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- [00:01]
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Ben Carlson
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Ramit Sethi
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Marvel Television's Wonder man and Ada episode
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Ramit Sethi
series now streaming on Disney plus a superhero remake.
- [01:38]
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Ramit Sethi
I'm gonna need you to sign this, assuming you don't have superpowers,
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I'll never work again. If anyone found out, my lips are sealed.
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Marvel Television's Wonder man all eight episodes
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Ramit Sethi
now streaming only on Disney.
- [02:00]
Ed Elson
Today's number? 170. That's the five year percentage increase in Google searches for the phrase how to looksmax. However, new geolocation data shows that the number was skewed by a large volume of searches from number one, Observatory Circle, also known as the Vice President's House.
- [02:22]
Ramit Sethi
Money markets matter.
- [02:23]
Ed Elson
If money is evil, then that building is hell.
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Ramit Sethi
The show goes on.
- [02:32]
Ed Elson
Welcome to Profg Mar Green Markets. I'm Ed elson It is May 6th. Let's check in on yesterday's market vitals. The major indices rose and The S&P 500 hit a fresh high after the US said Iran had not broken the ceasefire. Despite Monday's direct hostilities, Brent crude fell as fears that the war would reignite eased. Treasury yields fell and Finally, Samsung stock rose 5% while intel stock jumped 13% to an all time high. Those rallies came on reports that Apple might enlist the companies to build chips for its devices in the U.S. okay, what else is happening? Goldman Sachs just uncovered a concerning fact about America. In a survey, roughly 40% of households earning more than half a million dollars a year say they are living paycheck to paycheck. That is a higher share than households making between 50 and $100,000 a year. Of those households say the same. Now, there is a debate about what this stat actually means, which we will get into, but it does raise a very important question, which is how much money do you actually need to feel economically secure? So to dig into this question, we're going to do something a little different today. We're not going to focus on the news per se, but we are going to focus on this survey and we're going to speak with two really excellent guests. To break this down, we are speaking with Ben Carlson, director of Institutional Asset Management at Ritholtz Wealth Management, and also the author of the forthcoming book Risk and Reward, and also our friend Ramit Sethi, host of Netflix's how to Get Rich, bestselling author and host of the Money for Couples podcast. Ben and Ramit, thank you so much for joining me on the show here. Ben, I'm gonna start with you because I know you've written about this, you've talked about this on your own podcast. I mean, this data is just quite striking. The fact that you've got people making more than $500,000 a year, 40% of them say they're living paycheck to paycheck. I'd also add people who are making 300 to $500,000 a year, they say the same thing. 41% of them say they're living paycheck to paycheck. Really striking data. Let's just get your initial reactions.
- [04:50]
Ben Carlson
Where to begin? The personal finance people would look at this and say, see, I told you, lifestyle creep. These people, it doesn't matter what you make, it's what you keep and what you spend. But I also think that in a lot of ways, sentiment is completely broken these days and you have to watch what People do and not what they say. And I think that the idea, the definition of what paycheck to paycheck actually means for people is totally distorted depending on how much money you have and how much money you earn.
- [05:18]
Ed Elson
So I'll just go with the definition that they gave us in this survey. The definition of paycheck to paycheck according to the Goldman survey was, quote, I find it tough to make progress on any long term financial goals. Ramit, what do you make of that definition and what do you make of
- [05:36]
Ramit Sethi
the data in personal finance? There are two things you should never trust Americans about. Number one, how much do you spend on groceries? They have no clue, but they really believe they know it. And number two, the question are you living paycheck to paycheck? This question is completely absurd. Yes, I live paycheck to paycheck too. After I max out my 401k, I max out my HSA, I pay a $1250 a month payment for my F350 and put aside money for my upcoming three vacations. Absurd. Nobody knows what that actually means. And so we have, as Ben put it, we have, basically our sentiment is broken. We go by vibes. And once anybody of essentially any income level hears the word paycheck to the brain short circuits and they just go, yep, that's me too.
