Ramit:

Your future is together. It's not separate. And that was what my wife and I talked about a lot. Our future is together. Of course we have some premarital assets and all that stuff, yes, but our future, the stuff that I get excited about is not me going on some solo trip. It's us, us traveling, us, eating us, seeing us, spending time with family. That's our future.

Katie:

I last spoke with Ramit Sethi on the show in June 2023, and it was one of my favorite interviews that I've ever done. His bestseller, I Will Teach You To Be Rich, was one of the most influential books I read in the beginning of my financial journey. So when I got my hands on an advanced copy of his new book, Money for Couples, I wanted to bring him back to talk about how couples can manage their finances together in a way that actually makes their relationship stronger.

So welcome back to The Money with Katie Show, where this is a topic that I have instincts about having navigated a marriage with finances myself, concepts of a plan as it were. But I am by no means an expert.

[Audio clip]:

Do you have an actual plan at this point? Just a yes or no. You still do not have a plan.

I have concepts of a plan.

Katie:

Those who have followed Ramit's work over the last decade know that he's gone deep in the psychology of money with respect to relationships specifically. This is a challenging topic because half this stuff, honestly maybe more than half, feels less like money advice and more like relationship advice. It's the study of how our personal complex hangups interact with or are triggered by our partner’s. And it's true. If you aren't having regular positive conversations about money with your partner, then it means the only time you're going to talk to them about it is when something is going so wrong that you have no other choice. So bearing that in mind, it's no wonder many couples assume discussing money is tantamount to arguing.

Now usually this manifests as one partner becoming the de facto “money person” in the couple. But as Ramit says towards the beginning of the book, money isn't like the chore of emptying the dishwasher. It's more analogous to parenting. One partner isn't the parenting person, right? You don't have the parenting conversation. It's a flowing, evolving part of any healthy relationship and it can also reveal areas that need work.

I read a piece a months ago from Lyz Lenz that I found myself thinking about a lot as I read this book. It was about the insidious way that a lot of personal finance advice for families ultimately amounts to creating more unpaid domestic labor for women. Here's an excerpt: “For a long time I was married to a person who followed Dave Ramsey's Financial Peace plan. And let me tell you, I know that advice firsthand stop going out to eat and pay less for non-essentials mean more work for the wife because who do you think is cooking more couponing, more stretching the shampoo and going with less? Dave Ramsey thinks haircuts and makeup are non-essentials. And who does this hurt the most? Whose labor is not being valued here when you have two cars and sell one who has to do the extra running around and mental load of planning to make sure everyone gets where they need to go? Beware the financial gurus who build their empires on the backs of the uncompensated labor of women.”

And I will say there is a specific anecdote in Ramit's book, I'm going to ask him about it when we talk that addresses the way in which the dynamics that Lyz is describing here when not acknowledged directly can manifest as money fights and overspending on the surface. And he joins me today to talk about how we can live rich lives with our partners and make money a source of closeness and teamwork, not division.

So Ramit, welcome to the show. Before I read Money for Couples, I don't think I had an adequate appreciation for how much you love systems or that you consider yourself such an optimizer. There is this passage in the book where you basically fantasize about how you would make the airport run more efficiently. And I couldn't help but think, well, I was reading it that it felt almost at odds in some ways with your approach to that higher level four part Conscious Spending Plan. We'll get into that a little bit later in this conversation, but the long and short of it is that the conscious spending plan does not obsess over optimizing every little thing.

So I want to start today with getting your advice for the other optimizers in the audience and their relationships because I have a feeling that there are a lot of people who listen to shows like this one who skew in that direction of being the optimizer. So what do you tell the optimizers who might be driving their partners crazy?

Ramit:

Well, I know a lot of these optimizer freaks because I was one…and I am one. You can't take it out of me. So optimizers love to plan for the future. It's usually gotten them some success. Me being an optimizer helped me become successful. I started investing as a teenager. I planned for my honeymoon and wedding before I ever met wife. I had a subs savings account set up. So that part is good, but the problem is optimizers can take it too far and frankly, a lot of them become really boring.

They suck the joy out of life because they only look at the world as a series of costs and numbers and that's no fun. It's especially not fun once you have accumulated a lot of money and you are still playing the same optimization game. I just spoke to a couple that said multimillionaire couple and they were telling me about their travel and the way they talked about it was, of course we only travel where we have points of course, and then dah, dah, dah. I said, wait a second. You only travel where you have points. Where'd that come from? And that is a relic of being an optimizer. It actually limits your scope on the entire world.

Of course, I don't need to tell everybody here that if you are married to an optimizer, they often become unbearably cheap over time. So I say all this because I have a lot of compassion for optimizers. I understand them, but it took a lot of work for me to realize, yes, I'm an optimizer. That's good. It helped me achieve all these things. It's never going away. But I probably need to turn the page and start looking at other parts of life experience even just pure fun and not only focus on the numbers.

Katie:

We'll get right back to it after a quick break.

I think the book is interesting because it talks about these types in the context of relationship dynamics. And I got the sense from reading it that you sort of organically began building these typecasts while you were doing hundreds of interviews for your podcast Money for Couples, and that you saw these trends emerge, right? And you have this phrase that's like sort of rejecting the personal finances personal thing and favoring more this idea of most of us are mostly the same. You can see these patterns play out time and time again pretty reliably. So if we set the optimizer aside for a moment, you also talk about the worrier, the dreamer, and the avoider. Which one do you encounter most? What is the most common?

Ramit:

Out of the four money types, by far the most common is the avoider. Avoiders use a series of conscious and unconscious techniques to deflect talking about money. They'll say stuff like, you're so much better at money. I'm just not good at math. Or fine, we can talk about it, but let's do it next week, I'm tired after work, things like that. And you can actually get pretty far being an avoider, as long as you still have a roof over your head, you still have Netflix, most people actually are “fine” being an avoider. However, I'm not in this life to be fine. I'm in it to live a rich life.

