somebody like me comes around and says, "Actually, you should run the numbers, 'cause sometimes renting can be better," people are shocked. Same thing with, um, if you wanna be taken care of, or you want someone to treat you, or you want someone to pay for the first date. Same thing when men come and they talk about being a provider, but in certain relationships where they actually earn less. I'll say to them, "If we look at the numbers, you are not the provider. So who are you?" And they're stumped. And that is when we need to start grappling with the idea that maybe what we were told is not exactly true for us in our situation today. And that's okay.

   10. SBSteven Bartlett13:54

       Do you think it causes more problems when the, in terms of the relationship dynamics and that sort of emasculation and, you know, that, the man not feeling like a provider when the woman earns more money than the man, from what you've seen?

   11. RSRamit Sethi14:06

       Not necessarily. I think that it is a different framework than we're used to.

   12. SBSteven Bartlett14:11

       Yeah.

   13. RSRamit Sethi14:12

       When we think about my parents, for example, my mom stayed home with us, my dad went to work, single earner. Simple. Everybody knew where they stood, what the roles were. It was very simple. It's very difficult to do that today. Housing is historically expensive. Healthcare is expensive, especially in the US. And so you have two people earning. In, in urban cities, you have young women earning more than men in their 20s. A lot of us are trying to figure out, what does this role mean for me and for my partner and for our relationship?

8. 14:46 – 16:07

   Should Men Remain Single?

   1. RSRamit Sethi14:46

      That makes it tricky.

   2. SBSteven Bartlett14:47

      I wonder if a lot of men are just choosing to remain single until they've kind of worked on themselves, because-

   3. RSRamit Sethi14:52

      Sure.

   4. SBSteven Bartlett14:52

      ... I think actually that's probably the path I would have taken, if I'm being completely honest, and one I kind of did take, is I didn't have a relationship until I was able to really provide.

   5. RSRamit Sethi15:02

      Oh! The P word!

   6. SBSteven Bartlett15:04

      Yeah. (laughs)

   7. RSRamit Sethi15:04

      Yeah. And where did that word come from, provide?

   8. SBSteven Bartlett15:07

      Like, watching my father, watching movies, everything.

   9. RSRamit Sethi15:09

      Exactly. Yeah. No one ever says, like, "You are a provider," but we learn it from a million different, uh, perspectives. And yeah, I hear a lot of guys. I mean, when I, uh, was living in New York and I had a lot of single friends, topic of conversation was, "I'm not ready to get married. I need to get to a certain point in my career first."

   10. SBSteven Bartlett15:28

       Mm-hmm.

   11. RSRamit Sethi15:28

       We have all these words for it, and deep down there's a feeling that we're often expressing, you know? "Maybe I'm not ready. Maybe I'm not enough. Maybe I need to do X, Y, Z before I do the thing that I want." And so part of what we talk about when it comes to relationships and money is like, let's actually shine a light on that. Let's not be shy about it. If you want someone to pay for your dinner, fine. That's totally fine. Let's have that conversation. If you want to be the sole earner in your household, okay, let's see what it would take. And too often we don't have those conversations. We just dance around them for 50 years.

9. 16:07 – 18:37

   Who Should Pay For The First Date?

   1. RSRamit Sethi16:07

   2. SBSteven Bartlett16:07

      Who should pay for the first date, then?

   3. RSRamit Sethi16:09

      My answer is, doesn't matter. It would be nice if the person who suggested the date pays, but I think we spend way too much time focusing on the first date and way too little time thinking about the next 14,625 days. It's like a couple who's obsessed with the wedding. Fine, you want a nice wedding, great. What about the marriage? Same thing with money. First date, okay, we can have that conversation, but aren't you more interested in how your partner thinks about money and talks about money? Are they a cheapskate? Are they generous? Are they abundant? Did they grow up the same or different than you? That is something we don't talk about. Meanwhile, we have five million YouTube videos on who's gonna pay on the first date. We are missing the real point. The point of money in a relationship is not just about the first date. That's fun for clicks, but it's about do we see money the same way? Do we connect? Are we gonna be rowing in the same direction, or are you gonna be doing that and I'm doing this and we can never get aligned?

   4. SBSteven Bartlett17:12

      You can only make a first impression once, right? And if you are a guy ... This is just how I feel, anyway. If I go on a date, a first date with a woman, and we have a wonderful date. We ... you know, it's a nice restaurant-

   5. RSRamit Sethi17:24

      Yeah.

   6. SBSteven Bartlett17:24

      ... and then it gets to the end of the day, and then I turn to her and say, "Should we split the bill?" (laughs) I can't even say it with a straight face, frankly.

   7. RSRamit Sethi17:31

      (laughs)

   8. SBSteven Bartlett17:31

      I couldn't. (laughs) I definitely couldn't ask her to pay. (laughs)

   9. RSRamit Sethi17:34

      Yeah.

   10. SBSteven Bartlett17:35

       I just, I just could never. And if, I think if you anonymously polled 10 of my female friends and said, "How would you feel if, on the first date, the guy asked you to pay?"

   11. RSRamit Sethi17:44

       Mm-hmm.

   12. SBSteven Bartlett17:45

       ... I think privately they would say, "That's a bit of a turnoff. That's a red flag. That's an ick."

   13. RSRamit Sethi17:49

       I think probably that's true, and again, goes to the power of socialization.

   14. SBSteven Bartlett17:54

       Yeah.

   15. RSRamit Sethi17:54

       Right? Like, culture is very difficult to change. We gotta admit that. We gotta acknowledge that. And when I was dating, I paid for dates. So I don't have a problem with it. I like to be generous. I think that when you are in a relationship, you like to know that your partner is generous too. Now, generous comes in lots of ways. It could be paying for dates. It could be planning a trip. It could be being thoughtful and, you know, buying extra toothpaste 'cause we're running low. There's so many different ways to be generous. But generosity, for me, would be a value.Paying for a date, sure. I paid for dates. I'm happy to, I like to do it. But generosity to me is way more important to talk about that in a relationship versus the

10. 18:37 – 20:13

    Should Men Be Chivalrous?

    1. RSRamit Sethi18:37

       date itself.

    2. SBSteven Bartlett18:37

       Because chivalry, you know, this, this idea that the man is to lead, um, in that regard and to, you know, open the door-

    3. RSRamit Sethi18:46

       Yeah.

    4. SBSteven Bartlett18:46

       ... and open the car door and pull out the chair.

    5. RSRamit Sethi18:48

       Yeah, but think about it, I agree with all that stuff. I, I'm, I support it. But think about what message that sends when you tell men, "You're supposed to be chivalrous," but there's no real context, no, no real teaching around it. And let's say you have a 26-year-old guy now who's earning less than his girlfriend. So he wants to be chivalrous, but for him, he's like, "Well, look at our bank accounts." And so what I wanna emphasize to people is you can be chivalrous, you could be generous, money is just a small part of that.

    6. SBSteven Bartlett19:18

       Yeah.

    7. RSRamit Sethi19:18

       Let's not over-fixate on who's paying for tapas, okay? (laughs) And let's actually think about the important things. When it comes to money, we are so obsessed with $3 questions. People are obsessing over, "Should I buy this coffee? Can I afford this appetizer?" On and on and on about $3 questions. We totally neglect the $30,000 questions, or the $300,000 questions. Is this person financially aligned with me? How do I even find out? Am I investing 5% to 10% of take home pay every month? Are we doing it together? Um, do we talk about money regularly and proactively and positively? Those things matter, and they're actually worth hundreds of thousands of dollars. These $3 questions, including who's paying for appetizers or should I buy a latte, irrelevant. In fact, get, get the big answers in life right, and you can buy all the appetizers

11. 20:13 – 21:19

    What Are Financial Red Flags?

    1. RSRamit Sethi20:13

       you ever want.

    2. SBSteven Bartlett20:14

       What are the financial red flags in a relationship, then?