- [06:28]
Ed Elson
Yeah. Just looking at the. The other options that you could have picked if you were polled in this survey, there were two other options. One of them was. So the question was, how would you describe your financial situation? One, one of them was, I live paycheck to paycheck. The other was that it moderately improves each year. And the definition of that was, I am able to make some saving progress each year. And then the other option was considerably better. And the definition of that was, quote, I am able to make progress on both and long term financial goals. So that's.
- [07:02]
Ramit Sethi
That word doesn't mean anything to Americans. The word financial goals. You might as well say, how many photons are in your room right now. It's irrelevant. That's not how people operate. And the fact that the financial media continues to use words like goals. What are your goals again? The minute people hear that, they shift into this mode. Well, I probably should save more. That's not how people talk about money or think about money. The fact that we are still doing this really speaks to how out of touch the financial press and the financial industry is with the average American.
- [07:35]
Ed Elson
Ben, would you agree?
- [07:36]
Ben Carlson
Yes. I also think that there is something in the financial media that's figured out, if we put a stat out like this, the rage bait, we're going to get people really angry about it. And I think that there's something to that where they got us. Yes, yes, it's true. And I also think that there's just this idea that I think social media has a big component of this. The funny thing is, like, wealth inequality obviously is a problem for people. The top 10% controls, like 70% of the wealth in this country. If you go back to the Gilded Age, like the early 1900s, the top 5% controlled like 90% of the money. So it was. We've. Wealth inequality has always been a problem, but back then you didn't have, like, Rockefeller and Vanderbilt tweeting all day and showing their houses and showing their private jets. And so I also think that the goalposts have shifted so much with people that they don't know how to answer these things correctly because social media has, like, opened the kimono for so many people that they don't really understand what wealth means to them. Their relative basis of keeping up with the jones is so out of whack from what it was in the past.
- [08:39]
Ed Elson
Right. I think this gets to something which I'm going to kind of push back on you both, because in a lot of ways, I wonder if it doesn't matter what the definition is, because what the survey is basically telling us is that it's how people feel. And that's what we're trying to get an understanding of. How do people actually feel about their financial situation, whether or not they're doing okay? I can tell you, if you're making half a million dollars, I'm pretty sure you're doing okay. But the thing that strikes me, and it gets to your point about social media, Ben, is that it's the way people feel about that money. It's the fact that despite the fact that you are in the highest income bracket by a long shot, you still don't feel that good about it. When you're asked the question, no matter what the definition of the survey questions are, what the answers are, you're kind of just choosing the most negative one. And I guess that gets to this question of, like, is there ever an amount of money that makes you feel good or at least not bad? And this seems to tell me that for 40% of people, the answer is kind of no. What do you make of that, Ben?
- [09:48]
Ben Carlson
I'm of the opinion that financial advisors love to say, just figure out what enough means for you, and then you'll be happy for the rest of your days. And I don't think that that amount exists for any individual person or household because I think the goalposts can move and they probably should move for most people. If you make more money, you shouldn't introduce lifestyle creep. Most personal finance experts tell you, no, don't ever spend any more money, never enjoy anything. But I think you should have some lifestyle creep. And it's funny because it's probably bad at the individual level, but better for society that no one is ever really content with what they have. It's like what pushes us towards progress and innovation in these things, but it also is what makes people never satisfied. And I think once people reach their goals, if they have a goal in mind, right, they get there and then they realize like, oh man, I feel the same. I don't feel any different at all. I said, if I make half a million dollars, my life is going to be easy. I'm never gonna have to worry again. But I still have all the same worries and nothing changed.
- [10:44]
Ed Elson
Yeah, this seems to be the thing that that's my takeaway, at least from this survey. And it's honestly a little concerning. Ramit, you've consulted with lots of different households across the entire spectrum of income. Does this reflect what you see among higher earning households?
- [11:00]
Ramit Sethi
Yes, and I think it's. I'm not particularly interested in asking people how they feel about money at large in America because the answers are always wrong. Why ask a question where the answer is only going to get you bad data? And think about it. We are the product of the media that we consume. As Ben pointed out, the media loves to rile people up, get them feeling worse, and then enact whatever policies they are trying to enact. So when it comes to actual mastering your money, there's two parts you need to do. Number one, you need to know your numbers. The average American does not know their numbers. 50% of the people I speak to do not know their own household income. It's a running joke on my podcast. I will invite them on every week we look at their income. I go, cool. Did you know that number? They do not know if they don't know their income. Are we seriously expecting them to feel good about money to do Monte Carlo calculations? Absurd. The second thing they need to do beyond knowing their core four numbers is they need to master their money psychology. Unfortunately, this is not taught. It's also highly undervalued by people money psychology. No one's going out there to pay to learn how to do it. They don't think it's that important. But that's also part of the reason they feel bad about money, mostly for their entire lives.
