Ramit Sethi: ‘We Have to Make Money Fun and Connective’

Summary

The Long View: Ramit Sethi – ‘We Have to Make Money Fun and Connective’

Episode Release Date: March 4, 2025
Host: Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar

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Introduction

In this insightful episode of The Long View, Christine Benz welcomes back renowned personal finance expert and author Ramit Sethi. Best known for his bestselling books, I Will Teach You to Be Rich and Money for Couples: No More Stress, No More Fights, Just a 10-Step Plan to Create Your Rich Life Together, Ramit delves deep into the intricate dynamics of money management within relationships. With his extensive experience as the founder of iwillteachyoutoberich.com and host of both a popular podcast and a Netflix show titled How to Get Rich, Ramit brings a wealth of knowledge to the conversation.

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1. The Intimacy and Taboo of Money Conversations

Ramit opens up about the deeply personal and often taboo nature of discussing money within romantic relationships. He emphasizes that money conversations are at the intersection of finance, psychology, and relationships, making them some of the most intimate dialogues couples can have.

Ramit Sethi [01:35]: "Money and couples is one of the most intimate, taboo topics there is, and it is the intersection of money, psychology, and relationships."

Ramit shares his own journey, highlighting the challenges he faced in aligning his financial perspectives with his wife's. This alignment became especially crucial when they decided to sign a prenup, a decision that initially seemed daunting but ultimately strengthened their financial partnership.

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2. Critical Junctures for Financial Discussions in Relationships

One of the standout insights from Ramit is the revelation that couples only have substantive money conversations about four times in their relationships. These critical junctures include:

1. Buying a House
2. Job Loss
3. Having Kids
4. Retirement Planning

Ramit Sethi [06:18]: "Couples only substantively talk about money about four times in a relationship."

Despite money being a top financial worry for Americans over 40, most couples avoid regular, meaningful discussions about their finances, leading to misunderstandings and conflicts during these pivotal moments.

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3. Trends in Money Communication: Affluent vs. Less Affluent Households

Ramit highlights a significant trend: affluent families tend to have more open and frequent money conversations compared to those from less affluent backgrounds. He attributes this disparity to the different upbringings regarding financial discussions.

Ramit Sethi [08:38]: "People who grew up in poor families, money was never talked about. Affluent families talk about money frequently."

This difference often results in affluent couples being better prepared for financial challenges and opportunities, underscoring the importance of cultivating open money dialogues regardless of one's financial status.

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4. Best Practices for Money Communication in Relationships

Ramit offers actionable strategies for couples to enhance their financial discussions:

a. Starting Positive Conversations

Ramit introduces the concept of the First Positive Money Conversation, which comprises four parts:

1. Opening Up: Acknowledge past communication issues and express the desire to improve.
2. Emotional Sharing: Discuss current feelings about money openly.
3. Vision Setting: Share how each partner wants to feel regarding finances.
4. Scheduling Future Talks: Decide on a time to continue the conversation.

Ramit Sethi [10:57]: "Money should be fun. The point of money is not to accuse each other. It's to use it to live a rich life."

By framing money conversations positively and proactively, couples can foster a healthier financial relationship.

b. Implementing the Worry Free Number

Ramit emphasizes the importance of determining a Worry Free Number—a threshold below which financial transactions won't cause stress. This concept helps couples manage small expenses without friction, allowing them to focus on more significant financial decisions together.

Ramit Sethi [34:00]: "A worry free number should necessarily change. It's a fun exercise with your partner."

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5. Gender Dynamics and Changing Financial Roles

The episode delves into the evolving landscape of financial roles within relationships, particularly as women increasingly attain higher incomes. Ramit challenges traditional notions of masculinity tied to the provider role, highlighting the identity struggles men may face when their female partners earn more.

Ramit Sethi [20:15]: "100% of the men I've spoken to define themselves as providers. When your girlfriend or your wife is earning $60,000 more than you, how do you reconcile being a provider?"

He advocates for open discussions about these identity shifts to prevent underlying tensions and ensure both partners feel valued and understood.

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6. Blending Finances: Joint and Individual Accounts

Ramit outlines a pragmatic approach to blending finances in relationships:

• Joint Account: For shared expenses like bills and household costs.
• Individual Guilt-Free Spending Accounts: Each partner maintains a separate account for personal use, free from questions or judgments.

Ramit Sethi [24:30]: "Each partner should have their own individual guilt free spending account, and it's totally up to you what you want to spend that money on."

He also addresses the issue of financial infidelity, stressing the importance of transparency and mutual respect in managing personal finances within a relationship.

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7. Shared Financial Responsibilities vs. Singular Money Managers

Ramit advises against assigning the role of the sole "money person" in a relationship. Instead, he encourages both partners to be actively involved in financial management to foster teamwork and accountability.

Ramit Sethi [28:54]: "Having a money person is a big no, no. It's a potentially catastrophic mistake."

By sharing financial responsibilities, partners can benefit from each other's strengths and maintain a balanced approach to money management.

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8. Conducting a Rich Life Review

A cornerstone of Ramit's methodology is the Rich Life Review, an annual practice where couples reflect on the past year's financial and personal experiences and set goals for the upcoming year. This review focuses on creating a vision for a "rich life" beyond mere numbers, emphasizing meaningful connections and shared aspirations.

Ramit Sethi [46:17]: "We're creating meaning in our relationship and turning numbers into a rich life."

Through activities like sharing memorable photos and discussing what to do more or less of in the coming year, couples can align their financial strategies with their life goals.

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9. Strategies for Couples with Tighter Budgets

Ramit assures that even couples with limited financial flexibility can benefit from his frameworks. By prioritizing what brings joy and adjusting other expenses, couples can optimize their budgets to enhance their quality of life without overextending their finances.