And if you understand compound interest, you understand that by being an avoider, you are kicking the can down the road. And this isn't something like, oh, I'll get a new shirt next week, next month, next year. Okay, your shirt is tattered and you look horrible, but it's fine. You can still go buy a new shirt.

If you don't invest until you are older. It doesn't just become a little harder. It becomes almost exponentially harder. It's also harder on your partner who's put in the role of parenting you, of chasing you, and even nagging you. I hate seeing people put in a position of having to nag their partner. I even hate the word nagging. It's so gendered. It's so fraught with connotations. But avoiders make it very difficult as a type. They're the most common. The good news is there are lots of ways you can change these things, whether it's yourself or your partner. You can change your money type, absolutely. You can move between, they're quite fluid, but it's just important to understand what type you are.

Katie:

Yeah, I mean there is something that you're touching on in the book with respect to the way we almost unknowingly fulfill our roles in our relationships. And it reminds me a little bit of a, I can't remember where I first heard this saying. It's kind of like a therapy saying, but what are you getting from this situation that you say you don't want anymore? Clearly you’re getting something out of it, right?

Ramit:

I love that question. I ask couples on my podcast, Money for Couples, I ask them all the time, what are you getting out of this? I'll ask them. They're fighting about money, they fight about it all the time. They have what I call the sitcom dynamic, like Seinfeldian type of dynamic. And I go, do you like fighting? And they both go, no! And I go, what do you get out of it? And the first answer is always nothing. But I never let them get away with it.

I say, no, you're getting something out of it otherwise you wouldn't be doing it. What do you think you're getting out of it? And I will wait. And they will often use a series of deflection techniques, but I never let up. I just wait. And eventually the couples will say something extremely insightful.

One of them will say something like, well, fighting lets me feel right just for that moment. So that feeling of righteousness just for that moment is enough to generate that dopamine to make them feel superior and to about the rather problematic financial situation they're in. And when they realize that, it's often the first time they've ever realized that. And of course then I help them future pace it out. Do you want to keep feeling like that? What will happen if you don't change, et cetera? But just that moment of realization is quite powerful for individuals and for couples to realize, oh my gosh, I've been operating under this invisible script with money and I never knew it until now.

Katie:

I think I see this the most with the frugal partner trope. So the frugal partner is kind of a mainstay of FI/RE rhetoric online. And the subreddits of this person might be, to use the type casting, might be a worrier and an optimizer or some hybrid of the two. And I think the last time that you came on the show, we talked about this a little bit, how frugality can become an identity marker and that giving up that identity as being the frugal person can begin to raise uncomfortable questions about who you are. Without that, who am I, if I'm not frugal? But you wrote something in the book with respect to this idea that kind of stopped me in my tracks.

And I think that there are a lot of people in the audience who either are this person or are coupled up with this person you wrote, when you reach a certain level financially, you have an obligation to buy well-made things rich. People should be delighted to be able to pay full price for experiences because it means that others can experience the same thing more affordably. And then you go on to use a couple examples like how the first class seats on a plane actually subsidize the economy seats. How if you are paying the full price to go to the museum, that's going to enable them to charge less for people who might need it. Same with taxes on the broadest scale.

And when I read that, I was thinking of the couples that you talked to who have $5 million and are like, well, we're not going to go out for a nice meal. It's not happy hour. So I guess I want to just give you the opportunity to riff for my selfish interest on this idea of once you have reached a certain level financially, you actually have an obligation to change the way you're behaving in the world.

Ramit:

I do believe that it is a tragedy to live a smaller life than you have to. It's not just a tragedy for you because you don't get to experience the full breadth of what your rich life has to offer, but it's also a tragedy for the people who depend on your money, especially wealthy people[‘s], to continue their craft. And like you mentioned in the book, I share some examples of this rather provocative idea, which is provocative today, but was never provocative in the past. Wealthy people historically have always subsidized the arts, always. Theater, authors, muses. It was common back hundreds of years ago, but yet today in our western highly individualistic society, it's almost forbidden to say that you have an obligation as a wealthy person.

Well I do. I certainly do. Lemme tell you why for a couple of reasons. First, a lot of people don't know in many businesses the more expensive products subsidize the cheaper ones. Airline seats are a good example. Or when I go to a Broadway show, let's say I buy expensive seats. I took my nephews, we went to Lion King, we got really nice seats. By the way, let me just tell you my nephews were young at the time. I really went out of my way to get these nice seats. And then when we sat down, one of them looked at me and said, Ramit mama (mama is uncle), Ramit mama. Why don't these seats recline? And I was like, oh my God. Whatever, they didn't understand.

Now listen, businesses are not doing this to be nice. They are profit maximizing. So if they can make more through charging people like me more, which enables other seats to be cheaper, fantastic, but I think it goes deeper.

I went to India with my mom. We were in the Rajouri Garden market. She took a scarf, she wanted dyed in different colors. She took it to a dyer. He looked at it, he looked at the color. He said, come back in 15 minutes. And we just watched, he mixed the dyes together. No computer, no anything, just by eye. And he dyed it perfectly and it was done in 15 minutes. Now imagine you have someone making block print art or creating rugs in Iran. How is that craft going to be continued? Who pays for that? Not the typical consumer who wants to buy a rug for 300 bucks on Wayfair.

It is wealthy people and good because when I pay a huge tax bill, I am happy. I'm happy. I can pay a lot of taxes because I can be successful in this country, make a lot of money and happily pay my taxes so that a family like the one I grew up in can afford to send their kids to a nice public school. So these are the things that I want people to think about and I want to give you a bigger vision of money both on your own and in your relationship.