- [12:16]
Ed Elson
Do you think that those people who are making half a million dollars a year and saying that they're paycheck to paycheck, do you think maybe they don't know what their income is? Do you think that could be it as well?
- [12:26]
Ramit Sethi
That's part of it. Again, they're no different. If you earn money, doesn't mean you know your income. But in the same way that if we ask a toddler, do you think it's fair how much candy you're allowed to eat? And they're like, no. If you ask the average person, hey, do you feel you live paycheck to paycheck just like, yes, I treat it the same, blah, blah, blah, you want more candy? Okay, say what you need to say. That doesn't mean we're gonna give you more candy. We need to, yes, take more responsibility for our own money, of course. But the average person is now being fed this machine of information that is designed to make them feel bad and keep clicking. What do we expect?
- [13:03]
Ed Elson
I guess the question then becomes like, what are we supposed to do about it? I mean, if we're living in a society where even if you make 300 to 400 to 500 plus thousand dollars a year and you still feel kind of shitty about the situation, then I feel like this society doesn't really work anymore. At least it doesn't work in the way it was supposed to. I mean, this is. We're supposed to be looking at the surveys and learning. Life gets better, you improve the more money you make. And I guess I'm starting to think, like, what are we supposed to do about this? I mean, is this a social media problem? Do we need to stop looking at social media? Do we need to stop reading these surveys? I mean, Ben, what are we supposed to, I guess, take away from this data?
- [13:52]
Ben Carlson
So in the wealth management industry, the biggest question everyone wants answered, regardless of how much money they have saved, how big their portfolio is, am I going to be okay if I make this decision? Am I going to be okay if I buy this second home, if I buy this new convertible, if I take my family on a trip around the world, whatever it is, am I going to be okay? And that's the one that's hardest to answer because you're. Everyone's dealing with the same unknown future. All the variables, what's going to happen? The stock market, what's going to happen with the next election and inflation and all these things, no one knows. And that's the hardest part is finding some. Someone else out there to make you feel comfortable enough. And I don't know if that's a spouse or a friend for some people. It's a financial advisor. But that's the thing that people have the hardest time with is. And the hard part is the more money you make, the more rich people you hang out with. So you start. You stop feeling rich anymore. Even though by any objective measure you're in the top 1% of the 1% or whatever, you still might not feel rich because, well, geez, I fly first class, but the person down the street flies private.
- [14:52]
Ed Elson
Right.
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Ben Carlson
I'm not rich. And so that's the hard part is trying to figure out how to. How to just move your goalposts a little instead of moving them a lot.
- [15:00]
Ed Elson
Yeah, it's interesting just looking at the chart, there is a sweet spot based on this data, which is $200,000 to $300,000 a year. Only 16% of those households or those people say that they are living paycheck to paycheck, which is the lowest of any group. And it makes me wonder, like, maybe there is a sweet spot. Maybe there is an amount of money where you are not really on this hedonic treadmill. You don't feel that you're so much in the rat race, but also you're comfortable enough to feel good about your situation. Maybe. I mean, Ramit, is there a sweet spot?
- [15:37]
Ramit Sethi
No.
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Ed Elson
No.
