Summary of Episode 187: “We’re worth $87M, Why are we arguing over credit card bills?” from "Money For Couples with Ramit Sethi"

Introduction

In episode 187 of "Money For Couples with Ramit Sethi," host Ramit Sethi delves into the intricate financial dynamics of a highly successful couple, David and Victoria. Despite their combined net worth of approximately $87 million, the couple grapples with financial disagreements that strain their relationship. This episode offers a candid exploration of how money psychology and separate financial management can impact even the wealthiest marriages.

Guests' Background and Financial Overview

David is a 36-year-old startup founder and CEO whose company generates $1.4 million in annual revenue. He owns a property valued at nearly $5 million and holds investments totaling $1.2 million. David's salary stands at roughly $120,000 before tax.

Victoria, aged 30, is a prominent entrepreneur running a skincare brand that produces $20 million annually. Additionally, she earns from her work as a content creator, bringing her total yearly income to around $350,000. Victoria possesses $700,000 in liquid cash and investments, with her business valued at approximately $80 million.

Current Financial Dynamics and Issues

Despite their significant incomes, David and Victoria maintain largely separate finances:

• Joint Expenses: They share a joint credit card used primarily for utilities, groceries, and fixed expenses.
• Individual Expenses: Each maintains separate checking and savings accounts, leading to frequent Venmo transactions to balance shared expenses.

Notable Quotes:

• "We feel like we're just roommates sharing joint expenses on groceries and utilities."
  — Victoria [02:46]

• "There's been times where she's requested a Venmo from me and I'm like, I don't have that in my checkings account."
  — David [03:01]

This arrangement has led to practical conflicts, such as unexpected Venmo requests and misunderstandings over credit card usage during vacations.

Notable Quotes:

• "I don't take enough time to look back on where we are and what we have achieved."
  — Victoria [16:27]

Psychological and Cultural Influences

Both David and Victoria's financial behaviors are deeply influenced by their cultural backgrounds and past experiences:

• Scarcity Mindset: Both exhibit a scarcity mindset, stemming from their upbringings and past financial struggles.

  Notable Quotes:

  • "There's definitely a scarcity mindset and some extension of frugality that was taught and that was instilled in our upbringings both together."
    — Victoria [03:39]

• Trauma and Fear: David reflects on familial traumas related to financial instability, which perpetuate his fear of wealth and influence his spending habits.

  Notable Quotes:

  • "There's always this fear that tomorrow may not come or tomorrow may not have what we have today."
    — David [03:29]

• Cultural Work Ethic: Their Korean heritage emphasizes hard work and financial prudence, contributing to their frugal behaviors and reluctance to fully embrace their wealth.

  Notable Quotes:

  • "It's my Korean DNA to torture."
    — Victoria [17:53]

Ramit Sethi’s Analysis and Feedback

Ramit identifies both psychological and systemic issues in David and Victoria's financial management:

• Psychological Barriers: Despite their wealth, they operate with a scarcity mindset, leading to unnecessary stress and conflicts.

  Notable Insight:

  • "Most people get their information and feelings about their financial Status, literally from their checking account."
    — Ramit Sethi [13:25]

• Systemic Flaws: Their financial systems resemble those of less affluent couples, with separate accounts and frequent money transfers complicating their financial harmony.

  Notable Insight:

  • "Their money dynamic is not carefully based on the most fair setup, but likely whatever they used to do years ago which leads to them transferring money back and forth."
    — Ramit Sethi [23:05]

Ramit emphasizes the importance of transforming from a transactional to a connective financial relationship to foster trust and reduce conflicts.

Moving Toward Connected Finances

Ramit provides actionable advice to help David and Victoria overhaul their financial relationship:

1. Adjusting Salary Distributions:

   • Encourages Victoria to consider increasing her salary from her business to better reflect her contributions and alleviate financial disparities.

   Notable Quotes:

   • "What I can tell you right there, that is such an interesting example because you're right there. You know that you need to make an assistant that makes like 100 to 200 a year, like full time benefits, all of it."
     — Ramit Sethi [44:45]

2. Integrating Finances:

   • Suggests moving away from a strict 50/50 split to a more proportional distribution based on income, reducing the need for frequent Venmo transactions.

   Notable Quotes:

   • "If your income is not the same. In fact, I think, Victoria, you make a lot more, right?"
     — Ramit Sethi [47:56]

3. Defining a Shared Rich Life Vision:

   • Encourages the couple to collaboratively outline their financial goals and desired lifestyle to ensure mutual understanding and alignment.

   Notable Quotes:

   • "Define what a rich life is for you together."
     — Ramit Sethi [71:21]

4. Implementing Regular Financial Meetings:

   • Recommends establishing monthly financial meetings to review their finances, fostering open communication and continuous alignment.

   Notable Quotes:

   • "Have a monthly money meeting... sit down periodically and just talk about it."
     — David [86:34]

Reactions and Transformations

David and Victoria respond positively to Ramit's advice, expressing readiness to implement changes that promote a more unified financial approach:

• David acknowledges the need to shift his mindset from individual transactions to a collective financial vision, aiming to eliminate unnecessary Venmo transfers.

  Notable Quotes:

  • "I just need to be able to get that response from her once she's been able to process it."
    — David [31:40]

• Victoria feels empowered to address her fears about wealth and is eager to align her financial behaviors with her and David's shared goals.

  Notable Quotes:

  • "I want to kind of unleash whatever restrictions or limiting beliefs that I have with my conservative spending habits."
    — Victoria [08:24]

Their transformation signifies a move towards a connective financial relationship, emphasizing trust and shared vision over individual financial autonomy.

Conclusion and Takeaways

David and Victoria's journey highlights that substantial wealth does not inherently equate to financial harmony within a marriage. Psychological barriers and cultural influences can impede effective financial management, leading to unnecessary conflicts. Ramit Sethi's guidance underscores the importance of:

• Transitioning from separate to integrated financial systems.
• Aligning financial distributions with income disparities.
• Establishing a shared vision for a rich life.
• Maintaining open and regular financial communication.

Final Thoughts:

• "This business is great, it's doing fantastic. Let's not cause anything to harm."
  — Ramit Sethi [81:28]

David and Victoria exemplify how even the wealthiest couples can benefit from reevaluating their financial dynamics to foster a healthier, more connected relationship.

Notable Quotes with Timestamps:

• "We feel like we're just roommates sharing joint expenses on groceries and utilities."
  — Victoria [02:46]

• "There's been times where she's requested a Venmo from me and I'm like, I don't have that in my checkings account."
  — David [03:01]

• "There's definitely a scarcity mindset and some extension of frugality that was taught and that was instilled in our upbringings both together."
  — Victoria [03:39]

• "There's always this fear that tomorrow may not come or tomorrow may not have what we have today."
  — David [03:29]

• "We are too successful to be allowing money to be intruding on what should be something bringing you together."
  — Ramit Sethi [33:21]

• "I don't want to feel like I'm taking advantage of my wife's success."
  — David [67:30]

• "Having a monthly money meeting can bring a lot more joy than I would have imagined."
  — Victoria [86:14]

This episode serves as a compelling reminder that financial success must be paired with effective financial management strategies to ensure that wealth enhances rather than hinders marital harmony.