Ramit Sethi [50:52]: "Adapt the same principle and adapt it for your own situation."

He provides practical examples, such as reallocating funds from groceries or entertainment to areas that matter more to the couple, ensuring that every dollar spent aligns with their shared values and goals.

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10. Overcoming the Optimizer Mindset

Ramit addresses a common issue among financially savvy individuals: the tendency to over-optimize their finances at the expense of personal happiness. He encourages a balanced approach that prioritizes meaningful spending alongside prudent saving and investing.

Ramit Sethi [38:25]: "Optimizers can become unbearably boring and unbearably cheap. They delay happiness."

By advocating for intentional spending and focusing on what truly enriches one's life, Ramit helps listeners break free from the constraints of relentless financial optimization.

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Conclusion

Ramit Sethi's conversation on The Long View underscores the profound impact of money conversations on relationships. By fostering open, positive, and purposeful financial dialogues, couples can navigate challenges, align their visions, and cultivate a rich, fulfilling life together. Ramit's blend of personal anecdotes, practical advice, and transformative strategies provides listeners with a comprehensive roadmap to enhancing their financial partnerships.

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For further insights and resources, visit iwillteachyoutoberich.com or check out Ramit Sethi's latest book, Money for Couples.

Transcript

[Jackson Financial Representative]

At Jackson, we've created a digital retirement planning experience with you in mind. Visit Jackson.com to explore our easy to understand resources and user friendly tools that are designed to enable financial professionals and clients to plan a path to financial freedom. Jackson is short for Jackson Financial, Inc. Jackson National Life Insurance Company, Lansing, Michigan and Jackson National Life Insurance Company of New York, Purchase, New York.

[Disclosure Announcer]

Please stay tuned for important disclosure information at the conclusion of this episode.

[Christine Benz]

Hi and welcome to the Longview. I'm Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar. Today on the podcast we welcome back Ramit Sethi. Ramit is a personal finance expert and author. His latest book is called Money for Couples. No more Stress, no more fights. Just a ten step plan to create your rich life together. It's already a best seller, as was his first book, I Will Teach youh to Be Rich. Ramit is the founder of iwillteachyoutoberich.com and he's also the host of a podcast called I Will Teach youh to Be Rich, which features in depth conversations with couples about money. In addition, he hosts a Netflix show called how to Get Rich. Ramit, welcome back to the Longview.

[Ramit Sethi]

Thank you for having me.

[Christine Benz]

Well, it's great to have you here and congratulations on Money for Couples. I've noticed that this topic of helping couples do better with their money is a recurrent theme for you. It's something that you cover in your podcast cast. It's obviously the thrust of your book. What about this topic do you find so interesting?

[Ramit Sethi]

I think that Money and Couples is one of the most intimate, taboo topics there is, and it is the intersection of money, psychology and relationships. So since I've been writing about money and helping people with money for 20 years, this really goes into a much deeper level than anything I've done before. And on a personal level, I have also had my own difficult conversations with my wife and I've had to really take a hard look at my own relationship with money as we have tried to work together to create this shared vision of a rich life.

[Christine Benz]

If you don't mind if I ask, I'm just curious what have been those discussion points that have been tricky for you and your wife to navigate around money?

[Ramit Sethi]

Well, the first one was a mistake that I made. I violated my own rules from my own book. At one point when we were dating, my now wife said to me, hey, it doesn't really feel fair because you know everything about my finances and I don't really know much about yours. And it was like in a movie. I looked up. There's the horror music playing in the background. And I was like, oh, my God, I forgot about my own advice in chapter nine of I will teach you to be rich. And that very day, I was like, okay, let's look at the numbers. Let's talk about what it means. So that was a pleasant conversation. Even though I made a mistake in delaying talking about it. There were much more difficult conversations. We ended up signing a prenup. And I was the one who brought that up because of my business, which has been around for decades, and I had accumulated a portfolio and this and that. Bringing that conversation up was scary, really scary. But it went well at the beginning. Over time, it started to get harder and harder, and we found that we were speaking different languages to each other. We were looking at money differently. And fortunately, we got help. We saw a therapist. We learned some new skills. But even as we got married and brought our finances together, it hasn't been all smooth sailing. It's been challenging. And I love that. I love that this is one of the most challenging and I think important topics for people to cover. That is your relationship with money, and more importantly, your relationship with your partner and money.

[Christine Benz]

So you referenced the prenup. I'm curious. Do you recommend those for most couples, or does it depend on their assets? What does it depend on?

[Ramit Sethi]

On. Most couples don't need to get a prenup because most couples do not come to a marriage with a disproportionate amount of assets. Even when I started thinking about this and I had a bunch of friends and others who had been married, and they were all giving me different types of advice, it was unusual for me. I don't know anyone in my personal network at the time who had signed a prenup. I thought of it like so many Americans. Some asshole in the back of a limo rolls down the window, takes his top hat off and says, sinus prenup. And that's. That's not real. That's Richie Rich. And what I learned is that in any business, you have a contract. And even though in America, we love to conceptualize marriage as purely love, we should remember that that is a very recent historical phenomenon. And indeed, in a marriage, you are creating a business. You are creating the business of running a household. So for those who have a disproportionate amount of assets, maybe you have a business, maybe you have a house. As people are getting older, they may own real estate or any sort of specific assets you want to have those discussions about, hey, of course we're planning to get married. We want to stay together for the rest of our lives. But in the unfortunate circumstance, if something happens, let's talk about it now, specifically relating to premarital assets, the things that were accumulated before the marriage. And let's decide that right now at our best, so that we don't have to make those decisions. Hopefully never at our worst.