- [15:38]
Ramit Sethi
I mean, how many hugs do you need to give your partner in order to let them know that you love them? Is it 2? Is it 20? Is it 32 per day? I mean, come on. Quantifying this is totally absurd. And actually talking about these surveys is also absurd. We might as well throw out a survey that says Ramit Sethi is too handsome for the Internet. 72% of people agree. Let's discuss that. You might as well. It's actually more relevant than this. But when it comes to what are you supposed to do? Yeah, you do need to work on improving your relationship. Just today I have an episode on my podcast of a couple they. He won't buy a new office chair. He's had his chair for like 15 years. It's aching his back. She has holes in her pants. And they are so struck by ultra frugality, by scarcity. I work with them, I talk to them. There's lots of reasons they feel that way. Eventually I show them. If they stop Investing today, never add another cent. At retirement, they'll have $9 million. This is quite common. Common in the sense that almost nobody knows what they're gonna have even at age 65, which is a very simple math calculation. And it was shocking, that insight alone, that all of us spend our entire lives worrying about money, but never run a couple of basic calculations. That's just the first step. You gotta know your numbers. Then you gotta stop trying to quantify your feelings. It doesn't work. Working on your feelings directly and your relationship with money, that's the only way to actually heal it.
- [17:08]
Ben Carlson
Yeah, it is funny, Ed, your question about quantifying it. So we have, like, these different breakpoints for our firm in terms of the clients we work with. So there's the people who make. Who have less than a million dollars up to 5 million, and then there's the people who have 5 to 10 million, 10 million and up. And then like 20 million and up is ultra high net worth. And I've talked to our advisors about this, and I say, who, who are the clients who have, like, the least amount of stress? Because at a certain point, money becomes more of a responsibility than a stress. And they say the sweet spot is somewhere in, like, the 5 to $10 million range for wealth management clients. Because it's enough money where you know you're gonna be okay, but you don't have enough money where people are constantly trying to reach into your pockets and make you do something and give money away or help them out. And so we've actually talked about this. It's like, what is the least stress value? But if you talk to those people, they're not going to think that that's the hard part. They're going to say, no, no, no, no. I want to be on that next level. I want to have more responsibility. So that's, that's, that's like the really tricky part is, like, you think you have this. This narrowed down to, like, this is the. The perfect number. And then you get there and you go, no way. That's not. No, I need more. It's got to be more, right?
- [18:13]
Ed Elson
It sort of brings up the question of, like, what is even the ultimate goal when it comes to money? Because, I mean, we know how we rank different countries based on gdp, and the US Is number one. But then we also have happiness rankings. And of course, America continues to fall in those rankings. But you also bring up an interesting one, Ben, which is maybe your metric is your level of stress. Maybe that's the thing that we're trying to gauge, I guess for both of you. I'll start with you, Ramit. What is the ultimate goal when we're talking about money? What are we even trying to achieve when we talk about money?
- [18:53]
Ramit Sethi
This is the question, because the goal of money is not to save it, it's certainly not to hoard it. I believe the goal of money is to use it to live a rich life. The reason that so many people are living in a spreadsheet, comparing themselves to their neighbors is that they don't actually have a vision of a rich life. I ask them 85% plus of people who I ask that question to say the same answer to me. I want to do what I want, when I want. I go, cool, what do you want? They just blink. They've never thought about it. Working 40, 50 hours a week listening to all podcasts, never thought about what they want. And I push them. I really push them. I never accept them just saying travel. I want to know what airline seat? What are they going to be seeing? What's it going to smell like? What hotel? Who are they taking? When you start to have a beautiful, crisp vision that is perfectly unique for you, then you start to use your money in a way that lets you live, can be luxurious, it can be simple. That's up to you. But if you don't have that and you're not actually using your money for certain specific money dolls, it's just a theoretical, abstract number. And of course you never have enough.
- [20:04]
Ed Elson
Ben, do you find that with your clients? I mean, do you find this sort of dynamic of that kind of hoarding and saving, waiting for the thing, and then it's not even clear what that thing actually is.
- [20:14]
Ben Carlson
That is a problem that I never expected to happen, that you have to force people with money to spend it. One of our advisors, when I first joined the firm 10 years ago, said we have to have conversations with our clients and give them permission to spend their money and enjoy it. Take that vacation, give that money to your child so they can be better off. And you have to tell them you're going to be okay if you spend this money. Because people develop habits over 30 or 40 years and it's save, save, save, get the nest egg bigger and bigger and bigger. When it's time to turn it off and they have no more income left and to spend it down. And they see the portfolio value go down in money. Like they see their principal eroding, they can't handle it. And they. So that's actually a huge problem, which I mean, you know, first world problems, obviously, but there are a lot of baby boomers out there right now like that who can't force themselves to spend the money and they need permission to do it because they think, what if I outlive the money? What if something really bad happens and there's a market crash or whatever it is, and they need permission? And that's the hard part is you spend all your life saving and saving and saving. What's the point of delaying the gratification if you're not gonna be gratified at some point, Right?
