Amy, let me tell you about a magical place that is so exactly designed to be an enclosed space, year-round fun for the whole family, that I bet you already know what I'm going to say before I even say the name. Let's say it together on three. One, two, three. Great Wolf Lodge. You got it, Amy.
My kids loved Great Wolf Lodge when we went. You probably already know that it has a huge indoor water park with a wave pool, lazy river, a bunch of massive water slides, but then your pack can hit the other attractions because wait, there's more. Great Wolf Lodge has adventure-packed attractions like MagiQuest, a live-action game kids can play throughout the lodge. Plus, the Northern Lights Arcade. Spent some quality time there. So, your kid who loves the Lazy River and your kid who loves fantasy games will both have a great time. Great Wolf Lodge also offers great dining options and complimentary daily events like nightly dance parties, all under one roof. Unpack the car once and you're settled in to have fun. And with 22 lodges across the country, you're always a short drive away from adventure. We've both had such great times at Great Wolf Lodge. So bring your pack together at a lodge near you. Learn more at greatwolf.com and strengthen the pack.
Hello everyone and welcome to Fresh Take from What Fresh Hell: Laughing in the Face of Motherhood. This is Margaret, and today I am talking to Ramit Sethi. He is the host of the Netflix hit show How to Get Rich, the host of the popular podcast Money for Couples, and the author of the New York Times bestseller I Will Teach You to Be Rich. Ramit is known for his unconventional insights on money psychology and his no-nonsense approach to designing and living a rich life. Today we are talking about his second New York Times bestseller, Money for Couples. Welcome, Ramit.
We talk a lot on the podcast about how our problems start when we try to skip talking about the problem, and I think the book gets at this really well. Why is talking about money so difficult, even with the person we supposedly are closest to in the world, our partner or our spouse?
Well, when you think about it, most of us have a love-hate relationship with money. We love looking at people on Instagram going to Bora Bora on Wednesday. We love the ability to go buy something nice for ourselves, kids, families. That's great.
But we also hate money. We hate the rich. We hate keeping track of a budget. By the way, I hate that as well. I don't track using a budget. I think it's pointless. We hate having to learn what a 401k and a target date fund is. And because most of us deep down have this love-hate relationship, when it comes to thinking and talking about money, it's almost always talked about like this: 'I guess we got to talk about it. We should probably figure out the bill.' It's so negative.
And when other people see money, they see a complicated spreadsheet or some weird words. I see a beautiful family trip to Disneyland. I see the ability to buy a beautiful cashmere coat or to go to the grocery store or a restaurant and not have to choose based on price. So that's why I'm so excited to get a chance to talk about living a rich life, because the point is not just to accumulate more money, it's to actually use it to live your rich life.
I think there's also something in a lot of the issues that we talk about, whether it's what might be going wrong with one of our children or what's kind of not going great at the heart of our marriage, that if we talk about it, it becomes real. And I often say to my spouse, 'But if we look at, you know, our money, we're going to realize we don't have enough to do all the stuff we like doing.' And so I don't want to. I think that's really insightful.
That starting point, how do we get past it? Because that's where I get stuck. Like I kind of want to just put my fingers in my ears, whistle past the graveyard, and like go to Target and buy the things I want. [laughter]
Okay, so this is classic. This is what I would call an avoider. Avoiders are one of the four money types. And we can see why avoiding actually works for a long time. Think about it. People in debt, for example, when I talk to them, 90% of people I talk to in debt do not know how much they owe. 95% of people in debt do not know their debt payoff date, meaning the month and year they will be debt-free. They have no idea.
And it actually makes a lot of sense. I'm going to ignore those envelopes. I'm going to ignore those emails. Guess what? My internet still works. I still have a roof over my head. I can still go out and eat a little lunch here and there. It's actually fine. My world is not collapsing. But there's a problem. Number one, when it comes to money, if you ignore money, time works against you. Because the earlier you start paying off this debt, investing, all those things, you actually get massive, massive rewards using the power of time.