[Christine Benz]

I've heard you say that couples rarely talk about money, and when they do, it's only at a few critical junctures. Can you talk about what those are? What are those flashpoints when money discussions tend to bubble up in a marriage or in a, you know, in any sort of couple relationship?

[Ramit Sethi]

Yes. And here is something very shocking. Couples only substantively talk about money about four times in a relationship. Substantively. There's this myth that couples are talking about money all the time. No, they're not. In fact, time studies show that couples rarely talk about money. They only talk about it substantively four times. Can you guess what those times are, Christine?

[Christine Benz]

Buying a house, maybe?

[Ramit Sethi]

That's one.

[Christine Benz]

I've heard you say job loss. Like, what are we going to do for money? Because we're down in income. That's another one.

[Ramit Sethi]

Okay. Wow. That's very good. That's. You really follow my material. I am. I'm flattered because that is a very. Okay. The. The next two are kids, if they have children and retirement right around the age of 58 to 60, they start going, hey, what is this retirement thing? And they start looking into it. That's four times in an entire relationship that couples substantively actually talk about money and use real numbers. I'm not just talking about how I feel. I can't believe you put that beef jerky at the gas station. I'm not talking about that. I'm talking about substantive conversations. That is crazy. That is crazy considering that money is the biggest worry people have after the age of 40. Considering that in America we consider an existential crisis. We constantly talk about phrases like living paycheck to paycheck and credit card debt, and yet we actually don't really talk about them, and certainly not with real numbers. That is part of the reason I wrote Money for couples. Money is not meant to only be talked about walking on eggshells. Money is also not this delicate topic that we can only crack the china cabinet in very rare cases. No. Money's fun. It's fluid. We're going to make mistakes. We're going to try some stuff. We're going to use it to live our Rich life. And we need to talk about it regularly, positively, and proactively.

[Christine Benz]

So this communication thing, do you notice any trends in terms of who's more likely to talk about money? So do more affluent households talk money more, or do they maybe talk about money less?

[Ramit Sethi]

They do talk about it more. And you can see this very clearly when I speak on my podcast, I will always ask couples, what do you remember about money discussions when you were growing up? It's quite striking. You can really tell a lot. You will often find that people who grew up in poor families, money was never talked about. And if it was, it was just one phrase and one phrase alone. We can't afford it. You will find that affluent families talk about money frequently. I remember a very striking episode we had. I had a young woman, she was in her late 30s, and she was a very successful entrepreneur. She was making $200,000 per month. She was doing extraordinarily well. Her boyfriend had just left his job, started his own company, and he was making $24,000 per year. So there was a vast difference in income. Well, when I asked him, what do you remember about money discussions as a family when you were growing up? He said nothing. We didn't talk about that in our family. He had only recently learned what a Roth IRA was. Very typical. By contrast, her parents started talking about investing around the age of five. They were talking about growth. They were talking about compound interest returns. That is a systemic difference. And so frequently I will talk about how money is political. Money is political. And part of that is the socioeconomic mores that we have that we grow up with when it comes to money. So I think it's such an important topic and one that we could dive into for hours and hours.

[Christine Benz]

So I want to get into some best practices for couples around money and communication. In your book, you really walk people through how to do this, how to do this better. And one thing I picked up from that is that you want to take it slowly. And you also want to bring an aspect of like, you don't want to be too heavy about it, and you don't want to come at it from a point of conflict or sort of accusations. So maybe talk about. For couples who want to decide discuss their money, but want to keep cool heads while they do so, what should they bear in mind?

[Ramit Sethi]

Well, money should be fun. The point of money is not to accuse each other. The point of money is not even to save it. The point of money is to use it to live a rich life. So what I talk about in the book, in part is reconceptualizing our relationship with money. And then I get really specific in terms of the actual words to use. So I'll give you an example of something that a listener could use right now. I call it your first positive money conversation. And I named it specifically because most of us actually have not had a positive conversation. We only fight about it with our partner. I can't believe you spent that much at Target. And then we go to bed, sleep on opposite ends of the bed, wake up, pretend it never happened, and wait for that same fight to come up six weeks later. What a horrible way to live with money. So your first positive money conversation has four parts. And it's very quick. You go, you start, you say, look, you know what? I realize that when we talk about money, it's not really going the way I want it to. I don't think it's going the way you want it to either. It feels like we're both in our corners. We get in fights. And honestly, I feel like I might have been a little overbearing in the past and I want to change that. That's part one. You're opening up. You're telling them why you want to make a change and maybe even sharing a little vulnerability. Part two, how I feel right now, when I think about money, I feel scared, overwhelmed. I feel behind. How about you here, you're opening up more on an emotional level and you're getting your partner involved. It's not a monologue, it's a dialogue. Third, how I want to feel, I want to feel confident, I want to feel calm. I want to feel connected. How about you paint that picture? And finally, when should we talk about money next? How about next week? That's it. Give each other a big old kiss, a nice hug and call it a day. We do not have to Talk about that $32 charge on Amazon right now. We have a lifetime. What we do have to do is connect emotionally, both of us participate, set some logistics for when we talk next time, and then just give each other a big hug. That's what these conversations are about.

[Christine Benz]

So, you know, as I was listening to some of the sharing that you encourage couples to engage in, where you were urging them to, you know, kind of do a 10 year bucket list, for example, it struck me that perhaps couples are under communicating about kind of big picture happy visions for their lives, period. That they're not just under communicating about money, but they're also just not really envisioning their futures together. Do you Find that, that it actually goes deeper than money. Some of this under communication.