    3. RSRamit Sethi20:16

       Number one is they don't wanna talk about money.

    4. SBSteven Bartlett20:19

       Okay.

    5. RSRamit Sethi20:19

       If you don't wanna talk about money, red flag. The biggest red flag of all because we could differ on how we see money. We can even have different values for a few things. But if your partner simply will not talk about money, you have a huge problem.

    6. SBSteven Bartlett20:35

       Why?

    7. RSRamit Sethi20:36

       If you can't talk about money, then you can't even understand where they're coming from, and they are not curious about what you want. So how are you ever going to get on the same page? Think about this. A lot of people think, "We need to have the conversation about money." The con- as if it's one conversation. Would you have the conversation about raising kids? No. You'll have thousands in your life. That's the way it should be. Money is very much like parenting, not like, "Uh, should we play pickleball or tennis today?" Irrelevant. So we wanna have lots of conversations about money, and that means we need to, first of all, be willing to talk about it, and then we need to find a way to have fun doing it.

12. 21:19 – 22:45

    The Money Types – Avoider

    1. RSRamit Sethi21:19

    2. SBSteven Bartlett21:19

       Why don't we, and who doesn't? Is it men? Is it women that don't do it more, more? Or who's not talking about money, and why aren't they talking about it?

    3. RSRamit Sethi21:26

       It's not about gender. Couple, it has nothing to do with gender in terms of who does or doesn't talk about money. There are avoiders. That's one of four categories, uh, money types that I've identified. Avoiders hate talking about money, and they will use a series of conscious and unconscious techniques to avoid talking about money. S- they'll say things like, um, uh, "Why, why do you always have to talk about money? Can't we just have a nice night out?" Or, "You're so much better at this. You just handle it. You're just so much savvier at this stuff." That's an avoider.

    4. SBSteven Bartlett22:00

       Do they know their own financial situation?

    5. RSRamit Sethi22:02

       No.

    6. SBSteven Bartlett22:03

       So they don't know their own financial situation, and they don't wanna talk about it.

    7. RSRamit Sethi22:05

       Correct.

    8. SBSteven Bartlett22:06

       Mm-hmm.

    9. RSRamit Sethi22:06

       We... And by the way, we all have something like this. It could be our fitness. It could be our relationship with our parents. There's something in our life that we know we should deep down, but we avoid it.

    10. SBSteven Bartlett22:17

        Yeah.

    11. RSRamit Sethi22:18

        And there's no, there's no immediate consequence. Like, "If I don't call my college friend, it's fine, I could probably call them tomorrow," and you can go on and on and on like that until one day you can't. Same thing with our fitness. It's very easy to procrastinate on fitness or money because it's not like your house is being taken away or even your cable's being shut off. You'll probably be fine until one day you hit this brick wall and it's not.

13. 22:45 – 24:59

    The Optimizer

    1. SBSteven Bartlett22:45

       Mm. So that's the avoider. That's the first money type.

    2. RSRamit Sethi22:48

       Yeah. Next up, optimizer. (laughs) I have a soft spot 'cause I am an optimizer. Optimizers, we love to live in the spreadsheet. It's like, "Let me sit and calculate this, and what if I run a compound interest calculation, a Monte Carlo calculation, and what if we do this but not that?" I love calculating everything. And left alone, I would sit there and do that for the rest of my life. Okay? The problem is you can take it a little too far. Now, I don't think I've taken it too far. Perf- I think I'm perfect on my spreadsheets, but my wife has taught me enough's enough. We, we've won that part of life, let's focus on another part, connection and fun and experience.

    3. SBSteven Bartlett23:29

       Are these people often thought of as boring?

    4. RSRamit Sethi23:31

       Yes, they are, they are... Deep down, they are boring. I was boring when I was sitting there-

    5. SBSteven Bartlett23:36

       (laughs)

    6. RSRamit Sethi23:36

       ... thinking money is only about numbers. It's not. Money is about adventure and possibility and generosity. And you will often find optimizers, I'll give them a challenge, I'll give them a $100 challenge. I'll say, "You have to take $100 in the next week and spend it on yourself." They cannot do it. They will spend it on their dog, they'll spend it on their kid, they'll spend it on their partner, but they will not do it for themselves. And I go, "Why didn't you do it?" They go, "Ramit, do you know that if you put $100 into S&P 500 and you compound that for the next 45 years, it'll turn into this much?" I go, "I don't give a shit. Spend the money!" Because money is not simply meant to be hoarded, right? It's meant to create a rich life. And when you have optimizers, the thing is they can get you to a very good place. They will probably have your account set up, dialed in. They'll be investing great. They're gonna be very proud. "Look at the compound interest returns." All that is fantastic-... but it can be taken too far.

    7. SBSteven Bartlett24:33

       These are the people that die and then you figure out that they had, like, $9 million-

    8. RSRamit Sethi24:37

       Yeah, what a waste.

    9. SBSteven Bartlett24:37

       ... in some saving account.

    10. RSRamit Sethi24:38

        What a waste.

    11. SBSteven Bartlett24:39

        They never tasted the caviar, but they've got...

    12. RSRamit Sethi24:41

        Yeah. Like, people send these newspaper articles around like, "Oh, local librarian discovered to have $9 million," and I go, "What a tragedy. What a tragedy to live a smaller life than you have to." Like, I want you to save, I want you to invest, but I also want you to try a nice meal. Or if you don't

14. 24:59 – 26:42

    The Worrier

    1. RSRamit Sethi24:59

       like nice food or you don't want a nice T-shirt, also fine. Get super generous. Give that money. S- surprise the people around you. Tip 50%. So those are optimizers. The third category is worriers. They love to worry. Typically, they picked up worrying from their parents, almost always, and their entire relationship with money is worry. "Are we gonna have enough? What if we run outta money? What if we don't have enough to pay at the gas station?" And oftentimes, it's very surprising, 'cause I told you that 50% of couples don't know how much they make, right? So they'll say, like, "We need more. We don't have enough right now." And I'll ask them, "How much do you think you make?" This just happened a couple of weeks ago on a podcast episode. They thought they made around $70,000 a year, okay? (laughs) We add up all their stuff, they make $120,000 a year. So I go, "Well, here you go. You, you wanted to make an extra 40K, you actually make 50K more than you thought. Do you feel any better?" And she goes, "No." Because the way you feel about money is highly uncorrelated to the amount in your bank account. So worriers worry, that's how they relate. They can't imagine any other relationship to money, and my job is to help them realize, first of all, let's actually look at your numbers. Let, let me help you understand what it means. Do you have enough? What does it take to have enough? And then, can you start to develop a new relationship with money? It's almost like a new taste bud. I'm never gonna tell you to eat tomatoes if you hate tomatoes, but I am gonna teach you, maybe you like okra and we can develop a new taste for that.

15. 26:42 – 27:57

    The Dreamer

    1. RSRamit Sethi26:42

       Finally, the dreamer. The dreamer believes that success is one deal away. "If we just close this deal... If I just get this thing..." And they tend to fall into get rich quick schemes. Lots of scams, MLMs, a lot of crypto shit coin scams, like all this BS, but they are extremely resistant to calm, low cost, long-term investing. In other words, the way that most people build real wealth. They think it's boring. They even have little phrases like, "Ugh, I don't wanna be stuck in a nine-to-five like those suckers." I'm like, "That sucker makes 10 times what you make. What are you talking about?" But they have simply been surrounded with the idea, "One more deal and I'll finally make it."

    2. SBSteven Bartlett27:28

       They must be hard to be married to.

    3. RSRamit Sethi27:29

       It's impossible. It's really, really difficult. Th- they don't... Not only do they not want to talk about money, when they finally do talk about money, they're almost living in a different world. And often, you will find that dreamers can only dream because they are being subsidized by someone in their life, usually their partner. And if their partner were to leave, for example, the house of cards would collapse, and actually, that's usually the only thing that gets them to truly change.