Katie:

We get a lot of questions every week for Rich Girl Roundup about money and relationships, dynamics and couples, and I really struggle to answer them because I find that so often, as soon as we're talking about money within a relationship dynamic, it almost immediately becomes much more about how you are relating to that other person in ways that have nothing to do with money. And I find that kind of challenging. And there was something that you had written in the book about basically the dynamic that I think I hear most about, which is the way the partner of an avoider often automatically becomes the chaser who sees it as their job to persuade their partner to care, and you basically reject that framing and you suggest something else to people.

Ramit:

Yeah, in chapter six I explore money dynamics, which is not just your individual money type, but the way that the two of you both relate to money. And there's often a chaser avoider dynamic where one person avoids and the other one chases, and the more partner one avoids, the more partner two chases.

Now how do they do it? They use a variety of techniques, they beg, they reason, they nag and it never works. The more they try, the more their partner becomes resistant and the solution is to reject the frame entirely. You don't have to beg or nag your partner. The solution is actually to set your expectations and tell them what you expect in a relationship.

Now let me be specific. The way you do it tactically is you talk about it. You can use the word for word scripts in the book to have these conversations. You don't let them avoid by getting out of this or that. You actually set a time and you say, what time would work? Would it be Tuesday or would it be Thursday evening? What's best? You extract micro concessions. Remember, this is your partner. It's not some rando on the street.

You want to have a conversation. You are going to have a conversation. Now during that conversation, you're going to agree to make a change and they will agree as well. I'll show you how in the book you're going to hand over a small amount of responsibility to the avoider that could be as small as you in charge of tracking our grocery spending for the month and making sure that we are within $800.

And finally, this is something a lot of people don't do: You're going to plan for resistance. This isn't going to work the first time. That's okay. Your partner has a lifetime of avoidance, okay? You're going to plan for it. They're going to try to distract or derail the conversation. No problem. I show you how to handle that, but you're going to plan for resistance because you're not going to fall apart the first time. It doesn't work, it's not going to work the first time. That's okay. You've got a bigger vision. We're going to live a rich life together. I love my partner, so I'm going to go out of my way and take on the burden of shepherding us to where we need to go and I'm going to plan for when it's going to fail because it is. But ultimately I think there is a better day tomorrow. That is how you approach that dynamic. Reject the frame, create your own, bring your partner along with you.

Katie:

Yeah, I do find it a little bit interesting because the audience that we have is primarily female, but I think there is a notable gender dynamic in that question. Oftentimes when I receive that question from people, it is the men in the audience and I never quite know how to take it because I guess I similarly reject the framing that women aren't interested in money.

But I do think that there are gender dynamics that influence how men and women relate to one another. I want to talk to you specifically about your podcast guests, Jennifer and Andrew, and their $600 per month GrubHub spending, because you write that it was really hard for them to talk about it. So why was that?

Ramit:

This is a great, I love this couple. Episode 96. They had around $4,500 in debt and as we looked through their spending on the podcast, which you can hear the actual conversation, they were shocked to realize that they were spending about $600 a month on the food delivery service, GrubHub.

Now this is very common. When couples actually look through their money, they are quite shocked. Katie, 50% of the people who come on my podcast do not even know their own household income. You can tell why I have a lot of compassion for people because this is the level that we are talking about. Money is not something we want to particularly engage with unless it's a problem.

So in this case, like many women, Jennifer had taken on more emotional labor at home and she tells me she wanted Andrew to notice when she was tired and didn't want to cook and ordered GrubHub, but she also didn't advocate for herself. She wasn't clear about what she wanted, what she needed, and I remember when I talked to them, she would often answer for him and rush to offer solutions for him. And I had to say, hold on a second, I want to hear from him. I don't want you to take on the labor of answering his question.

So this was very common and I can actually generalize to many couples. We see this, the research shows women in heterosexual relationships will take on more emotional labor, but it also shows up in other peculiar ways. When couples split their spending by expense, it almost always happens like he'll pay for rent, she'll pay for the car, she will almost always pay for the kids' expenses. This drives me insane. Why is her money exclusively going towards kids' clothes, kids' activities? Why? It's really infuriating and frustrating.

So anyway, what we see is that couples spend money in a peculiar, often gendered way. They often struggle to articulate what they want. They get dragged into the weeds talking about some expense, but when I ask them point blank, what do you want? They go, I don't know. Many of them tell me. I've never actually thought about that. So in their case, it was really interesting. We went through this discussion, discovery and I showed them how to have an actual discussion about money, one where they were having a dialogue and I gave them the example of tossing the ball back and forth.

It's so surprising when I ask couples to have a conversation in front of me, it's usually one lecturing the other so horrible to listen to and I'm just a third party. Imagine you're in the conversation, you're like, I don't want to be here so you can lighten it up. I go toss the ball back. They go, what do you mean? I go ask him, what do you think? Ask her, hey, do you agree or disagree? And we have some fun. We tease each other, we laugh. After that conversation, I remember Andrew telling me it was one of the first times they'd ever talked about money that honestly.

GrubHub food, kids' expenses, they really represent something much deeper in this case gender dynamics: Jennifer's inability to advocate for herself, Andrew not listening or being curious, and the two of them not having talked about money together.

Katie:

Yeah, it reminds me a little bit of there was someone who had reached out a long time ago when we had done an episode on sort of the economics of outsourcing and how it can make sense to pay people to do things that you might not really want to spend your time doing. And that after a certain point it's actually you can build—the optimizer’s coming out of me. You can build an economically rational case for paying a professional cleaning service or professional laundry service. And someone had reached out and said, I am interested in this. This was a woman who said, I'm interested in this, but there's a part of me that feels like I'm using this as a Band-Aid for the fact that I cannot get my husband to be an equal contributor in our home for domestic household labor. It feels like if he would just pick up the slack and do his part, we actually wouldn't even really need this service. But I'm so tired of talking about it that it's worth it to me to spend the money to pay for this, to just get it off our plate.

