Welcome back for another deep dive.
Today we're gonna be talking about something
that a lot of couples find a little bit, well, uncomfortable.
Oh yeah.
And that is how couples handle money in relationships.
That can be tough.
Yeah, really tough and awkward sometimes.
And we're gonna be talking about this using an interview
that we found really fascinating with Ramit Sethi.
Oh yeah, I know Ramit Sethi.
He wrote the book, I Will Teach You to Be Rich.
Great book.
And this interview was from the YouTube channel,
The Diary of a CEO.
Oh cool.
Get ready for some really, really interesting aha moments.
I'm ready.
Because Sethi does not hold back at all.
And the thing that I found most striking right off the bat.
What's that?
Was the statistic he drops really early on.
Okay.
He says that 50%,
a full 50% of couples
don't even know their total household income.
That is mind blowing.
I know right?
I was floored.
It really makes you wonder,
like if you're not on the same page
about something as fundamental as like how much money
is coming in, what other financial blind spots
might be lurking?
Yeah, and even scarier, it gets even more intense.
He goes on to say that 90% of couples who are carrying debt
have no idea how much they actually owe.
Wow.
It's like they're afraid to even look at the numbers.
It sounds like classic financial avoidance.
Yeah.
It's human nature to like shy away
from uncomfortable situations.
Yeah.
But you know, when it comes to money,
burying your head in the sand almost always
just makes things so much worse.
Yeah, you're not solving the problem.
You're letting it build up.
Exactly.
Those numbers just keep piling up in the background,
adding stress to the relationship.
Absolutely.
And speaking of different ways that people approach money,
Sethi identifies four common money types.
Okay.
That often show up in relationships.
And this is really interesting.
I love these personality based financial framework.
Me too.
They're so fascinating.
Yeah, and it's like a shortcut to understanding
Exactly.
Why people behave the way they do with money.
Okay, so the four types are avoiders, optimizers,
warriors, and dreamers.
Okay, I think I know some of these people.
I think we all do.
So first up.
Yeah.
The avoiders.
Okay.
So imagine someone who strategically changes the subject
every time the word budget comes up.
Oh yeah.
They might even like leave the room.
Oh my gosh.
That's an avoider in their natural habitat.
I know the type they might joke about being bad with money.
Yeah.
But deep down there's often this like fear of conflict
or even a lack of confidence in their financial skills.
Absolutely.
And that could be a major relationship red flag,
wouldn't you say?
100%.
Like if you can't even have a conversation about finances,
how can you plan a future together?
Communication is so key in a relationship.
So important.
So let's talk about optimizers.
All right.
They're the opposite end of the spectrum.
Okay.
So if spreadsheets and budgeting apps were Olympic sports.
Oh yeah.
These folks would be gold medalists.
They'd be on the podium.
Yeah.
They'd love to color code, categorize their transactions.
They'd love a graph.
Oh, I bet they do.
And while their organizational skills are amazing
for keeping your finances on track,
Sethi points out that even optimizers
have a potential downside.
Oh really?
What's that?
They might get so fixated on sticking to the plan
that they forget to actually enjoy
the benefits of their financial discipline.
Right.
They might be saving for a rainy day.
Yeah.
But they forget to savor the sunshine.
That's such a good point.
It's all about balance, isn't it?
Exactly.
Saving for the future is important.
Yeah.
But so is enjoying the present.
Absolutely.
Okay, so next we have the worriers.
Oh boy.
These are the people who are perpetually convinced
that financial disaster is right around the corner.
Right.
For them, anxiety around money just stems
from deep seated emotional patterns.
Maybe even from childhood experiences.
Like their parents were always stressed about money.
Exactly.
And that can be carried forward into adulthood.
Like sense.
And the last type, these are the dreamers.
Okay.
These are the people who are always chasing
that next big opportunity.
Oh.
Often getting swept up in get rich quick schemes.
Oh, the eternal optimists.
I know.
You gotta admire their enthusiasm.
But dreamers sometimes neglect the fundamentals.
Like budgeting, saving,
building that solid financial foundation.
The boring stuff.
Exactly.
It's like they're so focused on the penthouse suite.
Yeah.
That they forget to lay the bricks for the first floor.
That can lead to instability.
Yeah.
Both financially and emotionally.
Absolutely.
Especially if those high risk ventures don't pan out
the way they had hoped.
So I want you to think about this for a second.
Yourself, your partner.
Correct.
Which of these money types resonates most
with each of you?
That's a great question.
It's really important to have this self-awareness.
Yeah.
Because recognizing your own tendencies and your partners
can be a great starting point
for having more productive money conversations.
Absolutely.
It's not about judging or labeling each other.
It's about understanding the different ways
you approach money.
And that actually leads to another really fascinating
aspect of the interview.
Which is?
How traditional gender roles are evolving.
Ooh.
And what that means for couples and their finances.
All right.
So we're gonna get into that in part two.