16. 27:57 – 29:42

    Which Money Type Lives A Happier Life?

    1. RSRamit Sethi27:57

    2. SBSteven Bartlett27:57

       So if we've got these four money types-

    3. RSRamit Sethi27:59

       Mm-hmm.

    4. SBSteven Bartlett27:59

       ... um, the avoider, the optimizer, the worrier, the dreamer, in your view, who lives a happier life?

    5. RSRamit Sethi28:07

       You can live a happy life with any of these.

    6. SBSteven Bartlett28:09

       Yeah.

    7. RSRamit Sethi28:09

       Also, you can change any of these types.

    8. SBSteven Bartlett28:11

       But on average, one person's gonna probably lead-

    9. RSRamit Sethi28:13

       Well, I mean-

    10. SBSteven Bartlett28:14

        ... leading.

    11. RSRamit Sethi28:14

        I, I am the optimizer and I'm pretty happy, so is that, is that the answer? (laughs)

    12. SBSteven Bartlett28:18

        Yeah.

    13. RSRamit Sethi28:18

        Optimizers are great. They love their spreadsheet. Um, I think that, uh-

    14. SBSteven Bartlett28:23

        The worrier clearly is not gonna live the happiest life.

    15. RSRamit Sethi28:26

        The dreamer's actually quite happy.

    16. SBSteven Bartlett28:27

        Yeah.

    17. RSRamit Sethi28:28

        The dreamer's quite happy.

    18. SBSteven Bartlett28:29

        They live in optimism.

    19. RSRamit Sethi28:30

        Yeah, they're living in a world that's not real. It's subsidized by somebody else. They're always optimistic about what's gonna happen next week, next month, next year, never realizing the catastrophe that they are leaving behind them. That's, that's the whole issue. That's the reason I wrote the book, is it's one thing to treat money in a certain way on your own when you're single. You can be irresponsible, you can be an optimizer, but when you're in a relationship, it's not about you anymore. It's about the two of you as a unit, and so you have to deeply understand yourself, and then you have to be willing to communicate with your partner and really create a rich life vision for the two of you. Most couples I talk to have no vision for their money. That's why they fight over who spent $50 at Target. I go, "Who gives a shit about Target?" Financial problems are almost never about overspending at Target. The biggest problem with couples and money is they have no rich life vision. What is money to us? What do we want to use money for? How do we wanna feel about it? So they're confronted with a thousand different decisions with their money every week, and they have no vision to guide them, "This is for us, this is not for us."

17. 29:42 – 32:00

    Do You Know How Much Your Partner Makes?

    1. RSRamit Sethi29:42

    2. SBSteven Bartlett29:42

       One of the things I've always wondered in relationships is, w- how many couples know how much money the other couple has in their savings account and their total sort of investment portfolio, 'cause I've never been in a relationship where... I mean, I've only really been in two relationships you could say, but I've been with, you know, dated people over the years. Um, been with my current partner for many, many, many years. But even my current partner has no idea how much money I have.

    3. RSRamit Sethi30:06

       Hmm.

    4. SBSteven Bartlett30:07

       Zero idea.

    5. RSRamit Sethi30:07

       When will you have that conversation?

    6. SBSteven Bartlett30:09

       (laughs) Probably never.

    7. RSRamit Sethi30:10

       Should we bring him out right now?

    8. SBSteven Bartlett30:11

       (laughs)

    9. RSRamit Sethi30:11

       Let's bring him out. (laughs)

    10. SBSteven Bartlett30:13

        I've just never had the conversation. If we, if you need something, we can get it.

    11. RSRamit Sethi30:18

        Yeah.

    12. SBSteven Bartlett30:18

        And it's just always been like that-

    13. RSRamit Sethi30:20

        Yeah.

    14. SBSteven Bartlett30:20

        ... in my life.

    15. RSRamit Sethi30:21

        Okay, so I, I made a mistake in my own relationship. I was, uh, dating my now wife for many years, and at one point she had asked some question about her 401K or something, and I said, "Well..."There is a book called I Will Teach You To Be Rich. Here's a copy of it, and I was joking around with her, and so it, I ended up learning all about her finances. So I knew about her entire financial picture. It didn't occur to me to talk about my own, and a little while later, she- she very assertively said, "This doesn't feel fair. You know everything about my finances, but I don't know about yours." And I realized, I violated my own rule in chapter nine of my first book, which is talk about money early on. Talk about it regularly. So we talked about it. We talked about... It's actually one of the most memorable conversations we had, because talked about the numbers, talked about my pride in how hard I had worked to build my business and invest for 20 years, 25 years, and um, and then we talked about what it meant for us. Like, what kind of life do we want to have? Do we want to live here? Do we want to live there? Do we want to have kids? Do we want to eat this type of food? Travel? Like, that conversation about possibility is the conversation I want every couple to have, because it's about possibility and you can start to dream, and that dream is important. You can get to the logistics. Of course, we'll get to that, but so few of us still dream with our money.

18. 32:00 – 36:28

    Should You Keep A Bad Financial Situation A Secret?

    1. RSRamit Sethi32:00

    2. SBSteven Bartlett32:00

       But I, you know, the... I think f- for someone like you who is the optimizer-

    3. RSRamit Sethi32:04

       Mm-hmm.

    4. SBSteven Bartlett32:04

       ... and who's probably quite proud of the system you've created for yourself-

    5. RSRamit Sethi32:06

       I love systems.

    6. SBSteven Bartlett32:08

       But there's gonna be so many people listening now that are in a relationship, and they are maybe early in the dating process, and maybe they've been with a person six months. They've taken them out on lots of nice dates, and they have $1,000 in their savings account and their partner has no idea.

    7. RSRamit Sethi32:26

       Yeah.

    8. SBSteven Bartlett32:26

       And they're thinking, "Ramit, if I tell my partner what's in this bank account, she is gonna be shocked or he is gonna be shocked, and he, they are gonna leave me."

    9. RSRamit Sethi32:35

       Mm-hmm.

    10. SBSteven Bartlett32:35

        "So, I'm keeping this shit a secret, because they are living under illu- an illusion." (laughs)

    11. RSRamit Sethi32:41

        (laughs) That I have more than I actually have.

    12. SBSteven Bartlett32:42

        Yeah.

    13. RSRamit Sethi32:43

        But remember this: just because you don't have as much money as you want doesn't mean that you are less of a person. What could be more-

    14. SBSteven Bartlett32:51

        I completely agree.

    15. RSRamit Sethi32:52

        Yeah.

    16. SBSteven Bartlett32:52

        I completely agree.

    17. RSRamit Sethi32:53

        What could be more appealing than saying, "You know what? Would you be open to talk about our finances? We're getting a little bit serious, you know? I know we're kind of talking about taking the next step. I think money's gonna be an important part of it. I know it is for me, and I wonder if we could sit down and talk about it." First, just being proactive. How many people watching and listening are like, "I wish my partner, whether they're dating or my partner of 20 years, would come to me and say, 'Can we sit down and talk about money?'"

    18. SBSteven Bartlett33:25

        But the part of that is- is shameful about their financial situation-

    19. RSRamit Sethi33:29

        Yes.

    20. SBSteven Bartlett33:29

        ... if I run it back 10 years, just over 10 years ago, I was living in an area called, um, Rusholme. I was in a shared house with, living with some, um, a few people who had come to the UK illegally.

    21. RSRamit Sethi33:45

        Okay.

    22. SBSteven Bartlett33:45

        Um, I didn't have a carpet in my room. I was in a single bed, didn't have duvets or bedsheets or anything, and every day, I woke up and thought to myself, "How am I gonna eat today?" So I'd find different ways to find food. At the same time, I was dating this girl called Ruby. This girl called Ruby had no idea. She'd never seen where I lived. She wasn't aware that I was looking behind, uh, sofas in takeaways for pound coins. There is no possibility in the world that if I (laughs) I would have ever told Ruby-

    23. RSRamit Sethi34:12

        Yeah.