I mean, there was a part of that that I was like, yeah, I can a hundred percent see how you ended up there. And I think that that is a common retort that I see online and hear from real people that it's almost always the case that in a mixed sex relationship, the woman is like, we should pay for cleaning. And the husband is the one that's like, well, we don't need that. Why would we need that? That's a waste of money. And it's like that to me is such a perfect example of the disconnect.

Ramit:

That's a great example and I love the layers that you uncover with that example. It's never as simple as should we hire a cleaning service? It is who has what role in this relationship? It's socioeconomic, it's gendered. Is there a stay at home parent? There's so much to it.

I will say your example reminds me so much of couples who come on my podcast where I speak to and they are at odds, they're fighting about one arbitrary expense: cleaning service, one person wants organic food, family trip to Disneyland. And the most common affliction with money in relationships is the lack of a shared vision. So they're really fighting about something small.

It's almost like someone says, I want to look good. I'm single. I'm going on dates. I want to look good, but let's get in a fight about should I have red shoe laces or white shoe laces? And it's like, that's not really the point. That's actually totally irrelevant to this thing at all. It's, do I feel confident? Do I look good? Am I conversational?

But they're down in the weeds. Should you get a cleaning service? Maybe, maybe not, but let's zoom up and talk about what is our rich life? Do we want to wake up with no alarm clock? Do we want to be able to spend Sundays having brunch with our friends and family? What is it that gets us excited? And then how do we use our money for it?

Now, I will say it's possible that if you're in some type of partnership that your partner doesn't want the exact same things as you. That's okay. My wife, her money dial or the things she loves to spend money on is self-care. She loves it. She's really good at it. I'm not that interested. I don't need a massage, but I love beautiful hotels, love them. Will spend a crazy amount of money on them; she's not as interested. So you can still have a very happy, successful vision of a rich life. You don't have to agree on everything, but you probably need to at least talk about your vision and articulate it together.

Katie:

I love that you brought up your wife, your marriage. Perfect segue. You are now at least the second financial expert who was either written in a book or told me directly that you and your spouse had to overcome psychological hangups around combining your money and kind of joining your rich lives together. You mentioned in your book that y'all saw a therapist to overcome the challenge and you wrote about the experience of switching from a former strategy that y'all had used with proportional budgeting and keeping funds separate. And it was a little bit complicated, but it worked for you at the time to combining everything into your joint checking account and how it shifted the way that you felt about your money together. And I would love if you could talk about that.

Ramit:

My wife and I have gone through years of challenging conversations about money and we have a particularly challenging situation, which is why I love this topic. When we were dating, first of all, my wife, we were dating for a while and then she said to me, I would like to be engaged by Q1 of next year. And I was like, oh my God, she speaks in financial quarters. I love her. This is my dream girl.

So we sit down, we have a conversation. I still have the Google calendar invite where we had an agenda of topics, kids, where do I want to live? What if parents get older and sick? Things like that. Serious stuff. And I think the agenda is—one thing I just want to point out. A lot of people find it a little odd to have an agenda in meetings and in your relationship, but a relationship is a business. You are creating the business of running a household. And so regular conversations are exactly what you would do at work.

So we started talking about a prenup. I was really nervous and she received it as well as she could have, and we started getting lawyers and all that stuff. But the conversations got pretty hard, really hard. We were fighting and I felt resentful because these numbers were astronomical and I was trying to be very generous and she did not feel listened to.

So at one point she goes, we need to see a therapist. This isn't going well. And, now, she was right. We just got online and searched for therapist nearest our house. We literally walked outside and went there and the therapist was so helpful. She asked us a lot of questions including how do you see money? And she looked at me and asked the question and I was like, oh, such an easy question. And I was like, growth. I could literally see compound interest rolling in front of my eyes and I could see—

Katie:

You’re like, have you read my book?

Ramit:

Yeah, I don't want to say that. But deeply deep down I thought it, I was like—

Katie:

Does she know who I am?

Ramit:

She looks at my wife and she goes, what about you? And she says, safety. And I looked at her like a record scratch. Safety. What's that? That's like the equivalent of saying plastic. What does that have to do with money, safety? And we just saw money so differently.

I had been running a business for 15 years at the time. I'd been thinking about money almost every day, what I do. And so that helped us start to connect over the softer parts of money. And that's when I had to realize being an optimizer was not serving me at that moment.

Of course, we need to talk about numbers, but we first need to meet each other and talk about what does it mean to us. Okay, so we signed the prenup, we got married, and then the next chapter of that money journey was us combining our finances. So imagine we move in together. We have different habits, different spending patterns, different things, et cetera. So most couples, you kind of just glide together. You don't sit down and let's really talk about this.

But it was important to me that I not be the money person in our relationship. One day I'm going to get hit by a truck and I don't want some ****heads from Goldman Sachs knocking on the door and saying, oh, only 1.25% AUM. It's actually a good deal. We provide proprietary, shut up, get the **** out of here. My wife will never sign up with Goldman Sachs, okay? I don't care how dead I am.

So I told her one day I'll be hit by a bus. Second, I want us to both be stewards of our money, okay? It's not just one, it's teammates. We got to both do it. And then three, it's just more fun if we're doing this together.

So we had our money, but we have a very complex situation. We're both business owners, both variable incomes. So we had proportionality set up where if one person makes double, they pay double for the joint expenses. Well, that's fine, but I got to tell you, it was so confusing. It would take us hours every quarter just to figure out who owed what. Feels very transactional, very like you're taking something from the other person.