- [21:22]
Ed Elson
Yeah. I wonder if. I mean, underspending might even be a larger problem in America than overspending.
- [21:32]
Ramit Sethi
Maybe not based on savings rates, but it is a problem nonetheless. It is a really. I. With Ben, it is a big problem and it's largely intractable in my opinion. The people who I speak to who are hardcore frugal will not spend. You know, they have a number that they will not exceed. They almost never change. It is really, really difficult. The math does not affect them. It's an identity.
- [21:57]
Ben Carlson
Yeah. You're fighting decades of habits, right?
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Ramit Sethi
Yeah. Even generations, their grandma may have said something that their mom repeated 25,000 times and then they grew up. So they have millions sometimes or hundred or just more. They need. They don't. They can't internalize that. So I think, Ed, it is a serious problem. I do think overspending is a humongous problem in America in general. But underspending is under discussed.
- [22:21]
Ed Elson
Stay tuned for more of this panel after the break. And by the way, we are heading out on tour at the end of the month. So for more info and to get tickets to a show near you, head to profgumarketstool.com.
- [22:40]
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- [23:56]
Ramit Sethi
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Ed Elson
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- [24:09]
Ramit Sethi
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- [24:17]
Ed Elson
We're back with Profg Market. Ben, you pointed out some of this data in your article about where you broke down this survey. You pointed out that the share of Americans who say their financial situation is getting worse has never been higher. It's at 55% and it's quite striking. It coincides with these consumer sentiment surveys we've just seen which just hit their lowest levels ever, or at least in the history of recording consumer sentiment. This is the University of Michigan survey. And yet when you do look at the underlying data, the situation isn't that everyone's doing great in America, but it's certainly not the case that everyone's doing worse off from a purely numbers perspective right now than they were at previous times during depressions, during recessions. I mean, we look at the unemployment rate. We do know that wages are growing. Yes, inflation is growing too, and it's very tight. But this isn't the worst time ever. But people feel that way. And so I guess the question I would pose to you, Ben, and then I'd like Ramit's perspective. What do you think has changed in the past couple of years, say? Cause that seems to be where it started to get really bad.
- [25:38]
Ben Carlson
Well, the pandemic is the biggest one, obviously, if you look at they do these annual happiness readings and from 1970 to 2020 it was up and down a little bit, but essentially the same. And then it falls off a cliff in the pandemic and it has never come back. So I actually think this is going to sound weird to say it's a sign of progress because we didn't go through world wars and depressions and such and these things that people in the past were more used to dealing with. And I think that shock to the system that we had, it's like, oh my gosh, this thing that we thought this only happened in history books. I think it's actually a sign of progress that we're like luxuries that become necessities to us. And we. We are. I don't want to say we're more pampered than the past, but it's. Things are a little easier for us than they were for previous generations. And I think that shock to the system was something that we as a society were not equipped to deal with. And now we're seeing the ramifications of that, that it's completely changed the sentiment readings and thrown them off so much that it's hard to trust them anymore.
- [26:37]
Ed Elson
Where does the pandemic sit in that? Because you're right, it does seem as though the pandemic happened. It suddenly reset expectations on everything. But I'm not sure exactly why that necessarily means that suddenly we feel worse about everything. Like on the one hand, I would also think that maybe we feel better. We went through this crazy year. We suddenly learned the beautiful nature of getting together with people. We started to appreciate things. But that's not what happened, I guess. What do you think might have happened?
- [27:07]
Ben Carlson
I think it's really hard to avoid the fire hose of negativity these days. And I'm personally a glass is half full person. And it's hard to be optimistic when there's so much negativity that surrounds everything these days. And part of it is everything is politicized and there's politics and there's social media and all these things. And I just. I'm not sure that our brains have evolved enough to deal with that. I don't think enough people have a filter in place to know what to pay attention to and what to ignore. And I think that's really, really hard on your psyche when you're constantly just bombarded with all the bad stuff that happens in the past. Bad stuff happened all the time too, but people didn't hear about it on a 247 basis with alerts from their phones all the time.