    24. SBSteven Bartlett34:13

        ... the financial situation I was in.

    25. RSRamit Sethi34:14

        Yeah.

    26. SBSteven Bartlett34:15

        I, I, like... So I don't know what to do in that situation, and I'm sure, I'm sure, I would assert that maybe 30% of people listening right now don't wanna tell their partner their financial situation because they're deeply embarrassed or shameful to the point that they think their partner might leave, like them less, be less attracted to them if they really knew the truth.

    27. RSRamit Sethi34:35

        I totally agree. I totally agree. It's crazy how much shame we have around money, and it's, uh, a young guy not having enough. It's, um, a young woman who has $18,000 of credit card debt. It's all over the spectrum. That's the second point, which is if you want to talk about money, talk about money. Don't wait for your partner to do it. Bring it up yourself, even if you feel embarrassed or ashamed, okay? If you're planning to make a life with this partner, you gotta be able to talk about this, because you're gonna be talking about a lot of other personal, sensitive things over the course of your life. The second thing is, what could be more attractive than somebody saying, "You know, when I was in my 20s, I moved to the city, I spent a lot of money going out, and I wasn't super responsible. I racked up a lot of credit card debt. I've paid it down from $18,000 to $6,000. It's gonna be paid off next year, and I just know that I'm never going back there again." Oh my God, someone who acknowledges what they did, has a good reason for it, and then most importantly, has a plan? Huge turn-on. So what I'm begging all of us to do is to realize just because you have more or less money does not make you a better or worse person. I wanna take shame away, because we all have something that we are ashamed of. But not talking about it and putting it in the corner in the darkness, that doesn't solve it. That's why I love talking about the most taboo of taboo subjects. Money, gender, prenups, dating. These are things that nobody's talking about, so when you hear couples on the podcast and they're talking about being married for 15 years and they've never actually had one conversation about money, I want you and everyone watching to be inspired, because stuff doesn't have to be shameful and doesn't have to be kept in the dark.

19. 36:28 – 43:12

    Are Prenups A Good Thing?

    1. RSRamit Sethi36:28

    2. SBSteven Bartlett36:28

       And what d'you think about prenups then? Do you think they are a good thing for all couples? Do you think all couples should, uh, initiate a prenup?

    3. RSRamit Sethi36:33

       No, no. Not all couples. There are some couples who should have one. My wife and I have one. So we went through this process and, um...Who should get a prenup is if one or both partners are bringing substantial premarital assets to the marriage, meaning before they get married, they have a large investment portfolio, a business, rental property, or a house. Like, you should have a prenup, but most people should not. Because when most people get married, they don't have substantial assets.

    4. SBSteven Bartlett37:03

       What if your partner turns around, if I turn to my partner, I say, "Babe, Ramit told me to go get a prenup."

    5. RSRamit Sethi37:07

       Yeah.

    6. SBSteven Bartlett37:08

       And she goes, "Absolutely not."

    7. RSRamit Sethi37:10

       Well, that's not a good introduction. I wouldn't say that. Although, I don't mind if you throw me under the bus. "Oh, this guy, Ramit. He said this thing." Fine. How to bring it up is an art. So when I was, um, deciding on a prenup, I asked for lots of advice from lots of friends. And, um, some of the advice out there, especially online, is not great. Um, one of the most common pieces of advice is, blame it on your lawyer. I'm like, "Get real. You're about to build a life with your partner, and you can't be honest about this thing? This, in the grand scheme, is a minor topic." So, I'll tell you exactly what I said to my wife. We sat down, and, um, we, I said, uh, "I wanna talk to you about something. Um, you know that because of how long I've been in business, I've been very lucky, I've been fortunate, I worked hard. I've built this business up and I'm really proud of what I've accomplished and saved. And you also know my lifestyle. I don't drive around in a Lamborghini. Uh, I like to travel, I like to wear nice clothes, and I like to save money. And it's important to me that as we are getting closer in our relationship to getting married, that we talk about a prenup." And my heart was pounding. I had planned it, I had thought about it, I had talked to so many people. What I knew is, I wanted to take responsibility. It's not some lawyer that wants it, it's me. It's important to me. I wanted to bring up the topic, and I wanted to reassure my wife that I'm not gonna change overnight when we get married into someone who's blowing all of our money. It's just important because of the business that I built. And her response, I was like ... Like, "How is she gonna respond?" Because bringing up prenup is very fraught. She's the best. She said, "Okay, I wasn't expecting that, but I'm willing to learn more about it." That's as good of a response as I could've hoped. So we started this series of conversations. We both had lawyers. It was going well at first, until it wasn't. And we were talking about numbers that, to me, seemed astronomical. I started to feel resentful. She didn't feel listened to, she didn't feel heard. She started to feel resentful. And these conversations were, were like so difficult. I would say they were some of the most difficult conversations of our relationship. At one point, she said, "We should go see a therapist, because these conversations are not good." And I was like, "You're right." So we went to see a therapist, we sat in that therapist's office, I still remember. Therapist asked us a bunch of questions, including, "How do you see money?" And she turned to me. I was like, "How do I see money? Growth." I could literally see numbers floating in front of my eyes. The optimizer in me was talking about the rule of 72. It was like so obvious, what an obvious question. Then she turns to my wife. "How do you see money?" And she said, "Safety." I said, "What? Sa- safety?" To me, that was like saying charcoal. Like, the two words don't relate at all. But it started us on a new path of realizing that we were seeing money completely differently. And that was exactly when I realized I wish there were other couples talking about money from behind closed doors. That exactly was the genesis of me doing my podcast and my Netflix show, to show people, not just tell them, but to show them how real couples deal with money.

    8. SBSteven Bartlett40:44

       What was the resistance between you two? I- in sort of more specific terms. She, she wanted a different arrangement to the one that you wanted?

    9. RSRamit Sethi40:53

       Yeah. The terms are, are super technical in prenups. It's, um ... So with a prenup, you have a variety of different rules or technicalities, which would be like, what if you separate in six months? What if you separate in 25 years, but there are children involved? Who gets the house? What if you have a house? What if you have two houses? What if you have this much in your joint investment, but each of you has this much in individual investment? And so what happens is, it's not even just the numbers themselves. It's the fact that the process is set up to be adversarial.

    10. SBSteven Bartlett41:27

        Mm-hmm.

    11. RSRamit Sethi41:27

        So they have a lawyer, we have a lawyer. We're communicating through lawyers when it comes to this topic, when normally you're just talking to your fiance or your girlfriend. And there's an art to also managing the lawyers. See, the lawyers want ... There's nothing bad. We had great lawyers, I'm happy with them. But lawyers' job is to look over every freaking contingency and make sure that nothing is left to chance. And I think a good reminder for anyone considering a prenup is to remember, you manage your lawyers, and your job is to come to an agreement with your partner for the rest of your life. So sometimes you can be generous. You can be willing to let up on a few things here and there as long as you are looking at the North Star. We're gonna be together, you want these premarital assets to be protected, and in case something goes wrong, we both wanna feel good about what the arrangement is.

    12. SBSteven Bartlett42:14

        And there is a 60-odd percent chance that you will break up if you look at the marriage statistics, so.

    13. RSRamit Sethi42:19

        Well, those statistics are a little skewed. That includes second marriages, that also includes all different socioeconomic, all d- everybody else. If you break it down, for example, just by having a bachelor's degree or certainly an advanced degree, that goes way down, first marriage goes down. And in fact, the divorce rate has been decreasing for decades. So this 50, 60% thing that's kind of tossed around, not quite accurate. But ...Whatever the statistic is, what's more important is if... Y- you should always think about how can things go right, and also how can they go wrong? And I think with money, a lot of times, uh, we only think about one or the other. We buy a house, never asking ourselves, like, "What if one of us loses our job?" And we get married without ever asking, like, "What if we separate?" So you wanna be able to play both. What happens if things go right, incredibly right? And what happens if things go wrong? Let's make a plan.

