Ramit Sethi: Never Split The Bill, Its A Red Flag & Renting Isn't Wasting Money!

Intro (0s)

• A common argument against renting is that it's a waste of money, but there's shocking math behind a mortgage that most people aren't aware of (5s).
• There are four money types that people fall into: avoiders, optimizers, dreamers, and worriers, each with their own unique characteristics and potential pitfalls (19s).
• Avoiders hate talking about money, and if a partner refuses to discuss finances, it's a huge red flag, as many people don't know their household income or debt (26s).
• Optimizers are good with money but can take it too far, becoming overly invested in spreadsheets and potentially missing out on other aspects of life (43s).
• Dreamers believe success is just one deal away and often fall prey to scams, such as crypto coin schemes (48s).
• Worriers are anxious about money, often due to parental influences, and can become overly frugal, obsessing over small expenses (59s).
• The only investment many couples make is buying a house, but there are alternative ways to create real wealth (1m18s).
• Four key numbers that everyone should be discussing are not specified, but the importance of being aware of these numbers is emphasized (1m26s).
• A significant percentage of listeners haven't subscribed to the show, and a request is made to support the show by hitting the Subscribe button (1m33s).

Why People Should Care About This Conversation (2m3s)

• Money is a central part of people's lives, regardless of their relationship status, whether they are single and dating, engaged, or have been married for 25 years (2m15s).
• Most people tend to avoid discussing money until problems arise, which can lead to a negative association with the topic (2m34s).
• There is an alternative approach to viewing money, where it can be used as a source of connection, possibility, and joy in one's life (2m48s).
• This conversation aims to explore this different perspective on money and its potential to positively impact relationships and overall well-being (2m51s).

What Has Ramit Learned About Money And Relationships (2m53s)

• A conversation with James Ston, a divorce expert and divorce lawyer, revealed that the two main reasons couples end up in his office for a divorce are infidelity and money problems in the relationship (2m54s).
• Financial avoidance is a common issue that can prevent people from getting into a relationship or end an existing one (3m24s).
• Research has shown that 50% of people do not know their household income, often because they only check their checking account and do not track their income (3m35s).
• 90% of people in debt do not know the exact amount of debt they owe, likely because they avoid thinking about it and ignore related emails and envelopes (3m41s).
• 100% of people in credit card debt have trouble saying no to their children, indicating a similar principle applies to overspending and saying no to kids (3m47s).
• The inability to say no to spending and racking up credit card debt is linked to the same principle of struggling to say no to children (4m21s).
• Despite these findings, it is possible for people to change their behaviors and improve their relationship with money (4m34s).

Differences Between Men And Women's Spending Habits (4m38s)

• Men often describe themselves as providers in a relationship, a role that is deeply ingrained in culture, but this can lead to issues when they are not the top earner, which is increasingly common, (4m45s).
• When men are not the top earner, they often struggle to define their financial role in the relationship, but they can take on multiple roles such as provider, nurturer, helper, or leader, (5m8s).
• Women, on the other hand, often discuss having a secret bank account to keep some money aside in case of emergencies such as physical or financial abuse, divorce, or other unforeseen circumstances, (5m24s).
• This behavior is rooted in the historical context of women not being allowed to open their own bank accounts in the US, a restriction that was in place just two generations ago, (5m33s).
• While the desire for financial security is understandable, it is recommended that individuals have an account in their own name, but without secrets in the relationship, (6m1s).

What Are The Sources Of Arguments In Relationships (6m8s)

• The main causes of arguments in relationships related to money are often not about hiding money, but rather about differences in spending habits and financial identities, with one partner identifying as a "spender" and the other as a "saver" (6m8s).
• Couples often struggle to discuss money and get on the same page, with the goal of "getting on the same page" often being unclear or undefined (6m41s).
• The way people feel about money is often unrelated to the amount of money they have in their bank account, which is why some multi-millionaires still worry about money (6m55s).
• To master one's relationship with money, two things are necessary: knowing one's numbers, or learning the basics of personal finance, and mastering one's money psychology, or changing the way one talks about and behaves with money (7m17s).
• Mastering money psychology involves changing the way one feels about money, which can be achieved by changing one's behavior and language around money (7m27s).
• Having a healthy relationship with money requires both understanding the numbers and mastering one's money psychology, which can lead to a more positive and healthy relationship with money (7m37s).