But second, many people who are avoiders, they actually just live a smaller life than they have to. And I think it's a tragedy to live a smaller life than you have to. The idea that, 'Oh, my rich life is getting an extra order of onion rings.' No, life has... there's nothing wrong with getting onion rings. That's fine. But that can't be your rich life. It can't only be limited to, 'Oh, I'm going to go out and I'm going to be bad this weekend.' Notice that puritanical value. Bad means spending money. Good means, 'Oh, I didn't do anything.' No, we cannot play small with our money. And in order to play big, in order to live a rich life, whatever your definition of a rich life is, you actually have to confront money, and you actually have to get pretty good at it.
Let's talk about confronting money and your idea of a rich life because this was really interesting to me. This is where sometimes we feel like conflict comes as a couple, that we have very different ideas about what's important to spend money on, and we maybe undervalue the things that our partner thinks are important. And we kind of get into, we often say on the podcast, 'watch your story.' And the story becomes, 'They're so boring, they want to save for college. I'm so fun, I want to go to Disney World.'
And how do we start reframing our language around money? And this is kind of where you start the book. How do we start having these conversations in a more positive way?
Okay. Can I get personal? Can I ask you and your spouse, have you ever talked about what your rich life is?
I think we have. And we talk about this. We were married in the Catholic church and we did something called Pre-Cana, which I always say I went into being like, 'This is so goofy. I can't believe we have to do all this.' It was so useful because they really asked us questions like, 'What is the role of money in your life?' And I think it established a pattern for us, and we do try to meet monthly and say like, 'What are our priorities? What are we trying to do?' It's been a process to, as we say, get on the same side of the net against money, that it's not a fight between us, it's us trying to figure out the problem. We don't do it perfectly. I think we have fairly different ideas about the rich life, but we've been working and having a lot of conversations about how to get there.
I love that. Truthfully, everything you're saying sounds very relatable. I think that we often imagine that everyone else has this perfectly linear, organized way of handling money, but we are the sloppy ones, the ones who don't have it. But that's not true. I talk to tons of people, including every week on my own podcast.
And you have to know that first of all, couples really only substantively talk about money four times in their relationship. That's it. Yeah, over 40 or 50 years. Here are the four times. The first, it's not when they move in. They don't really even talk about it. It's not even when they get married. They literally lick their finger, put it in the sky, and go, 'Oh, I think we'll spend $20,000 on our wedding.' Like, that's it. That's the extent of how far people go. They talk about money if and when they buy a house, just a little bit. They barely run any numbers, but at least they talk about it.
Can we afford it? Okay. Yeah.
They talk about it if and when they have kids. That's a real substantive conversation because it often involves one person stepping back from work or childcare arrangements. That's two. Three, if one of them gets laid off, that's an emergency conversation where they really have to look at numbers. And number four, right around the age of 60 when they go, 'Oh, what the hell? What's retirement? Do we have enough?' That's it.
I'm going to add one more for you because I'm in the middle of it. When their kids start to get ready to go to college.
Yeah, yeah, I think, 'How the heck are we going to pay for that?'
Yeah, for some that's true. And you can see the pattern of this.
The pattern is most couples are totally reactive with money. They wait until there is something looming right around the corner. And one of the key differences between people living a rich life and everybody else is people who live a rich life plan before they have to.
Now, planning doesn't have to be this complicated thing with 50 million spreadsheets. In fact, I'm going to give everybody the exact words you use to have your first positive conversation about money. This is directly from the book because most couples have never actually had a positive conversation. It's like, 'Why'd you spend that much at Target? I can't believe you bought another energy drink.' Blah, blah, blah. No, we're actually going to approach this positively. So, first thing you do, if you're listening or you're watching this, you're probably the one a little bit more interested in money. You go to your partner, you say, 'You know what? I realize that when we talk about money in the past, it hasn't gone the way that we want it to. Maybe I've been a little overbearing, but I want to change that. I want to be able to connect on money.' That's part one. That's simply approaching with vulnerability.
Maybe sharing a little bit about your own shortcomings. We all have them. And then painting a picture. 'I want to be able to connect about money.' Step two: 'Right now when we talk about money, I feel nervous. I feel scared. I feel alone. How about you?' Notice that I'm engaging in a dialogue. I don't want this to be a big monologue. They might say this, they might say that. It doesn't really matter. You just want to give them a space to talk. Step three: 'I want to feel competent. I want to feel calm. I want to feel connected. How about you?' And number four, it's really simple: 'When should we talk about this next?'