20. 43:12 – 44:27

    Do We Need A "Money Guy"?

    1. RSRamit Sethi43:12

    2. SBSteven Bartlett43:12

       What are the other red flags, then? We mentioned the first being they don't wanna talk about money.

    3. RSRamit Sethi43:17

       Ah. Um, they have a money guy. (laughs) A money guy is so common. Everybody talks about, "Oh, I have this money guy." Your money guy is probably a whole life insurance salesman charging you 1.25% AUM. Let me explain what that means. So many people in America do not want to learn the basics of money, and so they hire a financial advisor. Now, I don't have anything against financial advisors in general, but a money guy that they're typically referring to is someone who charges them a percentage of their assets. So if I have a $100,000 portfolio, they'll charge... or let's say a million dollar portfolio, I might be paying 1%. Now, 1% doesn't sound like a lot, but if you actually run the math, you will pay about 28% of your lifetime investment returns in fees. That's not $10 or $100. That's tens of thousands or sometimes hundreds of thousands of dollars. So it's a red flag if someone has an advisor that they're paying a percentage-based fee to. I would much rather you pay an hourly or project or that type of fee to. Okay? Um,

21. 44:27 – 45:52

    Red Flag: They're Cheap

    1. RSRamit Sethi44:27

       they're cheap. I can help a lot of people, but I can't help cheap. Cheap is... Cost is the first and last thing they always consider. So you might come home, you're so happy. "Oh my gosh, look at this beautiful thing I got for the kids." "How much was that?" And it just sucks the life out of every room. Cheap people are obsessed with cost, cheap people rarely recognize the effect they are having on their loved ones, and cheap people find it very, very difficult to change. They don't want to change. They actually reinterpret their behavior and call it a virtue. "Oh, I'm not that... I don't need that fancy wine. I'm perfectly happy with this." Well, what if your partner wants one glass of wine?

    2. SBSteven Bartlett45:14

       They seem like a miserable group.

    3. RSRamit Sethi45:17

       Yeah, I don't like cheap people. I don't like cheap people, I don't like cheap tippers, and their partners don't like them. So it's, it's one... I'm not saying everybody has to go out and spend a million dollars, but you gotta use money to live your rich life. The point of money is not to just hoard it and save it. That's why when you create a rich life vision, you ask yourself, "What do we want to spend extravagantly on? Not just a little bit, but extravagantly, and what do we want to cut costs mercilessly on?" You have to be able to play different notes like you're in a symphony. If your only note is spend less, that's a miserable existence.

22. 45:52 – 47:04

    Robert Kiyosaki's Advice Is Rubbish

    1. RSRamit Sethi45:52

       (laughs)

    2. SBSteven Bartlett45:52

       Are there any more red flags? I wanna go into why people and, uh, where they develop these relationships with money, but are there any other sort of standout red flags that we should be looking for

    3. NANarrator46:00

       Well, if they-

    4. SBSteven Bartlett46:01

       ... as well?

    5. RSRamit Sethi46:01

       ... if they follow Robert Kiyosaki, that's a huge-

    6. SBSteven Bartlett46:04

       (laughs)

    7. RSRamit Sethi46:04

       ... fucking red flag. I mean, the guy, once... Robert Kiyosaki wrote this, uh, well-known personal finance book, and the guy has really lost it in the last few years. He literally... I'm not joking. He literally told people, "The best investment you can have is a can of tuna." (laughs) I'm not joking. And I replied to him, "Robert, I sold everything in my portfolio and bought three million cans of tuna. Um, is this a good investment?" But sadly, I never heard back. So beware of, beware of charlatans. Let me put it that way. Personal finance and money is filled with people who will promise you get rich quick, who will tell you that the sky is falling, and when it comes to money, we wanna be balanced, we wanna have fun, we wanna be... have a healthy relationship with money. It's very similar to fitness. Lots of people making promises. You wanna find the people who are giving you long-term advice.

    8. SBSteven Bartlett46:55

       You know these cheap people that you mentioned?

    9. RSRamit Sethi46:57

       Mm-hmm.

    10. SBSteven Bartlett46:58

        And-

    11. RSRamit Sethi46:58

        You know any of them?

    12. SBSteven Bartlett46:59

        Uh, I... A couple come to mind.

    13. RSRamit Sethi47:01

        Tell, tell the camera who they are right now-

    14. SBSteven Bartlett47:02

        (laughs)

    15. RSRamit Sethi47:02

        ... so we know. Who are these cheap people?

23. 47:04 – 48:42

    What Makes A Worrier?

    1. RSRamit Sethi47:04

    2. SBSteven Bartlett47:04

       They also fit into the category of warriors, in my experience. So someone who's a, a bit of a warrior can also be quite, quite cheap. And I was just wondering, in the hundreds of couples that you've sat down with and interviewed, does there tend to be a origin story which links to their frivve- their fru- frugalness with-

    3. RSRamit Sethi47:22

       Yes.

    4. SBSteven Bartlett47:22

       ... money and their penny-pinching?

    5. RSRamit Sethi47:23

       Yes. Okay, always when I talk to people, um, I ask them, "What do you remember your parents saying about money when you grew up?" Always. And they'll tell me. They are very conversant. They remember, and usually the parents said stuff like, "We can't afford it," and, uh, "Money doesn't grow on trees. We don't talk about money in this family." These are the type of things that people said. But you will often find, um, usually when kids are teenagers, when there's something really tragic that happens, and it's often that, um, Dad lost his job, and that meant that they completely changed socioeconomically. Often they had a big house. They had to real- like, shift into grandma's apartment, that kind of thing. That affects people in a huge way. Now, it affects people in one of two ways, and you cannot predict how. Some people go, "I'm never gonna let that happen to me. Therefore, I'm gonna have a high savings rate, I'm gonna invest, I'm gonna start a business," and they develop a really healthy relationship with money. Others go the direction you're suggesting, which is they become incredibly cheap, incredibly worried about money. Anxiety is common. And they often do not see the connection at all until I point it out to them.

24. 48:42 – 53:02

    What Is A Rich Life Vision?

    1. SBSteven Bartlett48:42

       And when you talk about making this rich life vision together, what exactly does that mean?

    2. RSRamit Sethi48:47

       We start off in the book just talking about w-Let's have our first positive conversation about money.

    3. SBSteven Bartlett48:52

       Okay.

    4. RSRamit Sethi48:52

       You have to remember, most people have never had a positive conversation about money. Money is the... the only way it comes up is, "Why did you spend that much at the gas station last week?" That's it. So we start off by just saying, I give 'em an agend- literally an agenda, you can read off these words and start it off. It's like, "Why this is gonna be awesome, here's how I feel about money today, how do you feel? Here's how I want to feel about money, how about you? High five, I love you, we're good." That's it. Part of having conversations about money is this philosophy of declare victory and go home. You don't need to talk about it all at once. Make it short, make it fun, and at the end, always say, "I love you." That's it. Over time, you're gonna associate talking about money with positivity, and that's what we want. When it comes to a rich life vision, this is where it's really fun. So I have some fill-in-the-blanks, um, where you fill it in, like, "I wish we spent more money on..." and then you fill it in. "I think we could probably cut back on," and then you fill it in, and then you compare your notes. My wife and I did this really fun exercise, which I would encourage everyone to do, and it is the 10-year bucket list. So imagine you sit down with your partner and you go, "Let's each take a piece of paper, write down what would make the next 10 years incredibly rich, meaningful to, to me, and to us." So you write it down and then you compare notes. This is exactly what we did. And you get excited. You go, "Oh, you wanna learn Spanish? Amazing. Do you wanna do it online or do you want to go to Mexico City? Oh, you wanna go skydiving? Ah, that one's not for me, but I'll meet you at the ground," right? "Have fun." And you just get excited, you encourage the other person, and then you find one that you both wanna do that's meaningful for both of you. So maybe it is, "We want to, um, create an art studio in the garage." Love it. Maybe it is, "We want to take a round-the-world trip at some point in the next 10 years." Okay, great. The difference with this exercise is you're actually going to make it happen. So right there on the spot, you estimate how much it would cost. Take five minutes, don't take more than that. You can estimate it within 80% like that. Decide when you wanna do it. Maybe if there's kids involved, you're gonna wanna go in summer, winter, et cetera. And then all you do is take the rough amount, divide it by the number of months, and that's how you know how much you have to save for it. We did this, and for us, what was really meaningful is to have a 10-year wedding anniversary. So we know where we wanna do it, we know the exact place, we know all the friends and family we wanna have with us, and we knew when it was gonna happen. So we, we had a funny experience 'cause we each sat down and estimated the cost, and I think the number I picked was something like three times bigger (laughs) -