I can't wait.
This is where it gets really, really interesting.
So stay tuned.
Okay.
So we've got these money types.
But the financial landscape itself is changing too, right?
Oh, absolutely.
As we were saying before,
more and more women are becoming top earners.
Yeah.
It's amazing.
We're moving away from that provider model.
Right.
Where it was always assumed that.
The man was the breadwinner.
Exactly.
Outdated.
So Sethi has this story in the interview
that I thought really drove this point home.
Ooh.
What's that?
He's talking about a woman who's earning $200,000 a month.
Wow.
That is a power earner.
Talk about shattering glass ceilings.
No kidding.
And she's dating this guy
who was doing pretty well himself.
But obviously not making anywhere near $200,000 a month.
Right.
But she wanted him to prioritize
contributing more to his IRA.
His retirement fund.
Yeah, exactly.
Instead of always insisting on paying for dinner.
Interesting.
Because it kind of flips the script, doesn't it?
Yeah, it really does.
Like she's prioritizing long-term financial security.
Even if it means challenging these sort of old school ideas
of, you know.
Yeah, who takes care of who.
Exactly.
It's like she's saying, hey,
investing in our future is more important to me
than this symbolic gesture.
Exactly.
So refreshing.
I love it.
Yeah, it shows how important open communication is.
Yeah.
And that financial needs and desires,
they can evolve too, right?
Absolutely.
Gender roles are changing.
Things are shifting.
So couples need to talk about these things.
So what advice does Sethi have
for couples who are trying to figure this all out?
Well, he really stresses being upfront about your needs
and expectations, even if it's a little uncomfortable
to say out loud.
And a little compromise can go a long way.
Exactly.
In the case of this woman and her partner,
they worked out this system.
Okay.
Where he could use her credit card to pay for dinner.
Okay.
But the understanding was that he would also be
prioritizing those retirement contributions.
I see, so they kind of met in the middle.
Exactly.
They found this way to meet both their emotional
and financial needs.
It's a good compromise.
So, you know, speaking of navigating
these tricky financial conversations.
Yes.
Sethi brings up some major red flags.
No, red flags, okay.
To watch out for that can signal trouble brewing
in a relationship.
I'm all ears.
So the biggest one he mentions is a partner
who just refuses to talk about money.
Like it's taboo or something.
Exactly.
That's a big one.
It speaks to a lack of trust and transparency.
Yeah, imagine trying to build a house
and never discussing the blueprints.
Ooh, that's a good analogy.
That's what it's like trying to build a future
with somebody who just won't talk about money.
And it's not just about the numbers themselves, right?
Right.
It's about understanding each other's values, goals.
It is.
Fears, exactly.
Money is so emotionally charged for a lot of people.
It really is.
So avoiding those conversations can create
distance and resentment.
Absolutely.
What other red flags does he mention?
So he mentions things like excessive secrecy
around finances, controlling behavior.
Oh, yikes.
Or constantly blaming each other for money problems.
That's not good.
These can be really damaging patterns.
Absolutely.
So what should couples do if they see these things?
Well, you've got to address them head on.
Easier said than done.
I know, but maybe that means seeing a professional.
Okay, like a therapist, right?
A financial advisor.
Yeah.
It's important to recognize that these are just behaviors
that are often symptoms of something deeper.
Absolutely.
So you have to get to the root of it.
Okay, let's switch gears and talk about this debate
that's been raging forever.
Renting versus buying.
Oh, yeah, good one.
So Sethi makes this interesting argument
against the whole renting is throwing money away thing.
Okay, I've heard that a lot.
I think we all have.
But in lots of cities,
renting can actually be more financially sound.
Really?
Especially when you factor in the hidden costs
of home ownership.
That's a good point.
So Sethi uses this example.
Let's say you're paying $3,000 a month in rent.
Okay.
Buying a comparable property could mean
a $6,600 a month mortgage payment.
More than double?
That's not even counting property taxes.
Oh, great.
Insurance, maintenance, and all the surprise repairs.
Like what?
A new roof, a busted water heater, foundation issues.
It adds up.
So the dream home can become a money pit.
Pretty quickly.
Sethi's point is that there's no one right answer.
Of course.
It depends on your individual circumstances.
Goals, lifestyle, it's all part of creating
this rich life vision that he talks about.
I love that concept.
Me too.
Making conscious choices with your money.
Yeah.
Based on your values.
So it's not just about restriction.
No.
It's about supporting the life you wanna live.
Living abundantly.
But before we dive into that,
I wanna talk about another interesting idea he brings up.
What's that?
It's a difference between what he calls $3 questions.
$3 questions.
And $30,000 question.
I like this already.
He says that couples waste so much energy
arguing over little everyday expenses.
Yeah, like what?
Like who pays for takeout?
Oh yeah.
Or whether you really needed that fancy latte.
The little thing.
These are the $3 questions.
Okay.
Small expenses that can become
these symbolic battlegrounds.