- [27:50]
Ed Elson
Right. It does seem that a lot of this has to do with social media. The fact that we're just getting sprayed the wealth porn in our faces constantly. I wonder if maybe during the pandemic we were all on our phones and maybe it reset our expectations. Ramit, have you noticed this in the people that you speak with?
- [28:08]
Ramit Sethi
Yes. And I think that there is One large cause, which is housing. Housing. Everything in America is downstream of housing because as we know in America, the number one religion is home ownership. I'm not going to get into my whole thing about is that right or wrong, but I want to say this. The housing prices are historically high. It certainly doesn't help to have a bunch of boomers out here saying, when I was young, we had a 17% interest. Yeah, your house cost 50 grand. If you run the math, it's historically expensive. And wages simply have not kept up with housing. People are mad. Although they don't understand the direct connections between Things like Prop 13 and California housing prices, they know something is wrong. It shouldn't be this hard to not only buy a house, but even rent a house. It is difficult, near impossible. In the neighborhoods that I live in, it looks like a geriatric facility because young people can't afford it. It's crazy. And we have more and more resources going to people in retirement versus young people, family formation, et cetera. So when you look at that, you go, look, this is really bad. There's no possible way for us to ever buy a house. We can barely afford to rent it. And we're working two incomes in a household. This is really difficult. So housing is a policy choice. It's not just an accident that housing is expensive. It is a policy choice that we have made to allow NIMBYs and these people who are homeowners to not allow housing to be built. That makes people mad, as it should. It's one of the reasons that I talk about not just personal responsibility, but also structural reform. And until we fix that, people are going to be rightfully pissed off.
- [29:52]
Ed Elson
Yeah.
- [29:53]
Ben Carlson
So piggybacking on that. In our own community, they're talking about having smaller classroom sizes and even doing away, having some layoffs at our local schools. We live in a pretty good school system. And I was asking the question, why is it that enrollment is down so much? Is it just a demographic problem? They say, no, people can't afford to live in this area anymore. And families who used to live here to fill the schools are not able to do that anymore. So I agree with Ramit. It's one of these things where just because of bad luck, if you didn't buy a house before 2021 and lock in the lower prices and the lower rates through no fault of your own, you're now just boxed out of it. This necessity that you have. So that piece of it. I totally understand why people are just so flummoxed by this situation. Like, I didn't. There's nothing I did to make this happen. What did I do?
- [30:38]
Ed Elson
Yeah, yeah. Just to support this point, housing prices in America rose 50% between 2020 and 2025. That is the same increase that we saw in the 16 years prior to 2020. So, I mean, I think that's certainly part of this. And, you know, it gets this thing that I often hear about my generation, Gen Z, where, you know, I'll often go to people and say that we've been kind of screwed in various ways, specifically economically. And often the response is, well, the standard of living has been raised. You can afford things, you can afford doordash, and you can, you know, Uber eats a burrito to your house. And your grandparents weren't able to do that. And this is sort of similar to the kind of the rhetoric that we heard for the millennials, which is like, all the millennials are buying their lattes and their avocado toast. Can't be that bad. But I wonder if the real problem here, the real scarcity, is that while yes, people can afford things they can't afford meaningful things, they can't afford a home, they can't afford the things they can't afford to live in a community where they feel that they can raise a family and build a real base and build a real. Build real wealth in the way that, I guess other generations did. I wonder if that is the problem, that it's this dearth of not necessarily basic necessities, but a dearth of meaning, and that's why people are so upset, I guess. Ramit, do you think that might be right?