And here's the key point I want to make. The way that you set your money up will either make you structurally opposite or structurally together. It's kind of like in America, Americans are experts at doing the things, the exact things that will make them unhappy, unhealthy, and lonely. We are structurally set up to live in single family homes far away from all our friends and family. We have two incomes working long hours and then we just eat junk food. Then we're like, hey, why are we so unhappy? I think I need to buy an 8Sleep mattress to make me sleep at—what the **** are you talking about

 Same thing with money. If your accounts are separate, you're structurally set up to be separate. When we combined our finances, not just proportionally but all of it together, then it was almost immediately more unified. We saw it as ours, not mine and not hers.

Katie:

Alright, first of all, I will tolerate no 8Sleep slander on The Money with Katie Show.

Ramit:

Are they sponsor on this show?

Katie:

No, no. I bought a $2,000 8Sleep mattress and I was like, I feel happy.

Ramit:

Oh my God, I love this.

Katie:

So I'm like, what a hyper specific and targeted drag.

We'll continue after a quick break.

Even the structural things that you are alluding to with respect to how money is flowing through the system and what the plumbing of the system is. I think what you're referencing is before the money went into two separate accounts and then you guys would sit there, and I don't want to use the word haggle, but kind of be like, okay, how much am I giving and how much are you giving versus all the money just flowing into a joint account that you both consider jointly yours.

And the advice exists that, there is this idea, this advice, that women should have secret individual accounts that only they have access to. And I think these ideas are related from the standpoint of typically the advice to not have all your money flowing into the joint account is because it is exposing you to risk that you should have money that only you have access to. And I agree with that.

I think something, the point that you make in the book is you would also say that people should have access to money that is only theirs, but that if you feel compelled to keep it a secret and you do not want your partner to know that you have access to that money, that is probably something that is worth taking a much harder look at.

Ramit:

That's correct. So of course I take account of historical trends, maybe even your grandmother couldn't even get her own bank account for many, many years. So there's a lot of things that have happened just recently in living memory in terms of differences of men and women's access to financial products. I do believe that everybody should have their own account, which only they have access to. My wife has accounts that I don't have access to, but I'll tell you what, I know that she has them and I know roughly how much is in them as any partner should, and she knows the same for mine.

So yes, you need to have your own individual account. In chapter nine, I have the exact simple couples set up for how to set your accounts up. You have your own money that you can spend on no questions asked spending, whether it's travel guys trip, ladies trip, whatever you want. But you also have, you want to set your money up so that you are structurally together.

Your future is together. It's not separate. And that was what my wife and I talked about a lot. Our future is together. Of course we have some premarital assets and all that stuff, yes, but our future, the stuff that I get excited about is not me going on some solo trip. It's us, us traveling, us eating us, seeing us spending time with family. That's our future. And if you're in a relationship and your future is together, then you want your accounts to reflect that.

Katie:

Yeah, and I mean there was something else that I appreciated. Every couple and every person individually or together are going to encounter financial obstacles, financial challenges. There will be disagreements as in any other area of life. And sometimes it can be hard to identify or know when you have slipped into the territory of a financial disparity or disagreement actually being indicative of some fundamental incompatibility. And you addressed that head on in the book, which I appreciated. So when do you think someone should consider whether it is time for them to start asking these harder questions?

Ramit:

Well, first of all, interesting way of asking the question. I think that in the money and certainly in the relationship world, there's this unspoken rule that you're not allowed to say separation and you're definitely not allowed to use the D word. So we use a lot of illusions like “having difficult conversations.” I'm like, let's just shine a light on this stuff.

Katie:

Yeah, when should you get divorced? I guess let's be more direct. When should you not be with this person anymore?

Ramit:

One of the recurring patterns on my podcast is this couple comes on and one of 'em is complaining about the other one spending $75 at Target. I can't believe she does that. And meanwhile they have $11,000 of credit card debt and they drive a $67,000 truck. The things we fight about are often a distraction from the real issues.

And truthfully, the biggest two sources of overspending are in this order. Number one, housing and number two, your cars. A lot of bros driving $70,000 trucks two miles on a flat road to their insurance job. It's like, what are we doing here?

Anyway, people come on my podcast, they will describe their problem as a 10 out of 10, literally a 10 out of 10. But when they talk to me, they minimize it. Well, it's actually not that big of a problem. It's actually, it's mostly fine. You know what? Honestly, I think we just need a budget.

And in order to live a rich life, you have to be honest; honest with yourself, honest with the people around you. And that means asking, have I advocated for myself and told my partner what I want and what I—have I been clear? Because many of the couples I talked to have never actually said what they want. Does my partner at least exhibit a willingness to talk about money? If they have not and if they will not talk about money, if they avoid it at all costs, that is the biggest red flag of all.

Also, let's look at the partner's behavior. If they were in credit card debt but they have steadily been paying it off, that's a great sign. If they've been in credit card debt for seven years and made no progress, they continue to make one impulsive purchase after another, then you got to ask yourself, is that part of your rich life?

So again, I just want to leave all the listeners with this goal, which is to live a rich life, you have to be honest with yourself and honest with the people around you. Is it working? Do I have a chance of changing things? Will my partner come along with me for that journey? Even if it's hard, if so, let's do it. And if not, then we may have to have a more difficult conversation.

Katie:

Yeah, so let's talk about that first conversation. What are your guidelines for making sure that the first time you sit down to talk about money productively goes well?

Ramit:

The first positive money conversation, I love this. Let's, first of all, reframe the conversation. Remember when people used to say DTR, we need to “define our relationship”. It was like one conversation. That's how we talk about money. We need to sit down and have the conversation about money.

Hey everybody, would you ever have the conversation about kids or the conversation about your aging parents? No. You would have a series of conversations. So we want to reframe it from the conversation to a lot of conversations. And if they're going to be a lot, we probably need to have fun. I don't want to have 20,000 depressing conversations.

So we start off, it's a really simple framework, really simple. This is your first positive money conversation. You start off by saying, I want to try something new. I think in the past when we've talked about money, it's gotten a little bit in the weeds and maybe I've been a little controlling. I think that we're going to have an awesome time talking about money because I want to connect more with you and I want us to use our money and feel happy together. So you start off why this meeting's going to be awesome.