Oh, I've been there.
For deeper issues.
For sure.
And they often distract us
from the bigger, more impactful conversations.
Right.
Those are the $30,000 questions.
Those are the big ones.
Saving for retirement.
Okay.
Investment strategies, paying off debt.
Yeah.
Maybe even deciding whether to buy a house.
Those are the big decisions.
Exactly.
The ones that can have a major impact long term.
Yeah, but those conversations can be intimidating.
So we get caught up in the day to day bickering.
Easier to fight about the latte.
Right.
So why do you think so many couples fall into this trap?
Well, sometimes I think it's a lack of financial literacy.
Yeah.
And I know enough to feel confident
about those bigger questions.
It can be overwhelming.
And there's that emotional component too.
Money's tied up in our sense of security.
For sure.
Our values.
Absolutely.
Even our self-worth.
It all comes out in our spending habits.
Right.
So those little expenses become like stand-ins.
Yeah.
For these bigger, unresolved issues.
So how do we break out of that cycle?
Well, I think that's where this idea
of a rich life vision comes in.
Okay, let's talk about that.
It's about moving away from these restrictive budgets.
Okay.
Creating a spending plan based on what really matters
to both of you.
Shared value.
Shared vision, exactly.
Okay, so there are a couple more big ideas
that Sethi brought up.
Oh, yeah.
That I thought were really interesting.
I'm listening.
And he kind of goes there.
He doesn't shy away from controversial topics.
Like what?
Like pre-nups.
Oh, yeah.
Those can be a little touchy.
Right.
Like not very romantic.
You're already planning for failure.
Exactly.
But he makes a really good point about why pre-nups
can be a smart move for certain couples.
Okay, I'm curious.
It's not about expecting things to go wrong.
It's about being realistic
and protecting both partners' financial interests.
Especially if one or both people are coming in
with a lot of assets.
Exactly.
Like a business or investments.
Makes sense.
And you know, Sethi actually has a pre-nup himself.
Oh, really?
I didn't know that.
And he's super open about how he and his wife
navigated that whole conversation.
Which I imagine was probably awkward.
Totally.
So how did they do it?
Well, they ended up working with a therapist.
Oh, interesting.
To kind of help them through the tougher parts
of the conversation.
It's so smart to bring in a professional sometimes.
Right.
Like even if you have good intentions,
having someone neutral can really help.
For sure.
And it just proves that pre-nups can actually
strengthen a relationship.
If you do it right.
Exactly.
With open communication.
So who does Sethi think should have a pre-nup?
Well, he thinks they're usually good idea
when one or both partners has significant assets
coming into the marriage.
Right.
Like things they owned before they got married.
Exactly.
So it's about protecting what they built before.
Makes sense.
But he also says most couples don't really need a pre-nup.
Right.
Because usually if you get those assets during the marriage.
They're split pretty evenly.
Big and divorced, yeah.
So pre-nups are more for when there's that pre-existing
financial difference.
Exactly.
And even then, the key is to have those conversations
with empathy and compromise.
You're the team.
Always.
All right.
So shifting gears a bit.
OK.
Sethi talks about this concept of enough.
Enough.
Yeah.
Like is there really a magic number?
Ooh.
Good credit.
Once you hit it, you're like.
Except for life.
Financially secure, totally content.
Yeah.
I've wondered about that too.
He seems to think that it's not about reaching
a specific number.
It's more about how you feel about it.
Yeah.
Like aligning your spending with your values.
Yeah.
Living a meaningful life.
And he shares that he's at a point now where objectively.
He has enough.
He's got enough to live comfortably
for the rest of his life.
Interesting.
But he still finds fulfillment in working, investing,
even saving.
So it's not just about the money.
Right.
It's this ongoing journey.
I like that.
A journey, not a destination.
So we got to define what enough means to us.
And use our resources to support that.
Exactly.
And enough for one person might be totally
different for another person.
For sure.
Some people might want to travel.
Yeah.
Some people might want to spend more time with family.
Or give back to their community.
It's all about what's important to you.
And using your money to support that.
Wow.
This has been such an eye-opening conversation.
I know.
So much to think about.
From those money types and tricky conversations.
And some prenups and enough.
We even talked about raising money-savvy kids.
Yeah.
It's been great.
And I think ultimately this interview really
highlights that money is a tool.
A tool, yeah.
It's up to us to decide how to use it.
To create the life we want.
A life that's meaningful, that's aligned with our values.
Couldn't have said it better myself.
So to all our listeners out there,
have those open conversations with your partners.
Talk about your vision.
Define what enough means to you.
Yeah.
What does enough look like?
And remember that true wealth isn't just about the money.
It's about the whole picture.
It's about experiences, relationships, purpose.
Living a rich life.
Thanks for joining us on this deep dive into couples and money.
We'll be back next week with another fascinating topic.
But until then, keep learning, keep exploring,
and keep striving for that truly abundant life.