- [32:10]
Ramit Sethi
I think there's an element of truth in that. I do think we've seen. There was a book, Bowling Alone in the early 2000s, and if you look at the examples in that book of what the worst case might be of how people spend their time alone as opposed to in churches and community groups, it's actually five times worse only 25 years later. So, yes, there is a lack of that community meaning, for sure. But we have to understand that's not just that Americans have become lazier or more entitled. That doesn't happen in 25 or 30 years. Structurally, if you cannot afford a home, you have to move further and further away. That means you're driving hours to work. That means your school's closed. That means you're taking more of your money and putting it straight into rent. Again, why? Because older, typically older homeowners are preventing any new housing from being built. So we gotta. Yes, there's probably a lack of meaning. And yeah, maybe people are spending a little bit more on doordash, which didn't exist 25 years ago. But in terms of housing, the primary thing that is driving so much of the angst around finances. These are policy choices. They're not accidental. Other countries have different policy choices and you can afford housing. So if we want to fix how people feel about money, we first and foremost have to fix housing.
- [33:31]
Ed Elson
Yeah, Ben, we'll just start to wrap up here. But for the people listening who relate to this survey data, no matter how much you make, for the people feeling like I feel kind of paycheck to paycheck, I feel like I'm not really building for my long term goals. What advice would you give them? What kind of advice do you give to your clients?
- [33:54]
Ben Carlson
Yeah, it's a combination of numbers and emotions because part of it is, as Ramit said, most people don't track this stuff. I think you have to have a good sense of what your net worth actually is. What is this income turning into for you? If you're maxing out your 401k and your HSA and your Roth IRA and you make a lot of money, then you're not really living paycheck to paycheck, you're paying yourself. So I think you have to understand, like, what is this money doing for me? Where am I at? Where am I at today? And then it gets into the emotional stuff of how am I feeling? And then really, Ramit said, like, a lot of people's goals are just out here in the clouds. You have to have an actual definition of what it is you're trying to do with your money. It's not just traveling, it's when am I gonna do this? Who are the people I'm gonna spend time with? Do I want to keep working longer? All these different things that I think people have to figure out. And obviously you have to understand the fact that your goals and desires can and will change over time. So I think you have to understand yourself and what the money emotions mean to you, because obviously it means different things to different people. Some people can be perfectly content with a much lower income. So a lot of it is like looking yourself in the mirror and thinking, what are the things that really matter to me?
- [35:02]
Ed Elson
Right, Ramit? I'll end with the same question to you.
- [35:07]
Ramit Sethi
The most boring people that I ever encounter are wealthy people who deny that they are wealthy. And I never let them get away with it. I make this.
- [35:15]
Ben Carlson
I'm middle class.
- [35:16]
Ramit Sethi
Exactly. Oh, I'm comfortable. Really. You're rich. Say it. And I make them say it on camera, too. I make them say it. Nothing more boring in America than somebody trying to play small. It's actually great to acknowledge I've worked hard, I've been lucky, I had help, and here I am, and I get to enjoy this rich life that I've created. Maybe I don't quite know what my rich life is. Okay, I'm going to embark on a journey to figure that out solo, with a partner, with my children, whatever. But to simply say I'm playing smaller than I can, that's a tragedy. If, on the other hand, you do not have enough money, if you're not secretly wealthy, then, as Ben said, you got to know your numbers. You need to know your four key numbers. You need to set aside a certain amount. We can even start at 50amonth. Start putting it aside in investments, run a calculation to see how much that will turn into. It's actually shocking how time can work on your side even if you are starting a little later in life. And that is the way that you start to make progress and then accelerate that progress.
- [36:20]
Ed Elson
Ben Carlson, director of Institutional Asset Management at Ritholtz Wealth Management, author of the new book Risk and Reward, which I believe is out next week. Is that right, Ben?
- [36:29]
Ben Carlson
Week from today?
- [36:30]
Ed Elson
Yep, week from today. All right, go get that book, Risk and Reward. And Ramit Sethi, host of Netflix's how to Get Rich, bestselling author and host of the Money for Couples podcast, which is one of my favorite podcasts. Ben and Ramit really appreciate this. Thank you for joining me.
- [36:45]
Ben Carlson
Thanks for having us.
- [36:46]
Ramit Sethi
Thank you.
- [36:51]
Ed Elson
Okay, that's it for today. We appreciate you joining us for another Prof. G Markets panel. If you have a guest that you think we should speak to, please drop us a line in the comments or email our Producer, claire@marketsrofgymedia.com We hope to hear from you. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Pat and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Profgy Markets from Profg Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.
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