    5. SBSteven Bartlett51:36

       (laughs)

    6. RSRamit Sethi51:36

       ... than hers. And in those cases, I say go with the bigger number. Okay? It helps you dream a little bigger. If you can't save that much money per month, that's okay. Shrink the dream a little bit, right? Narrow the scope, or maybe extend it a little longer until you have to do it. But suddenly, every single month when you sit down and talk about money, it's like a video game. You're like, "Oh, we're 3% closer to that goal." That is how you start to build a vision for money and have fun along the way.

    7. SBSteven Bartlett52:05

       And do you subscribe to this idea that you should have like a joint bank account and then separate bank accounts?

    8. RSRamit Sethi52:10

       Yes.

    9. SBSteven Bartlett52:10

       Or... 'Cause right now I just have my bank account and-

    10. RSRamit Sethi52:13

        How does it work? How does it work for you? So do you just, you just pay for most things?

    11. SBSteven Bartlett52:18

        I have to give context on what my partner's like. She really doesn't care about material things.

    12. RSRamit Sethi52:25

        Hmm.

    13. SBSteven Bartlett52:25

        So she's-

    14. RSRamit Sethi52:26

        Avoider?

    15. SBSteven Bartlett52:27

        She just doesn't, she doesn't care about whether we fly first class or economy.

    16. RSRamit Sethi52:32

        Okay.

    17. SBSteven Bartlett52:32

        She doesn't care about if we stay in that hotel or this hotel.

    18. RSRamit Sethi52:34

        Great.

    19. SBSteven Bartlett52:34

        She doesn't care if we stay in the 70th floor penthouse, we live there, or if, or if she stays in a studio, she doesn't care.

    20. RSRamit Sethi52:40

        What does she care about?

    21. SBSteven Bartlett52:41

        She cares about quality time with me.

    22. RSRamit Sethi52:43

        Okay.

    23. SBSteven Bartlett52:43

        She likes having nice experiences and she likes going to places.

    24. RSRamit Sethi52:46

        Okay.

    25. SBSteven Bartlett52:46

        Doesn't care how she gets there or where she stays. She likes traveling and exploring, and she likes her simple things, she's a very simple person. If I didn't get her a birthday present or a Valentine's Day present or a Christmas present-

    26. RSRamit Sethi52:55

        Mm-hmm.

    27. SBSteven Bartlett52:56

        ... or if I just made her a scrapbook every year, she'd be thrilled.

    28. RSRamit Sethi52:58

        Okay. Love it.

    29. SBSteven Bartlett52:59

        So I am the one that wants

25. 53:02 – 58:43

    Merging Finances As A Couple

    1. SBSteven Bartlett53:02

       the nicer things.

    2. RSRamit Sethi53:02

       You want the n- Okay, I'm the sa-

    3. SBSteven Bartlett53:03

       Yeah.

    4. RSRamit Sethi53:03

       I'm the same, to, to a large extent.

    5. SBSteven Bartlett53:05

       But we have a lot, you know, life, it costs money.

    6. RSRamit Sethi53:07

       Mm-hmm.

    7. SBSteven Bartlett53:07

       So, um, I pay for most things.

    8. RSRamit Sethi53:11

       Okay. And you're cool with that? It's fine, right?

    9. SBSteven Bartlett53:13

       Yeah, I've always been-

    10. RSRamit Sethi53:14

        Yeah.

    11. SBSteven Bartlett53:14

        ... cool with it.

    12. RSRamit Sethi53:14

        Okay, cool. So-

    13. SBSteven Bartlett53:15

        I'm particularly cool a b- with it because she doesn't care.

    14. RSRamit Sethi53:18

        Right, right.

    15. SBSteven Bartlett53:19

        Does that make sense?

    16. RSRamit Sethi53:19

        Yes, it makes per-

    17. SBSteven Bartlett53:20

        There's no resentment th- because she doesn't care.

    18. RSRamit Sethi53:22

        Yeah.

    19. SBSteven Bartlett53:22

        I'm the one that's making sure she travels th- this way.

    20. RSRamit Sethi53:25

        Yeah.

    21. SBSteven Bartlett53:25

        I have to intervene and I have to fight to make sure that her plane ticket is booked here or s- that the hotel she's staying in isn't gonna be dangerous.

    22. RSRamit Sethi53:35

        Mm-hmm.

    23. SBSteven Bartlett53:35

        I, I've got so many stories of her booking it herself-

    24. RSRamit Sethi53:37

        (laughs)

    25. SBSteven Bartlett53:37

        ... and then me having to rescue her because (laughs) -

    26. RSRamit Sethi53:39

        (laughs)

    27. SBSteven Bartlett53:40

        ... it's super dangerous.

    28. RSRamit Sethi53:41

        Yeah.

    29. SBSteven Bartlett53:42

        So...

    30. RSRamit Sethi53:42

        So you and I have a similar, um, dynamic, at least in this way. Um, I think my wife does have her money dials. Money dials are the things you love to spend money on, and you can turn that dial up. But when we met, she was not into hotels at all. I'm a hotel guy.
26. 58:43 – 1:00:41

    Should You Sweat The Small Stuff?

    1. SBSteven Bartlett58:43

       you're in the camp of not caring too much about the small expenses, the coffee-

    2. RSRamit Sethi58:47

       Yeah, it's a waste of time.

    3. SBSteven Bartlett58:49

       Why is it a waste of time?

    4. RSRamit Sethi58:49

       Because the, they are $3 questions. If you actually added up how much they actually cost you, it's actually not that much. It's the simple joy that you enjoy in the morning, and you could spend your entire life agonizing over buying a coffee. But when I ask people, "Okay, so you stopped buying coffee for a month. How'd you feel?" They go, "Oh, I felt okay." I go, "What'd you do with the money you saved?" They go, "I don't know. It's in my checking account." Not only do you have to make the decision every single day to save on these tiny little things, you then have to properly invest that money, and you have to do this every single day for the rest of your life. What if we just got five critical decisions correct for the rest of our life and didn't have to worry about coffee? Why are we playing so small? "Oh, let's decide, do we have enough money to buy this Saran wrap?" Who cares? Let's talk about, are we investing properly? Do we have a s- a target rate that we are doing? Watch this. I bet you so many couples watching this right now have had arguments about, "Why'd you spend so much at the grocery store? Why can't you stop spending so much on the kids?" And on and on. But have they ever had conversations like this? What is our savings rate? Is it 4%? 6%? 7%? What is our investment rate? Is it 6%? 8%? Whatever the number is, let's make a rule that every December we increase it by 1%. If you just did that, if you increase your investment rate, meaning the percentage of your net income that you invest every single month, I always recommend people start off at 5 to 10%. Let's say you're at six. If you make a rule, "Every December we're gonna increase that by 1%," it will be worth hundreds of thousands of dollars to you, more than all the coffee you ever buy in your entire life. So why the hell would you focus on coffee when you can make one decision per year and make way more than all those coffees combined?