'How about next Thursday morning?' Done. Give each other a big old hug, declare victory, and go home. This is so key. When we talk about money, we don't need to have the conversation. Reframe it: we get to have a thousand conversations. And so, you don't need to do everything at once. All you need to do is just enough to give each other a big hug and then talk about it next time.
You talk in the book, which really resonated with me, $3 questions versus $30,000 questions, because I think that we talk about the idea of stable misery and getting just kind of stuck in the same loops again and again. That the $3 questions are where a lot of the conflict is coming up. That's the Starbucks. 'Why did you buy that? We don't need that.' Versus lay out for us the difference between the $3 and the $30,000 question.
Most people are obsessed with $3 questions and they really should be focused on asking $30,000 questions. $3 questions are, 'Why'd you buy that coffee?' You know, 'Ooh, should we get the extra appetizer?' 'Oh, I'm bad.' Those are totally irrelevant. If you like coffee, buy coffee. It truly makes virtually no difference on the overall big picture of your finances. But the $30,000 questions are the important ones. Examples are: what is our savings and investment rate? What percentage of net income are we contributing? What is our asset allocation? Most people don't even know what that phrase means, right? What fees are we paying to, say, a financial advisor? Do we have an unnecessary scam whole life insurance policy? Do you even know that? You should, because that could cost you hundreds of thousands of dollars.
These are the core questions. There's about five to ten. I lay them all out, the big ones. And if you get the big $30,000 questions right, you can buy all the pickles and coffee you want. You don't have to track every morning. You don't have to track the price of russet potatoes. It's a complete waste of time. You're playing small by focusing on that. And you can actually play big when you get the big questions right.
We talked about myself, the avoider. You talk about three other types, and I love a type because it makes you feel like I'm heard, I'm seen. That's me. I'm the avoider. Don't want to talk about it. Let's talk about the optimizer.
Okay. I have a soft spot for optimizers because I am one.
Okay. We always love our own types. Love it.
Exactly. An optimizer loves a good spreadsheet. They love...
You're what we call on this podcast an Amy.
Oh, there we... Hey, Amy. Sorry you can't be here today, but we're going to talk a little bit about you behind your back.
Okay. Optimizers love to plan. They love to build systems. They love control. As you can see, I'm leaning forward. I'm getting excited because I'm talking about myself.
Everything on my desk is perfectly organized right now because I'm a freak. The problem is, you know, optimizers, it can be very helpful because they build systems, they invest, they do all these things really well. The problem is they can become unbearably boring and cheap. Okay. And for people listening, it may be you or it may be your spouse where they're always looking at the cost, always. 'Oh, that's a nice sweater. How much did it cost? Oh, we could get the steak. How much does it cost? Maybe we should get the chicken.' And at a certain point, they are only living in a spreadsheet. But that's not the point of money. Okay? A rich life is lived outside the spreadsheet.
So that's optimizers. Then we have worriers. Worriers love to worry. They worry if they will have enough. They worry if they can pay for their kids to go to college. If they actually start to accumulate a lot of money, they still worry. And then they worry why they are worrying. Right? For worriers, it's often all they have known. And oftentimes when I speak to people, particularly women, their mom's worried and their grandmother's worried. It is the only way that they know how to relate to money.
And when I ask them, because many times I'll talk to people and when I analyze their finances, they never realized how much they had. Just to give you a really shocking example, 50% of the people I talk to on my podcast do not know their own household income. 50. That's not a typo. 50. So when I talk to them and I show them how much they'll have when they invest, blah blah blah, they're often visibly shocked. And I'll say, you know, 'You've been worrying about having enough for 25 years. Now that you see the path you are on, now that you see how much you actually have, that's a lot more than you thought.' Does it change the way you feel? And you know what they say?
No. [laughter] Because they're worriers. That is who they are.
Now, two important points to know. Number one, the way you feel about money is highly uncorrelated with how much you have in the bank. Deep down, many of us believe that if we just had 5,000, 50,000, 500,000 more, suddenly we would stop worrying and the sun would shine and we would go out and dance with the butterflies. Sorry to say, that's not the way it works. You can feel better about money. So worriers have to fundamentally, number one, they got to know their numbers, and number two, they have to actually work on their money psychology. They have to realize that you have to put work into your relationship with money just like we put work into our relationship with food, kids, parents, in-laws, all of it.