Next how I feel about money today, if I'm really honest, I feel confused, I feel behind and sometimes I feel lonely. How about you? Toss the ball. Next, how I want to feel about money. I want to feel good. I want to feel like I have a teammate. I want us to be teammates, and I want to feel competent right now. I don't, but I want to.

And then finally, next steps. When do you think we should talk next? And that is it. This is four steps in your first positive money conversation. It's like 15 minutes and then you declare victory and go home. Give ‘em a kiss, give ‘em a hug. That's it. No more talking about money for the night. What do you notice about that conversation, Katie?

Katie:

It's short. And I didn't hear anything about a budget or debt or a plan of any kind.

Ramit:

Oh my god, amazing. First of all, amazing. There are no numbers in this conversation. There's nobody saying, in fact, I'll tell you the words you're not allowed to use. You're not allowed to use the word budget, credit card, “we need to get a serious”, or here's one: “I just want to talk about blank.” Don't use the word “just”—don't minimize your desires. Money is not something you “just” talk about. It's not something you begrudgingly say, okay, I guess we got to talk about—no, money is important.

Don't apologize. Money determines where you live, what you eat. If you have kids, it determines who you are. So don't apologize and don't minimize it with the word “just”—be honest, be forthright. This is important to me. I want us to talk about it and I need your participation and we're going to have a great time doing it. That is how you talk about money.

Katie:

Yeah, you know what? I hadn't thought about this before, but I did notice this theme a lot in the advice in this book, which is basically—earlier in the conversation you said extract micro concessions. And I was incredible. But it was getting in manageable reps, you're accumulating a lot of the small wins. And you're talking about even to use a specific example, there was a section of the book where, okay, we've had a couple of conversations now things are going well. We are at the phase now where we are actually going to begin looking at our numbers. And even that was kind of chunked. It was like, alright, you know what? If you haven't done this before, you're not actually going to make the first net worth meeting about diving in. And okay, we're going to log into everything. We're going to track the numbers, we're going to look at the allocations.

It was like, no, first meeting is we're getting links, we're getting emails, we're getting passwords. We're making sure that we can even access these accounts. That way in the next conversation we can actually get into all of them without hassle. So I guess I wanted to hear a little bit more about how you developed that strategy and why you see it work.

Ramit:

When I was in college, I was in a class where we did class presentations and without fail, every single person would get up and they would do that horrible convention where they would go Webster's Dictionary defines “convergent” as.... And every single other person in the audience was like, oh my God, I want to die right now. And then guess what happened? The next group would go up and they would do exactly the same thing. And I'm looking around like, am I on candid camera right now? What is happening? Why are you all doing this? You don't have to do it that way.

And that is how I feel about money conversations. Everyone looks around and you hear people talking about money and they're talking about the most minute, pointless minutiae. Oh, do you think that we should have this credit card or that credit card? I go, who cares? What are you talking about? You don't have any investments. What are you talking about, what credit card should you have?

But it is so easy to get trapped in the weeds when you don't understand the full vision of how money works. When you don't understand the big picture, you often grasp for whatever you can to give you a sense of control. This is why so many parents, for example, their number one question to me when they're 38 to 42 years old, they always come on my social channels. They message me, Ramit, Ramit, what kind of account should I open up for my son, my daughter? Is it 529? Is that a good one? What about a government bond?

I go, hold on, hold on. First of all, congratulations on the new baby. How are your finances? And I kind of slow down their frenzied reaction and they go, oh, honestly, not that good. I only just started paying attention to money. But anyway, 529, is that a good one? And what they are really saying deep down is, I've lost the game of money for myself, but I'm not going to lose it for my daughter.

And that is what we have to interrogate when we are talking about doing all these things at once, sitting down for your first conversation and five minutes later you're talking about why haven't you paid off that last credit card or that debt or when are we going to pay the mortgage? No, you've already lost. So how I came up with this concept was observing lots of people talk about money and get lost in the weeds, but also from my own personal experience.

I used to live in San Francisco. When I would wake up in the morning, I first started working out and sometimes I would skip going to the gym. You know why? I realized it; I started to ask myself the five whys. Why am I skipping? Obviously I want to go dah, dah, dah. The answer was my closet was in the hallway, not in the bedroom. So I had to walk in the cold San Francisco morning barefoot to my closet to get my gym clothes out and I just didn't want to do it. So I stayed in bed and that realization was humbling. I'm not stupid, I'm not lazy, but there are little barriers that can cause us to not do very important things. So I brought my gym clothes over near my bed. I wake up in the morning, it's right there, put 'em on. No need to feel silly.

That's the same thing we do with our money, and that is why I engineered this book to be productive, not to make you get more information. You don't need more information. You need to know how to actually change the way you and your partner relate to money.

Katie:

Let's say that a couple has been working hard on doing that, right? They have their shared vision, they're excited about it, they're acting like a team. Let's come back to the four-part Conscious Spending Plan for couples. You have a specific recommendation in the book for how to think about this categorization, and I have a theory about why you keep it that high level, but it's fixed costs, savings, investments, and guilt-free spending. I want to hear how that works in practice when this is maybe the first time that a couple is sitting down and building a spending plan together. And a saving and investing plan, what have you.

Ramit:

You should see the shock when I ask people, what do your numbers tell you? Again, 50% of them don’t know their own household income. Then I'll ask something like, according to the numbers, you've told me, you will have $1.5 million when you retire. And I'll ask them, is that good? Is that bad? They have no idea. It's just a number. You have to remember that people who are not financial freaks like you and me and the people listening to this podcast, they don't know what the 4% rule is, or Trinity, and this.