27. 1:00:41 – 1:04:27

    Is Buying A House Financially Savvy?

    1. SBSteven Bartlett1:00:41

       Most couples when they think about investing or their investment rate, the only investment most couples make together is buying a house.

    2. RSRamit Sethi1:00:48

       Yeah. Well, and that-

    3. SBSteven Bartlett1:00:49

       Like-

    4. RSRamit Sethi1:00:49

       ... that's questionably not even an investment.

    5. SBSteven Bartlett1:00:52

       Most people think renting is wasting money.

    6. RSRamit Sethi1:00:54

       Yep.

    7. SBSteven Bartlett1:00:54

       And they, the logic goes, "Well, if my rent is $2,000 a month or 2,000 pounds a month, my mortgage is only gonna be 2,000 pounds a month. So," and w-, "so we might as well buy a house because then we get to keep the asset."

    8. RSRamit Sethi1:01:07

       Are you trying to get me mad right now? I'm starting to sweat just hearing this, 'cause you're right. That's what they say.Should I just dismantle these arguments once and for all right now?

    9. SBSteven Bartlett1:01:15

       Sure.

    10. RSRamit Sethi1:01:16

        Okay. Renting is not throwing away money (laughs) just like going to a sushi restaurant is not throwing money away on sushi. You're paying for something, you're getting value, it's fantastic. The next argument they use is, um, "You're paying your landlord's mortgage." I go, "Okay, aren't you paying the sushi owner's mortgage when you go there and get sushi?" Funny, we never think about it like that. We only think about paying the landlord's mortgage. Finally, we have to understand that buying a house can be a good financial decision. It can be. But renting and investing the difference can also be a good decision. And right now in the US, in the top 50 US metro cities, it is cheaper to rent than to buy. So let me give you some math. Let's say, 'cause I lived in New York, uh, close by, if the rent was, let's say, three thousand bucks a month, to own the equivalent property right next door would have been sixty-six hundred a month. That's $3,600 per month more just to own. So most people don't know this. They don't factor in phantom costs like maintenance, taxes, transaction, opportunity cost. They simply look at a number that says, "Oh, $3,600," or whatever the number may be, and they go, "Great investment." We have got to get more sophisticated with the biggest purchase of our lives.

    11. SBSteven Bartlett1:02:38

        I'm just looking at some of the, uh, comments on our last conversation.

    12. RSRamit Sethi1:02:41

        Oh yeah, what'd they say?

    13. SBSteven Bartlett1:02:42

        It's a balancing act. Uh, there's- there's two groups of people here. There's a group of people who attest to the fact that they bought a house and it's the single best thing they did.

    14. RSRamit Sethi1:02:50

        Yep.

    15. SBSteven Bartlett1:02:50

        Um, this person said, "I bought a house. It's the best thing I ever did. It's launched my mindset in new directions. Remember that having your own space has profound psychological impacts and can change your life."

    16. RSRamit Sethi1:03:02

        That's a good comment. Okay, let's talk about that for a second. I love that comment. We have to remember that life is not just about a spreadsheet. It's not. So when it comes to a major purchase like a house or a car, we gotta start with the numbers, okay? We have to start by running a buy versus rent calculation, by running an amortization chart. I have a whole bunch of stuff on buy versus rent. And then we- we need to know, can we afford it? Is this part of our rich life vision? What if one of us loses our job? And on, and on, and on. But then second, we need to say, "What kind of lifestyle do we want?" If we love to decorate, that's probably worth something. We should... Maybe we need to buy a house. If we want our kids to be in a particular area, maybe we need to buy. There's so many nonfinancial reasons to buy or to rent. And so we can't just do one or the other, but my main argument is this, most of us never run the numbers. We will spend a million dollars in total cost of ownership for a house and we won't run one calculation. So we gotta play multiple notes doing the financial and nonfinancial parts.

    17. SBSteven Bartlett1:04:04

        I think that's what a lot of people are actually saying. A lot of people are saying, "You know, I bought a house," and this person's saying, "I used to be... I used to live in a caravan. I finally bought a house and I don't care about being rich necessarily-

    18. RSRamit Sethi1:04:16

        Mm-hmm.

    19. SBSteven Bartlett1:04:16

        "... but having my own house means the world to me."

    20. RSRamit Sethi1:04:18

        Great. Great nonfinancial reason. They want stability. I totally value that. I would al- also ask, did you run the numbers?

28. 1:04:27 – 1:07:41

    Why Is It Hard To Buy A House In 2024?

    1. RSRamit Sethi1:04:27

    2. SBSteven Bartlett1:04:27

       I think th- the key thing is most people when they buy the house, they see it as an investment and they see it as a good investment. I think in part because they don't really know any other way to invest.

    3. RSRamit Sethi1:04:35

       Totally right.

    4. SBSteven Bartlett1:04:36

       So w- we, we grow up, we think, "Okay, the minute you get enough money, the first thing you have to do is buy a house." I mean, there's a real sequence of- of events in our lives that are given to us, which is go to school, go to college or university or something like that there, get the degree, get the job, buy the house, get married-

    5. RSRamit Sethi1:04:52

       Yes.

    6. SBSteven Bartlett1:04:52

       ... have the kids.

    7. RSRamit Sethi1:04:54

       And then move to Florida, get skin cancer, die.

    8. SBSteven Bartlett1:04:58

       Oh, retire.

    9. RSRamit Sethi1:04:59

       Okay.

    10. SBSteven Bartlett1:04:59

        Have your pension, die.

    11. RSRamit Sethi1:05:01

        We don't have pensions anymore. That was in the '60s.

    12. SBSteven Bartlett1:05:03

        Okay.

    13. RSRamit Sethi1:05:03

        But yes. And actually, that's a pretty good life if you think about it. It's actually a very good life, e- especially the way that our parents' generation grew up where, you know, they could buy a house on a reasonable salary, one salary, but that doesn't exist right now. Housing is historically expensive. Um, and not through any fault of young people, by the way. I- I... There's a lot of this, um, stuff thrown around the media, "Young people are buying too much avocado toast. They're always buying the new iPhone." That's not why housing is expensive. Housing is expensive because people who bought their houses in the '60s, '70s, and '80s bought a house and then systematically prevented everyone else from building more housing. So it is... It's called NIMBYism, not in my backyard. They have allowed almost no housing to be built, particularly in the US. That's why if you only have a limited supply, guess what happens to the price? It goes way up. That's changing slowly. Housing prices will, in certain cities like Austin, even Santa Monica, have come down in certain areas. It's really important to be able to build more housing so that young people, middle class people, poor people can afford housing. We should not have people unable to afford rent or buying housing. It's a big problem.

    14. SBSteven Bartlett1:06:19

        So are you saying that the average couple, if they're looking to make a financial return-

    15. RSRamit Sethi1:06:24

        Yeah.

    16. SBSteven Bartlett1:06:24

        ... on their joint savings count- account, they shouldn't invest that money in a house?

    17. RSRamit Sethi1:06:29

        I personally would not consider my primary residence to be a great investment because it has massive costs, right? Massive. Um, maintenance, opportunity cost of that down payment. Let's say you put down 50K or 100K, that could have been invested. It has all kinds of, uh, phantom costs. And then w- you have to stay there for... Until you pay it off, presumably 30 years. Most people don't stay for 30 years. There's some shocking math behind a mortgage. Like most people don't realize that they will be paying more towards their, uh, interest than towards principal for 21 years. Let me say that again. Most people, when they take a 30-year mortgage right now with interest rates the way they are-They will be paying more towards interest than they are towards the mortgage in year one, two, five, 10, year 20, until finally year 21 when they are finally paying more towards their mortgage, their principal, rather than interest. So you know that phrase, "I don't wanna throw money away on rent"? We might more aptly say, "I don't wanna throw money away on interest."