[Ramit Sethi]

Always. Always. One of the great honors I have is having couples come on my podcast every single week. We spent hours and hours together and they share everything. They share real numbers. They share things that they wouldn't tell their best friends. And that's because they trust me. I'm there to help them, not to judge them. You will find some really shocking things. Like, for example, I've spoken to many men, and after speaking to them in, in their relationship for one hour, two hours, three hours, I'll say, you know, I noticed something. I noticed you haven't asked your wife a single question today. And he'll just kind of stare at me. I go, do you ever ask her questions? I'll think about it. He'll go, no. Isn't that striking? Isn't that deep that this is not just one couple or one person? This happens repeatedly in a relationship. This is a example of gendered behavior. There's so many other types of patterns. I see. He simply will not ask her a question about anything. So what I have discovered with couples, specifically as it relates to money, is most couples treat money like they are driving in the fog, only able to see 30ft ahead. We focus on this month. We derive most of our information and feelings about our finances from what's in our checking account. We're routinely surprised by how much our holiday gifts cost us, even though it happens every single year. So why is this? Why are we operating like this? Why are we surprised? Are we clueless? Are we dumb? No. We simply live month to month. Few of us even plan six months ahead, much less a year or 30 years ahead. And this is what the financial industry does not understand. They constantly use language that simply does not match how human beings operate. They'll what are your financial goals? Well, that's not how people think about stuff. So if you ask that question, they're going to give you some made up answer. Well, I think we'd like to retire at some point. I don't know. No, you're asking the wrong question. You've already activated a bad answer because of your question. This is where the financial industry could really understand people on a deeper level and ask better questions. For example, planning ahead for something you don't like is a double whammy. It's like asking someone to plan ahead for a root canal. Hey, when are you planning that root Canal? In 2060? Why would I? I hate root canals and I certainly hate planning for one 30 years from now. So this is why we have to make money fun and connective and actually give people permission to spend on the things you love. Because again, the point of money is not to save it, it's not even to invest it. It is to use it to live a rich life. Yes, you should invest, but if you start off by telling people, oh, you're so bad, your IRA isn't funded enough, they're going to check out right away.

[Christine Benz]

So is part of the issue too that you know, we're asking 25 year olds to think about their retirement. They don't want to think about when they are 65, they don't want to envision their older selves. Is that part of it as well that, you know, that's what makes it not fun if we're telling people to look that far into the future.

[Ramit Sethi]

I started my business. I will teach you to be rich. When I was in college, I started from my door, literally from my dorm room. Do you know how many financial professionals I saw giving talks where they were literally talking about estate planning to college kids? What's an estate? I just want tequila this Tuesday. What are you talking about? And going and Talking to these 30 year olds now and saying, oh, let's talk about real estate. Get a clue. Interest rates are at 7 plus percent. You're talking about buying a house. How about talking about meeting them where they are? Hey, what's important to you? What do you, oh, you love going out with your friends, you love traveling. Let's start there. Let's talk about that for 10 minutes. I'd love to find a way to help you travel more, get them engaged. When I do this with couples, with individuals, and I'm like, hey, tell me where you like, you like to eat. And they kind of look down, they're a little embarrassed. Oh, I don't know. You know, sometimes I eat out occasionally. Come on, tell me. Here's where I eat. What do you like? They tell me someplace I go. What do you order there? I'm genuinely curious. You. Oh, you like to buy clothes. What kind of clothes? I love clothes. Oh, I shop at this place. What about you? I'm talking. And they realize no one has ever asked them about what they love to spend money on in a positive way. So we have to meet people where they are. They don't care about estate planning when they're 22, nor should they. That's not in the top 10 things they need to be concerned with. So in the financial industry, we need to do a much better job of meeting People where they are. I try to model that every single week on my podcast, on my Netflix show, et cetera. And we also need to get genuinely curious and less judgmental. If somebody tells me they want to buy a thousand dollar cashmere coat, I go, amazing. That must feel so good to put it on. Let's talk about your numbers. Let's see if we can help you get another beautiful coat. And they love somebody who accepts them and then will challenge them to create their own vision of a rich life.

[Christine Benz]

I want to follow up on the gender thing because you discussed that couple with the income discrepancy where she was earning a lot more than he was. And you note in the book that some men are kind of hung up on being providers. Yet when we look at the data, we see that women are really gaining ground on men in terms of income attainment. So maybe you can talk about some of the problems that arise in this instance and also how you help couples troubleshoot that where there is an income gap.

[Ramit Sethi]

Yes, great question. Can I gently push back on the language you used?

[Christine Benz]

Sure.

[Ramit Sethi]

So you said men are hung up on being providers. Men are not hung up on being providers. To put it quite simply, 100% of the men I've spoken to define themselves as providers. They're not hung up on it is their identity. And that is really important because sometimes in relationships, women earn more. Fantastic. I love it. This is happening more and more frequently. Well, guess what happens to the financial dynamics and relationship dynamics? I will ask the gentleman in that relationship, I'll say, how do you define yourself when it comes to me? Oh, provider, always. I already know what he's going to say. When I ask, I say, well, tell me something. How do you reconcile being a provider while your girlfriend or your wife is earning $60,000 more than you? And they look completely dumbfounded. They didn't realize that the source of their conflict was not how much somebody spent on gas last month, but rather an identity issue. Because if you are not a provider for American men, who are you? They don't know. There's been very few models of that shown. And I think this is one of the hottest and most interesting topics, which is identities are changing. They have to, by nature of educational metrics, income by gender, especially in big cities, things are dramatically changing and very quickly. So we need to start talking about what that means for our identities because it's not the 1950s anymore.