They don't know that stuff. They just see a number and they go, I don't know. I guess I'd want more. I go, okay, how much more would you want? $2 million? I go, cool. Where'd you get that number from? [They say] I don't know. It just sounds bigger. Literally.

That's the extent of how most people treat it. That's how I treat my car. I don't know how it works, nor do I care. Just turn on, get me there. I don't care. We have to respect that most people are not sitting around learning all these intricacies of money.

So the CSP, the Conscious Spending Plan, I intentionally designed it—it's free online—so that you can put your numbers in a format that actually are meaningful to you. Most people have never seen their numbers in a format that makes sense.

A couple philosophies underlie this one page document. First, you see your net worth. This is important because a lot of people do not count their retirement as real money in their mental bucketing. They literally think it's not real. I go, no, that's real. We're going to count that. So we count all of that stuff. Then I break down their spending into four categories, and I'll give you the percentages right now.

If you have your fixed costs, that's things like your rent or mortgage, debt, groceries, things you need to basically live, that's 5%^ to 60% of take home or post tax pay. Okay, the next is savings. I'd recommend 5% to 10% of course, the more the better. That's for things like an emergency fund or money you need in the next one to five years, maybe down payment on a house, things like that.

Investments, this is where the real wealth is created, 5% to 10%, although of course I'd prefer more. I have to tell you that very few couples talk about this. I mean, literally they're talking about the price of freaking turnips for an hour and they're not talking about investments. I'm like, am I in a movie right now? We need to be talking about where the wealth is created, not what type of carrots you're eating tonight. And then finally, guilt-free spending. This is actually my favorite category of all 20 to 35%. You want to go out, you want to treat your friends for rounded drinks, you want to buy a coat, take a vacation. You got 20 to 35% of take home pay. That's a lot.

Now, when I show them these numbers, it starts to make sense because it's kind of like I gave them a puzzle like Tetris and I'm like, here's all your numbers. As long as you make your expenses fit within these categories, you are winning. They don't need to read an encyclopedia of personal finance. They should probably read my new book, Money for Couples. And aside from that, make it work.

And then it starts to become very clear, hey, wait a second. That freaking truck we bought is actually not allowing us to go on vacation and vacation is part of our rich life. We do that. Or hey, oh my gosh, we're spending a lot on this gym and these subscriptions and this. Do we need all this? Or could we focus on one of those things and the rest, let's go outside. Finally, I show them some high impact changes. You could sit around and try to cut down on everything, but there's a limit to how much you can cut. There's no limit to how much you can earn.

And if you create simple principles like every December we have a calendar reminder, we're going to increase our investment rate by 1%, just one that will be worth hundreds of thousands of dollars to you, more than all the coffee you will ever agonize over for your entire life. So that is why I focus on a high level. It gives 'em a big picture, and it does not get them caught in the weeds.

Katie:

There's something powerful too about the framing of whether or not you'll often engage with people about this on Twitter. You'll be like, well, how do you know you can afford that? I think the mattress actually was a quintessential example of a back and forth that I observed on Twitter once about, well, how do you know you can afford an expensive mattress? And you say that most couples ask themselves that question, can we afford this, in the wrong way.

Ramit:

Honestly, this was one of the most shocking moments of my recent life, and I've been running my business for 20 years. So over the course of two podcasts, I heard a couple just calmly, casually say, oh yeah, we went to buy a $2,000 mattress. And I said, hold on a second. What'd you say? And they were like, yeah, yeah, we bought this. I mean, it's for your back. And I'm sitting there. I love when I am more in touch than my own guests. And I was like, I'm like, hold on a second. My mattress doesn't even cost that much. And they look at me like I'm crazy.

And so then I got curious. I went on Twitter. Everybody could search this. And I asked people, how do you know if you can afford a $2,000 mattress, Katie? The freaking answers I got were so insane. The answers were straight out of a mattress, salesman's playbook: Your back is the most important investment you can make on—the mattress is not an investment. That's a consumer purchase. They go, oh, I only invest in things that I wear, put on my back and dah, dah, dah, dah. I go, that's not an investment.

And also, if I ask a question about affordability, your answer better have a number in it. Don't tell me about “I love softness and thread count.” I don't care. I want to know a number. That's the question. Affordability. It turns out nobody knows how to decide if they can afford something. They literally lick their finger, put it up in the wind and go, looks like a good purchase. I think I can afford it. Good for me—wrong.

Okay, everybody, listen and listen closely. When you are deciding how much you can afford, you better use some numbers, and that's why you can use the Conscious Spending Plan for now. Get this. The fact that people don't even know how to measure if they can afford a mattress means they're definitely not doing it for a car. And if they're not doing it for a car, we all know that they're not doing it for the biggest purchase of their lives, their house, which is why people end up stuck. They wake up one day, they're like, where's all our money? We make good money. Where's it all going?

Well, the answer is, you never asked a single simple question, how much can we afford? There's actually ways to know. You should be able to plug it in. You should see what the TCO or total cost of ownership is. You plug it into your CSP and you see what happens to the numbers. You can literally use it as a time machine. Oh my God, if we buy this house, if we buy this car, what will it mean? It will mean we can't go to grandma's house every December. It will mean we can't pay for our organic food for our dog. Goodbye, dog! All these trade-offs you have to make decide. Do you want that freaking mattress, or you want your beautiful little puppy? Anyway…I'm tired of people not knowing how much they can afford.

Katie:

Oh my God. Sorry, I have to compose myself. Just the resigned sigh anyway. Oh man.

No, I mean I think that yes, there are specific ways with respect to housing, with respect to cars that you can understand, can I actually afford this or not? But even on the micro level, I think that one of the biggest financial mistakes that I made prior to having a plan was my gauge for can I afford something, was I'm going to pull up the Chase app, I'm going to go is the money in the account, and if there's money in the account, I'm going to buy it.