29. 1:07:41 – 1:14:32

    A Better Use Of Money Than Buying A House

    1. RSRamit Sethi1:07:41

    2. SBSteven Bartlett1:07:42

       So if I met a couple, I'm in a relationship, and me and my partner have managed to save, I don't know, 50K.

    3. RSRamit Sethi1:07:46

       Mm-hmm.

    4. SBSteven Bartlett1:07:47

       What is a better use of that 50K to drive a financial return?

    5. RSRamit Sethi1:07:52

       Okay. So, let's simplify the whole thing. I have a conscious spending plan. I have four numbers that couples should be talking about, okay? The first off is your fixed costs. Those should be roughly 50 to 60% of your take-home pay.

    6. SBSteven Bartlett1:08:04

       And what's a fixed cost?

    7. RSRamit Sethi1:08:05

       Fixed cost includes your housing or, uh, that could be rent, mortgage, your utilities, your car payment, any debt payment. Anything that is consistent, even groceries, that you need to live every single month.

    8. SBSteven Bartlett1:08:19

       So 50% of my monthly income goes straight to those fixed costs?

    9. RSRamit Sethi1:08:23

       Monthly take-home. Post-tax.

    10. SBSteven Bartlett1:08:25

        Post-tax.

    11. RSRamit Sethi1:08:25

        Yeah.

    12. SBSteven Bartlett1:08:25

        Post-tax, okay.

    13. RSRamit Sethi1:08:25

        Yeah. 50 to 60% is the number you wanna be targeting. Right there is, um, is the crux of why couples are stressed out about money. It's because they are spending too much on fixed costs, and within that, there's two areas they spend too much on. You know what they are? Housing is number one 'cause it's so expensive and they don't calculate. Number two is cars, usually trucks. (laughs) We love trucks, trucks and SUVs. In America, the cultural script is, "Oh, we're having a kid. We need to get a big house and a big SUV," uh, because we do. So that right there is where people get stressed out about money. Next number is your savings. This should be five to 10% minimum. This includes your emergency fund. This includes saving for a down payment, anything you're saving for money you don't need for between one to five years, basically. Okay? Next up is investments. This would be five to 10% minimum. This is where real wealth is created, and this is where couples neglect. They- they talk about saving, and they'll say, "Oh, we try to save." I don't try to brush my teeth. I don't try to save. I make it automatic. That's what I want couples to do. That's what I cover in the book. And then finally, my favorite category of all, guilt-free spending. This is going out for drinks, concerts, travel, 20 to 35% of take-home pay. That's a lot! That's a lot. If you look at it, people go, "Wow." Yes! And when you get down to that number and you're out and you're having drinks with your friends or you're out to a beautiful experience, you don't have to worry about anything else. You don't have to feel guilty or anxious because you're already handling all these other three numbers. You know you're set and you have this money set aside, and you can enjoy it guilt-free.

    14. SBSteven Bartlett1:10:17

        So this 10 p- this sort of 10% that is automatically invested, would you set up some kind of system that automatically invests it?

    15. RSRamit Sethi1:10:25

        Always, always. You should not be doing any of this manually. So your investments should be happening automatically, and for a couple, you actually get to celebrate it every month. You have a monthly money meeting where you talk about money every month. Most couples don't do this. You will now after watching this. And you talk about it, you look at how your investments are doing, you give each other a high five, a big hug, "Congratulations." And once you do this for six months, a year, you really start to see how it adds up fast.

    16. SBSteven Bartlett1:10:54

        What if your partner wants to buy a house and you don't?

    17. RSRamit Sethi1:10:57

        Ooh, that's tricky. How would you handle it?

    18. SBSteven Bartlett1:11:00

        Um, it depends on my level of conviction about the decision.

    19. RSRamit Sethi1:11:04

        Hm.

    20. SBSteven Bartlett1:11:04

        I think you've got to pick your battles in relationships. But, um, I am probably more financially aware-

    21. RSRamit Sethi1:11:11

        Mm-hmm.

    22. SBSteven Bartlett1:11:11

        ... than my partner because my brother is... he's been an investment banker for 13 years. He works for me full time.

    23. RSRamit Sethi1:11:16

        Okay.

    24. SBSteven Bartlett1:11:16

        He's my money guy.

    25. RSRamit Sethi1:11:17

        Yeah, okay. All right.

    26. SBSteven Bartlett1:11:17

        He's my older brother.

    27. RSRamit Sethi1:11:18

        What does he charge you? 1.5%?

    28. SBSteven Bartlett1:11:20

        No, nothing. Uh, he doesn't charge me a percentage of my portfolio. (laughs)

    29. RSRamit Sethi1:11:23

        Oh, my God, I'm so happy.

    30. SBSteven Bartlett1:11:23

        No, he works full time in the business, so he- he manages much of my money, but he would make the case to me of- of, uh... pretty much the case you've made.
30. 1:14:32 – 1:16:44

    Alternatives To House Buying For Investments

    1. RSRamit Sethi1:14:32

    2. SBSteven Bartlett1:14:32

       Mm-hmm. Yeah, and we're both aware. Me and my partner, we had the conversation, we're both aware that, um, this is one of the worst things we could have spent the money on. If our objective, if our KPI, our key performance indicator, was to make more money, this was a terrible decision to make.

    3. RSRamit Sethi1:14:48

       Yes.

    4. SBSteven Bartlett1:14:49

       But we're also a- we just didn't care. We thought, you know, it's- there's a lot of non-monetary things that are gonna be beneficial about this decision, and I think that's what most people don't realize actually, and I just think about my friends. They're, I think most of my friends believe that when they buy their house, they're doing so because... They don't know it. They don't know any other way to invest.

    5. RSRamit Sethi1:15:06

       Yeah. Yeah.

    6. SBSteven Bartlett1:15:07

       Society hasn't given us an alternative. So, what is the alternative?

    7. RSRamit Sethi1:15:10

       Simple, low-cost, long-term index funds are fantastic ways to invest. I'll explain what they are. The myth about investing is that you have to sit there and look at PE ratios and things like that. No. You pick often one fund. There's a simple example called a target date fund. You pick the year you're gonna retire in, like if I'm gonna retire in 2050, I pick a Vanguard 2050 fund or Fidelity or Schwab 2050 fund. All I do is literally send money every single month. I set it up so it happens automatically. It could be $50 a month, 500, 500,000 per month, and that's all I do. I just send it there. It automatically buys the, the stock market. It automatically diversifies and gets more conservative over time, and that's it. So, you know the fitness world? You've, I- I've seen you training. You- you've learned about fitness. When you first start off, so much information and so many different people giving you different pieces of advice, right? It's like, "Oh my God, how am I supposed to know? What about my genetics?" And this and that, and then over time you realize, "Oh, it's actually pretty simple once you cut through the noise." That's the same thing with money. That's the same thing with investing. You have to cut through the noise and it actually becomes shockingly simple. "Oh my God, this is the way that real wealth is created?" It's about consistent investing. It's about time. It's about low fees. That's it? And you start to wonder, "What's all this stuff that they publish all the time in these magazines and newspapers and on TikTok? It's just noise."

31. 1:16:44 – 1:22:47

    Uncovering Finances And The Shock It Can Have

    1. RSRamit Sethi1:16:44

    2. SBSteven Bartlett1:16:44

       Do you know, when you sat down with those 180 odd couples you've spoken to about money in their, in their relationship, have you not had moments where one of the partners was shocked?

    3. RSRamit Sethi1:16:53

       Always.

    4. SBSteven Bartlett1:16:54

       For better and for worse?

    5. RSRamit Sethi1:16:56

       Yeah. Yeah. Actually, yes. Um, sometimes they are shocked before they meet me because I have them prepare their document with their financials and one of 'em has never actually looked at their financials. Sometimes both, and they realize it's much worse than they thought or it's much better. Sometimes we're talking and a- one of the partners will actually talk about how they feel for the first time ever, and the other partner will be crying.

Episode duration: 1:50:01