[Christine Benz]

Yeah, I've known couples where the wife has earned more and yet she has been the one to step out of the workforce or to, you know, reduce work to care for children. And sometimes it's because she sort of has the more natural affinity with their kids or she's better at being with their kids. But it's interesting to me that sometimes couples make that choice to kind of conform with the cultural norms where he's gotta be the provider. And if someone is going to be full time childcare provider, it's often. And the, the female partner.

[Ramit Sethi]

Yes. Yeah. And I don't mind if a couple, it's. First of all, it's not my place to judge how any couple operates. As long as it's fair and they, they like it. Fantastic. But it's so interesting that we will often make some of our biggest life decisions without really examining them. Like as an example, when people get married, they rarely talk about money. Rarely. This is shocking to people, especially in the financial industry. What do you mean they don't talk about it? No, they don't talk about money. In fact, when they buy a house, over 90% of people do not even run a basic calculation for costs. Basic buy versus rent. They don't understand their phantom costs, they don't look at numbers. They effectively lick their finger and stick it in the air and say, sounds good, we should buy a house. I'm like, that's the biggest purchase of your life. What we got to run one calculation you could do it on for free online, but that's just simply not how we think. Same for childcare, same for these gender based roles, which is, look, if you choose to have a traditional relationship, fantastic, great. But you've got to talk about it. You've got to really examine this issue before you make a decision that is often very difficult to change later on. That's why I do. What I do is I want people to deeply examine what their rich life is. It's up to you to decide what it is. If you want to travel three months a year, great. You want to have six kids, amazing. It's totally up to you. But go deep, examine it, really think hard and design your rich life.

[Christine Benz]

I wanted to ask about the business of blending finances. I think you're kind of on the team where you think that people should coordinate and share their financial resources rather than each having their own separate accounts. But maybe you can talk about what you think are best practices for couples there.

[Ramit Sethi]

For married couples, the simplest way to set money up is to have everything blended, meaning money is shared in a joint account. But I will add a couple of wrinkles each couple, each individual in that Relationship should have an individual guilt free spending account, each partner. And in that account it's totally up to you what you want to spend that money on. It's no questions asked. It could be self care, it could be a guy's trip, it could be any beautiful clothes, whatever. It's totally up to you. And your partner really has no say in it because you agreed on your joint expenses and you each have your own individual money. I will also add that I addressed something which I think is a little bit controversial, which is the history of secret accounts. And there are lots of political reasons for this. We should remember that women only recently in living history got the ability to open up their own accounts. Many young men don't know the history of that. It's really important to know. And so there's a history of often having a little bit of money put aside, often under the mattress or in a secret account. Now I will tell you, I believe in each partner having an individual account that only they have access to. For example, my wife has an account that only she has access to and I think that's the right thing. It's up to her how she wants to spend or save that money. I'll never ask a question about it. But those accounts should not be secret because in a relationship, financial infidelity, it is devastating. Finances are one of the most intimate things that exist in a relationship. So we can protect ourselves, we can honor each other having their own autonomy in a relationship, which I think is a great thing, but we should also be transparent about it and talk about it.

[Jackson Financial Representative]

At Jackson, we've created a digital retirement planning experience with you in mind. Visit Jackson.com to explore our easy to understand resources and user friendly tools that are designed to enable financial professionals and clients to plan a path to financial freedom. Jackson is short for Jackson Financial Incorporated, Jackson National Life Insurance Co. Lansing, Michigan and Jackson National Life Insurance Co. Of New York Purchase, New York.

[Christine Benz]

So could someone forego that individual account? So say you have a, and I guess I'm asking for a friend here a little bit. But say you have a relationship where you everything's joint, always has been. But I do feel a lot of latitude to spend on what I need and want to spend on and I think my husband does the same. Is that okay? Where it's all just coming out of the same account and we each have free reign to do what we want and there's enough trust there?

[Ramit Sethi]

I think it's okay. Again, I am not here to dictate how any relationship operates. I'm here to show you what I've learned in terms of best practices. Speaking to lots of people over 20 years, I think there are certain things to consider. This is what I mean by doing a deep examination of big decisions. So there are little things, like if I want to buy a gift for my wife or my husband, where's that money coming from? That's a minor thing. Fine. Maybe I want to have a little bit to surprise him or her. But then there are more serious questions. Right now, everything's great in the relationship. Maybe we've been married 25 years. But what if just that 0.1% chance something bad happens? What if there's a separation? What if there's financial abuse or other kinds of abuse? You know, my mom has one of those things she bought from Ross. It's hanging on the wall, a bunch of quotes. It says, trust in God, but lock your car. And it's a good reminder that, of course I trust my wife. Of course, and my wife trusts me. We love each other always. Yes. Every couple also wants to have that 0.1% where you go, hey, what if something just awful that we can't even fathom happened? Let's just put a little bit of protection into place. And to have a simple little individual account where you have some of your own money under your own name, I think is a very prudent decision for most people.

[Christine Benz]

I wanted to ask about another thing that you say, which is this whole business of one partner being the money person in the relationship is not a great model. So maybe you can talk about that, because I do think that's very common for couples when they gather to sort of determine that one person's going to be in charge of all the money matters. Why is that not a great idea?