The final category: we talked about avoider, we talked about worrier, we talked about optimizer. The final one is a dreamer. Dreamers believe that success is right around the corner. It's the next gig, the next job, the next deal. I'm also a dreamer as well as being an avoider.
I'm a dreamer avoider.
So dreamers even develop their own language. They'll say stuff like, 'Oh, I don't need to work a 9-to-5. That's for suckers.' You know, 'Oh, investing 7% return, that's so boring.' And they typically fall into things like MLM, crypto, like very kind of get-rich-quick opportunities. Now the problem is it's very hard for the partners of dreamers because the partners are like, 'Hey, we need stability. We need to invest consistently. We need to save. We need to look at these numbers and talk about them.' And the dreamer goes, 'No, no, no, no. It's all about the gig, the deal.' Right?
Often what I find is that dreamers are subsidized by somebody in their life. Either their spouse is handling all the emotional financial labor, or their parents are funding things. If that partner left or even went away for a month or two, the house of cards would fall. And typically what you would find is that this person, the dreamer, would actually have to figure things out on their own instead of merely living in the clouds. Let's take a break, and we're going to talk about how these money types work together in relationships and how couples can design their rich life visions together.
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So before the break we were talking about these four types, and obviously in a couple you can have any particular types. My dreamer, by the way, I'm not into MLMs, or I'm not a... I'm not like a schemer dreamer. I'm more of a 'something great will happen and it'll all work out.' I'm that kind... I'm a kind of a little bit of a... I'm an over-optimist. That's the kind of dreamer that I am.
I hear that. And then as an optimizer, I'm like, 'Yeah, yeah. Something great will happen. That's why we're going to use my system and automatically invest every single month so that we know the exact month and year that we're going to have enough money to go do that thing.'
Yeah, yeah, that's right. I mean, and I think that this is where the heart of the book lies, is how to design this rich life vision you want with your partner. So, let's talk about money dials. I love this concept. We always talk in parenting about like adjusting the dials, that these are not doorways, these are not single decisions, these are not 'you're going to make a good decision and your kid is going to go to Harvard, or you're going to make a bad decision and your kid's going to turn out terrible.' That you're constantly working dials as a parent to make outcomes, and you have to adjust for a lot of incoming information, and you have to adjust as your child ages and stages. So, talk about money dials because I think this is really going to resonate with our audience.
I love hearing how people love to spend money. It's one of my favorite things, and one of the questions that I'll ask people is, 'What is your rich life?' And this is the answer that almost 80, 85% of people will say. They say, 'Well, I want to do what I want when I want.' Almost everybody independently says that answer to me, and I'll just say, 'Okay, what do you want?' And they just stare at me and they just blink. Most people have never deeply thought about what their rich life is. You know, we go to work, or our partner goes to work, and we stay up late, we take care of family, but we never actually asked ourselves, 'What is it all for? What do I get? What do I want?' And so one easy way to do that is to start thinking about what you love to spend money on. So if I ask you, Margaret, what do you love to spend money on, what would you say?
I love to spend money on good food.
I love to spend money on travel. And when I travel, I like the travel to be fancy. I'd rather travel once a year fancy than five times a year. And fancy for me is not, you know, Bora Bora at the Ritz. It's not the White Lotus.
Why are you minimizing what you like?
Well, because fancy... I'm not... I don't know that I'm minimizing, but I think fancy is... I know where my level of fancy is.
And it's worth it to me to go less often and get to my level of fancy.
I don't want to take five years off to do White Lotus fancy. That's not interesting to me. I want to go once a year, go pretty...
Fancy, comfy, and then that's what I like to spend money on.
Okay, so for everybody listening, this is step one of understanding your money dial, which is: what do you love to spend money on? Not just like, but love. It lights you up. You read magazines. You have a list of where you would, what you would do, what you...
The most common answer, actually, Margaret, you nailed it. The most common answer is food. Most people love to eat out or buy certain types of food. So that's the number one most common money dial. The number two is travel. Oh, look at me.