Ramit:

Okay, so one thing I love, I mean, you're one of my favorite people in the entire industry, and I love the relatability of what you just said because we have to remember that most people derive their feelings about their money and their information about their money from one single place, and that is their checking account.

Katie:

Their Chase app.

Ramit:

Literally, they look at their checking account and they go, looks good. I can do it. Or uh oh. And what I'm begging for people to do is to go deeper because your money is not just in a single account. First of all, I don't even have any financial apps on my phone. Why would I? My system runs itself. There's no need for me to log in on my phone.

Second, my money is more complex than what is in my checking account. My checking account is just, it's a minor detail. It's like my socks, but I'm talking about the full outfit. We are talking about retirement. We're talking about my savings, which my CSP reflects. We're talking about investments and guilt-free, all of it. We need the full picture because otherwise you get myopic and you start to fixate on tiny little things.

Sometimes you make bad decisions like overspending. Other times you simply feel anxious and guilty, and I would feel anxious too if I was only looking at my checking account, but I know the full picture and that is what I want for you. I want that for couples as well.

Katie:

Yeah. The thing that I loved the simplicity in, well, are you saving 5% to 10% minimum? Are you investing 5% to 10% minimum? If the answer is yes, and you have the money there in the budget, yeah, you can afford it. If the answer is no, you can't. It's very simple.

Ramit:

Totally. That's part two of the book where I go into real specifics about how much can you afford on a car? What if you want to take a vacation? How do you not raise spoiled children and on or on, and part of this is actually giving you a sense that you can win with money. I think for so many of us, we constantly feel behind and we constantly feel like we don't know what we're doing, but we're doing something wrong, and I want to show you that you can actually be doing it right. You can have your monthly money review, which takes about an hour. That's it.

You have your agenda, you have your numbers, everything's flowing because your accounts are set up in chapter nine. You're happy. You're talking about what you're going to spend money on you've made, and there's no surprises. We've shined a light on all this. That's when you're really having a healthy relationship with each other and with money.

Katie:

Beautiful. Okay. Ramit, before you go, my last question for you is if we can get a little OOTD, a little outfit check. You have a very beautiful sweater on. I know you love clothes. Tell us about the fit.

Ramit:

What is this for real? You do a OOTD on here?

Katie:

With you.

Ramit:

Wow. I don't think I've ever been asked.

Katie:

With guests that have some swag and some noted interest in clothing, so let's go.

Ramit:

I love this. Okay. This is a beautiful Loro Piana sweater. One of my money dials is clothes, and of course my wife is a personal stylist, and so I love it. I also talking about it as a guy, because we often guys are like, I want a man cave. I'm like, I want the most beautiful sweater that is so soft. So yeah, that's the fit. Thank you for asking. Oh my God, I'm honored.

Katie:

No problem. Yeah, I was checking out her—plug her business name.

Ramit:

Next Level Wardrobe.

Katie:

Next Level Wardrobe. I was looking at her Instagram yesterday and noticed a post that she had shared that was like, this year I have a couple style goals. I want to wear more accessories and I want to wear more dresses. And I was like, damn, that is an incredible level of intentionality. I'm lucky if I put on real pants, like hard pants in a day.

And I was like, I kind of love, I just get such a sense of intentionality from both of you about designing the life that you want, designing the way you want to feel, and then crafting your life around that. And I don't know, I think that's a rich life. I think that's beautiful.

Ramit:

I really appreciate that, and thank you for saying those kind words about her. She's the best, and I feel very lucky that we both love to design our rich life and really use our time and money to live it, so thank you.

Katie:

Anyone familiar with Ramit's philosophy knows about his “rich life” concept; in fact, I think it's kind of approaching the Kleenex level of money management phrases in the sense that I hear people using this without associating it with Ramit specifically.

But to the extent that it's helpful for you and your 2025 planning, I wanted to share my own rich life anecdote from earlier this year when I realized I had allowed an oversimplified assumption about my money to pigeonhole me. After a few years of finding success in business, I had come to associate earning more with doing better work. In other words, I had formed this unconscious correlation that perceived making more money as proof that my work was improving, and I kind of thought about the opposite, the alternative, the same way that, if my income went down, it was because my work was getting worse.

Now, this is similar to or maybe akin to noticing that, okay, I'm going to start eating healthier, I'm going to start exercising more. I'm going on walks every day, whatever, and then you lose weight as a side effect. But then instead of continuing to focus on the healthy habits directly, the walking or the eating vegetables, you then hyperfixate on the quantifiable metric, the weight, as flattened evidence that you must be getting healthier and then doing anything that'll cause you to lose weight. Maybe you start doing cocaine and chain smoking, right? Then you keep losing weight because you're not eating, and then you continue to assume erroneously, oh, well, I'm losing more weight. That must mean that I'm getting healthier. That was sort of how it felt.

That was how the flattened relationship between money and work had begun to feel to me, even though I wasn't conscious of it at the time. Now, the kids call this losing the plot, and yeah, I had lost it, and it wasn't until I started working with a coach and I shared my goals with her: “Basically, I want to become a better writer. I want to have more time to think I want to be a more critical thinker.” Things like that, but then she gently pointed out that my unwillingness to consider any path that would mean earning less was actually getting in the way of those goals. I hadn't noticed that this assumed correlation between quality of work and income was preventing me from arranging my life and my work differently because for too long, I had basically just associated a high income with good work.

And I'll never forget, I said I wanted to be a better writer, and then I immediately started talking about financial goals, and she was like, well, hold on though, because are you saying that you think earning more money means you're becoming a better writer? It doesn't mean that at all. And so for me, my rich life ultimately meant centering money less. It meant making money less of a fixture, less of a goal in my life, and yours might mean that too.

That's all for this week. We'll see you next week for a conversation with the author of You Don't Need A Budget, Dana Miranda. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer, and additional fact checking comes from Scott Wilson.