[Ramit Sethi]

Many couples really slide into their financial arrangements with each other. Like I said, most couples don't talk about money substantively. So it's quite rare that a new couple would sit down and say, hey, let's gather all of our information and let's create our shared vision and our philosophy on money. No, it's much more likely that one person comes with these five accounts, the other has these four accounts. They sort of combine it, but not really, and it's a little sloppy. What you will find in almost every couple is that there is a money person. In my opinion, this is a big no, no. It's a huge mistake. It's tempting, but it is a potentially catastrophic mistake. Here's the dynamic. We intuitively divide up responsibilities in a relationship. One Person empties the dishwasher, the other mows the lawn. I get that. But money is unlike any of those things. Money is much more similar to parenting. It encompasses every part of of life. And you would rarely see a couple, especially these days, who says, like, oh, he does the parenting or she does the parenting. No, it's like, right, we both do it. We talk about it every day. And that is the same with money. So that's the philosophy. But then there's also the pragmatic reasons. When my wife and I started seriously talking about money would have been really easy for me to become the money person. This is what I do for a living. I'm good at it. But I insisted that we both participate. One, I want her to know everything about money because one day I'm getting hit by a bus. Last thing I want is Goldman Sachs Wealth Advisors calling her up like the vultures they are and saying, hey, sign up for our 1.5% AUM garbage service. No, thank you. That's number one. Number two, I need a second set of eyes. I don't always make the best decisions. I need a partner in this. Somebody who we can check each other, we can ask each other good questions. And then third, honestly, it's just more fun. It's more fun to be doing this together, to create a vision, to talk about it like we just did in our annual Rich Life Review, where we plan out what we're going to do next year, where we're going to spend more and less, where we're going to go. Those can't be done. If you have a quote money person, you've both gotta be active, you've both gotta know at least a few key numbers, and you've both gotta have some skin in the game.

[Christine Benz]

So I want to ask about that Rich Life Review, but before we do that, I'd like to get a sense of. So when you decided to read your wife into whatever you were doing with your portfolio or anything, what steps did you take? Like, what's the bare minimum the disinterested person needs to know about the couple's financial affairs for that to be adequate?

[Ramit Sethi]

I like the question because it's very realistic. It's like, look, some people are just not into this.

[Christine Benz]

It's true.

[Ramit Sethi]

So what's the least. Yeah, let me tell you the answer and then let me tell you why I think that I can get anybody interested in finances. At least that's my goal. So the bare minimum that somebody needs to know in a relationship about money would be Net worth, four key numbers, which are your fixed cost percentage, I typically recommend it's 50 to 60% of take home pay. Your savings rate, I typically recommend 5 to 10%, maybe a little more. Your investment rate, typically recommend 5 to 10%, although more is better, especially because that's where the real wealth is created. And finally, your guilt free spending percentage, which I typically recommend be 20 to 35% of take home pay. The final thing they've got to do is they've got to own at least one number in the relationship. What that means is maybe they're in charge of keeping groceries below 800 bucks a month, or maybe it's they've got to make sure that total travel per year is less than 2500 a year. Regardless, whatever it is, they own a number which provides them skin in the game. So those key things, net worth, four key numbers and own at least one number, that is the bare minimum.

[Christine Benz]

So you referenced this guilt free number and you've also talked about kind of a guilt free spending amount that you know you're not going to sweat it if it's something that falls below that threshold. I think that's such a helpful concept. I'm wondering if you can flesh that out a little bit more.

[Ramit Sethi]

I call it a worry free number. And what I find a lot. I speak to a lot of wealthy people on my podcast who have millions of dollars. They've accumulated it, invested well, and yet they struggle to spend it. They really struggle. And this is becoming a bigger and bigger topic in the financial communities. I think it's a real topic. I take it very seriously, even though I think in the mass market it's kind of like boo hoo rich people, where no, it's a real topic. Because a lot of people will end up in this situation, especially people who are listening right now. They're going to end up with more money than they ever thought. And most people in America have not built the skill of spending money. Think about it. Everybody talks about how to save money. Almost nobody teaches you how to spend it meaningfully. So three core skills when it comes to money. Earning money, managing money and spending money meaningfully. Which of those is the most neglected? I argue it's the third. And that is why I talk extensively about a rich life. How to decide what your money dials or those important things are to you. I give people examples of how I spend extravagantly on certain things and I cut costs mercilessly on others. So here's a little tactic that everybody can use right now. It's called a worry free number. And it means we are not going to worry about things below this number. So imagine when you were 17 years old, it was like 50 to 99 cents for a pack of gum. You know, you're in the grocery store line, you see a pack of gum, you grab it, done. It doesn't affect you at all. 50 cents, who cares? A dollar, no big deal. The problem is that as we get older and wealthier, we don't actually adjust that number. So you still, you'll hear literal multimillionaires obsessing over the price of blueberries. It's crazy. Rich people are obsessed with berries and how much they cost. I'm like, are we seriously talking about this right now? I can calculate how much we just how much you made in the last 45 seconds. And they're telling me, I opened up two spreadsheets. I have a macro set up that automatically draws in and uses AI. I go, stop talking about this. I don't want to hear about you optimizing a price of bears. You're wasting my time. So a worry free number should necessarily change. And this is a fun exercise with your partner. You go, hey, what's a number where anything below it. We're just, we're not going to worry about it anymore. It's not going to affect us. If you're not sure what the number is, pick 20 bucks. So anything below $20, it's fine. Now. I know what you're thinking. I know the people listening, they go, oh, ramit, are you saying I can just spend $20 800 times a month? And I'm like, all right, you freaking optimizer. It's interesting that hyper frugal people always assume the worst about spending. Like, you think somebody who's had a 45 savings rate for the last 35 years is suddenly going to trip and fall and start dropping $6,000 a month on eating out? It's never going to happen. You'd be lucky if you can splurge for a cheesecake for dessert. So it's time to really relax if you can afford it and pick a number that's appropriate for your financial situation. Try it out for three months, set a calendar reminder. If you don't like it, you can adjust it down to 18, or maybe you can adjust it up to 50. It's up to you. My number is considerably higher than that and it gives me freedom and flexibility to spend on the things I love. And I hyper focus on big purchases like a house, a car, those type of things, but something that's 20 bucks in my financial situation, it does not make a material difference. I would challenge you to find your worry free number.

[Christine Benz]

So a related problem for people who are kind of in that optimizer mindset is I find people often seem to kind of move the goal posts on themselves in terms of how much they need to save to be happy with themselves, to maybe give themselves permission to cut back at work or whatever. Do you find that and do you have any tips to share on that front to kind of find enough, for lack of a better term? Because that seems like such a struggle.

[Ramit Sethi]

Yes. The entire financial industry basically wears the same glasses, the same lenses. And that lens is they look at the world through the lens of numbers. They really think that happiness is found in a spreadsheet. Ooh, if I get this much, then using the 4% rule, it will allow me a safe withdrawal rate. But I don't know. That's so aggressive. Maybe I'll make it 3.5%. Like, stop talking about numbers. You've run this Monte Carlo calculation 650,000 times. Maybe happiness is not found in Excel. Maybe, just maybe, I'm crazy, maybe it's not. So when people say what's enough? What's happened is they've, especially people in the financial industry, they've typically gone down the rabbit hole of becoming knowledgeable about money. They subscribe to 48 fire subreddits and forums like their entire ecosystem is full of this. And I don't mind. I love a good optimization. I like high savings rates. It's all great. It's great. But we have to remember that at a certain point, we won. We won the game. And it's more important to turn the page and create a new chapter of a rich life. To put it bluntly, running another calculation is probably not going to change your life. If you're listening to this podcast, I'm going to tell you right now, you would get more benefit out of giving yourself a hundred dollars a month. Take a friend out, go eat lunch, treat them, and set up a standing recurring lunch with your friend. You would get more benefit out of that than optimizing your freaking asset allocation. So I'm passionate about this, Christine, because I am an optimizer. I like optimizing. Left to my own devices, I wouldn't even be talking to you right now. I'd be in a spreadsheet. I love it. Let's calculate some shit. But what I've learned is that taken to a logical extreme, optimizers can Become unbearably boring and unbearably cheap. They look at the world through a set of lenses that focuses on cost and cost alone. They delay happiness, thinking, oh, one day I'll do what I really want to do, only to arrive at that number or that age. Having handily exceeded their goals, realizing they actually have no skills to spend money meaningfully, they have deteriorated in their ability to build hobbies, to spend it, to even treat other people. Because they are constantly looking at the cost and telling themselves, you know, that $86 dinner, we could invest it and given 25 years and a 7% real return rate would actually compound and turn into $350. Nobody wants to be around that cheap person. Stop it. Live a rich life. Yeah, save your money. But also you gotta remember to spend it. Spend it on the things you love and the people you love.

[Christine Benz]

This is a common flashpoint for couples and money, it seems, is that when they have these conflicting money types, they can run into trouble. So if that optimizer slash, you know, tightwad partners up with someone who has more of an abundance mindset or is a little more of a spendthrift, is that the common couple money discrepancy that you've encountered? Where you got one sort of live for today type person and the other is more into deferred gratification and investing?

[Ramit Sethi]

You know, it's interesting. That's a common American trope, and it actually is a very gendered American trope. Just tell me how familiar this sounds. Christine, She's a spender, I'm a saver.

[Christine Benz]

Yep.

[Ramit Sethi]

Or I make it, she spends it. It. I hate those phrases. I hate them. They are incredibly gendered, always against women. They strip her of any agency or sophistication. What is she just spending money blindly? She doesn't know anything about finances. And it assumes that earning money is the ultimate valor in a relationship. Okay, we gotta, we gotta change these things. I don't actually find that there are recurring patterns of money types that are attracted to each other. I don't find that. I do find that of the four money types, avoider is the most common by far. So I'll often see two avoiders. It's very common. I'll often see an avoider and a worrier. That's very common. And the real magic is in recognizing your own money type, recognizing your partner's money type, and then realizing you have the freedom to create a brand new shared vision together. One technique I love to give couples is to say, in our family, we dot, dot Dot. So, for example, a lot of parents will say to their kids, in our family, we clean our dishes before we go to bed. That's creating a really healthy culture. Oh, we clean our dishes. I love that. But we don't say the same about money. Last night I was speaking to a couple and they have, you know, pretty good amount in savings, but they have $2,000 of credit card debt at a very high income. I said, why do you have credit card debt? Well, we went on this trip and blah, blah, blah. I said, you know, I want you to create a culture in your household. Here's a suggestion. In our family, we never have credit card debt. That is so beautiful. And you can write these down. And soon you actually start to create this beautiful, harmonious culture that you start to live. So I think the money types are very valuable. I don't find any patterns in them. But I do think that when you understand yourself, your partner's money type, then you can start to create a vision for the two of you.

[Christine Benz]

So if one partner does have healthier financial habits, like objectively is, you know, happier with money, does a better, better job managing it, and then maybe you have the other partner who has less sort of benevolent traits, who struggles with money, is it possible for the couple together to rise to the best practices of the financially well partner? Have you seen that?

[Ramit Sethi]

Yes, yes, yes. And part of this is structural. It is setting up accounts, right? So that, for example, the person who likes to spend more has his or her own account guilt free, spending money. Nobody's going to ask any questions. Go ahead, do the thing you love. Here you go. No one's going to question you about it. That's structural. Part of it is also philosophical. What is money for? Again, in most couples, money is simply what is in the checking account. Money is seen as a necessary evil and obligation. The way people talk about is, I guess we need to talk about our bills. And I, I just don't resonate with that at all. You know, when you see money, you see a bunch of bills. When I see money, I see an amazing family trip to Disneyland, a beautiful jacket, or the ability to even pick up your kids from school every day. So we gotta communicate correctly and we have to do these two parts, the structural part and the philosophical part. If you can do that and connect with your partner, which is why I wrote Money for Couples. Yeah. You will often see that partner rise up to an amazing level so that the two of you are operating as true teammates.

[Christine Benz]

So you mentioned this rich life review that you and your wife do talk about what goes on in that review. It sounds like you do it annually and talk about the ground you cover in that conversation.

[Ramit Sethi]

Okay, this is one of my favorite things to do of all. Let me first give you an overview of how often I suggest couples talk about money. So Rich Life Review typically happens in December or January. That's once. The next is a monthly money meeting. I have the actual agenda in Money for couples. What you say, what you do, what you're tracking. It's very quick. You just touch base, update, discuss before things turn into a bigger fight. Have a good time, say I love you, and call it a day. And then at six months, you just check in, hey, how are we doing? According to our plan, we still have six more months. If we need to change something. That's it. So annual, monthly, and then six months. And these are quick meetings. The annual Rich Life Review, which my wife and I just did. I love it. So we give ourselves a lot of time. We'll talk for an hour or two, and then we'll pause and we'll do another session, another day. Typically, we'll go for like, like five, six days. We spread it out. We're in no rush. The ultimate luxury is time. So we give ourselves time. And typically we try to find an something that is expansive, inspirational for us to sit in and have a nice conversation. What we did this year was something really fun. We pulled out our phones and we each found 20 of the most memorable photos from last year. And we sat next to each other and we texted it to each other and we talked about it. It. I love this. We had some photos that were not all happy because life isn't always happy. And we talked about that too. And we really remembered what happened. And what I loved about that exercise was we're just connecting on a deeper level. We're smiling as we go through our memories. We're hearing memories that I didn't even know that my wife found meaningful. And I didn't even know we had that photo. And I actually realized from pulling my own photos that of the 20, 18 of them were friends and family. Wow. That's a big clue for the next part of the annual Rich Life Review, which is, what do we want to do more of next year? And what do we want to do less of? More of might be time with friends and family. It might be couples dinners every other week. It might be take the kids every Saturday and go to the park, whatever. What do I want to do less of? It could be eat out on stuff that's just mindless. It might be spend more money on this car. We don't even like it. And on and on and on. I came up with some new questions this year, which we did next. I said, what if this year, this coming year was incredibly luxurious? And we just kind of bantered. We came up with some ideas. What if it was incredibly generous? What would we do? Would we increase our tips? Would we give more to charity? What if it was incredibly fun? What if it was incredibly relational? And what if it was incredibly adventurous? So you can see we're getting the juices flowing. Notice we have not looked at our freaking term life insurance policy. We haven't looked at our portfolio. Oh, what does Vanguard say relative to the benchmark? No. Too many couples are jumping right into these inscrutable numbers that nobody understands. Oh, I don't know what's in our checking account. Did you link this thing? You already lost the game because you're way down in the weeds. We're up here at the visionary level. What do we want? What do we want to do more of, less of what would make this year magical? And it could be as simple, by the way, as I want an extra iPhone charger in the kitchen, because that would be amazing to not have to go back to the bedroom to get it every morning. Okay, let's do it. Finally, we get to the numbers, and that is when we take a look at what we projected for the year. Were we over? Were we under? What do we need to change next year? Do we need to add more to a certain category? Do we need to cut back on certain things? And how do we want to allocate our money for the coming year? That is how you start to get above the month to month cycle. It's also so important to get above the numbers themselves. We're creating meaning in our relationship and turning numbers into a rich life.

[Christine Benz]

So what about for couples with tighter budgets where attending to the household's ongoing obligations is consuming most of their income? What are your recommendations there? Can they go through this same process and at. At sort of a smaller scale, how would you suggest they operate?

[Ramit Sethi]

Yeah, absolutely. The principle is exactly the same. So, you know, one couple who has a huge surplus of money, they might say, you know, I really like to travel for six weeks next year. Okay, well, a couple who doesn't have that much money is not going to travel that much, but they certainly are still going to do the same principle, which is what would make next year magical? We always got to start there and it might mean that when I go to the grocery store, I don't want to have to look at the prices. Okay, that's amazing. How much? Give me a sense. If you were to go to the grocery store and not shop by price, but simply shop by what you wanted to get for our family, how much more do you think it would be? Notice that we are. We're talking about it. Notice that the partner is meeting the first partner where they are. They're saying, hey, let's. I'll play along. Tell me right now, it looks like we spend 750amonth on groceries. If you were able to loosen up a little bit, get what you wanted without looking at price, how much would it cost? Ballpark it. 900. Okay, amazing. So you're saying your rich life next year would be 150amonth extra on groceries? I'm giving an example. It could be going to the movies. It could be anything. Let's now try to work that out. We can use the CEO strategy. We can cut costs in certain other areas. We can earn more, which is something that is quite often neglected. We can also optimize our spending by doing things like renegotiating our interest rates on credit card debt. Yes, that actually happens. Renegotiating rent. Yes, that actually happens. Looking at our subscriptions, do we really need to be paying this much? Can we downgrade? And on and on and on. So there's so many ways you can take the same principle and adapt. Adapt it for your own situation.

[Christine Benz]

Well, Ramit, congratulations again on Money for Couples. I think it's a great and super helpful book. I always love talking to you. Thank you so much for taking time out of your schedule to be here.

[Ramit Sethi]

Thank you. Christine.

[Christine Benz]

Thank you for joining us on the Longview. If you could please take a moment to subscribe to and rate the podcast on Apple, Spotify or wherever you get your podcasts. You can follow me on social media, hristinebenz on X or hristinebenz on LinkedIn. George Cassidy is our engineer for the podcast and Carrie Grecick produces the show Notes each week. Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email [e-mail] until next time. Thanks for joining us.

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