Women Earning More Causes Problems (7m42s)

• With the shift in traditional gender roles due to more women earning higher incomes, new dynamics and issues have emerged in relationships, such as insecure men feeling emasculated or women not being happy about contributing more financially (7m58s).
• Research suggests that around 70-80% of women expect their romantic partner to earn more than them, but this gap is closing as women earn more money (8m32s).
• A specific example is given of a 40-year-old woman who earns $200,000 per month from her business, while her boyfriend earns a few thousand dollars per month from his own business, highlighting the difference in socioeconomic status and financial education (9m8s).
• The woman wanted her boyfriend to pay for dinner occasionally, but also wanted him to contribute more to his IRA, showing a desire to feel taken care of while also being financially responsible (10m4s).
• This couple's situation illustrates the irrationality of money decisions, where individuals may want one thing but not actually want it when they get it, and how this can affect relationships (10m25s).
• Working with the couple revealed that they both had underlying reasons for their feelings about money, and that they needed to understand and address these individually (10m40s).
• The couple eventually found a solution by having the woman give her boyfriend her credit card to pay for dinner occasionally, allowing him to feel like he was contributing (11m14s).
• This example highlights the importance of acknowledging and addressing irrational money behaviors in relationships, and building a shared vision of a "rich life" together (12m2s).

You Don't Need To Buy A House To Be Successful (12m15s)

• The idea of buying a house is often tied to societal expectations of success, but this may not be true for everyone, and renting can be a viable alternative (12m44s).
• One person's experience of renting for 20 years and investing the difference resulted in making more money than if they had bought a house (12m48s).
• The notion that renting is "throwing money away" is a common misconception, and people should run the numbers to determine what works best for their individual situation (13m3s).
• Traditional relationship dynamics, such as the idea of a male provider, can be challenged when the woman earns more than the man, requiring a re-evaluation of roles and expectations (14m2s).
• The changing economic landscape, including high housing and healthcare costs, has led to a shift in relationship dynamics, with many couples having two incomes and redefining traditional roles (14m24s).
• The concept of a single earner and traditional roles is becoming less common, and people are trying to figure out what these changes mean for their relationships and individual identities (14m38s).
• IRA (Individual Retirement Account) investments are an example of prioritizing long-term financial goals, but can sometimes conflict with short-term desires, such as buying dinner (12m25s).
• Societal expectations can often conflict with individual desires and values, leading to internal conflicts and a need to re-evaluate priorities (12m33s).

Should Men Remain Single? (14m46s)

• Many men may choose to remain single until they've worked on themselves and are able to provide for a partner, which could be a path taken due to societal expectations and personal feelings of inadequacy (14m46s).
• The concept of being a "provider" is often learned through various perspectives, including family and media, and can influence a person's decision to get married or enter a relationship (15m5s).
• Some men may feel they need to reach a certain point in their career or achieve specific goals before getting married, which can stem from feelings of not being ready or not being enough (15m23s).
• In relationships, it's essential to have open and honest conversations about money and expectations, rather than avoiding the topic or making assumptions (15m47s).
• Having discussions about financial responsibilities, such as who should pay for dinner or be the sole earner in a household, can help build a stronger and more transparent relationship (15m50s).
• Avoiding these conversations can lead to misunderstandings and unresolved issues that may persist for years (16m4s).

Who Should Pay For The First Date? (16m7s)

• The person who suggested the date paying for it would be nice, but it's not a crucial aspect to focus on, especially when considering the long-term implications of a relationship (16m7s).
• The focus should be on understanding how a partner thinks about and handles money, rather than just the first date, as this can indicate compatibility and shared values (16m36s).
• The point of money in a relationship is not just about the first date, but about whether partners see money the same way, connect, and will be working together towards common financial goals (16m55s).
• Asking to split the bill on a first date can be seen as a red flag or a turnoff, especially for women, as it may indicate a lack of generosity or consideration (17m42s).
• Generosity is a valuable trait in a partner, and it can manifest in various ways, such as paying for dates, planning trips, or being thoughtful in everyday life (18m11s).
• When in a relationship, it's essential to know that your partner is generous and willing to show appreciation and care through their actions (18m9s).
• The conversation about money in a relationship should go beyond the first date and focus on the underlying values and behaviors that will impact the partnership in the long run (18m33s).

Should Men Be Chivalrous? (18m37s)

• Chivalry is the idea that the man should lead and take care of certain actions, such as opening doors and pulling out chairs, but this concept can send a message that lacks context and real understanding (18m37s).
• A 26-year-old man who earns less than his girlfriend may struggle with being chivalrous due to financial constraints, highlighting the need to reevaluate the emphasis on chivalry (18m59s).
• Being chivalrous and generous is not solely about money, and people should focus on more important aspects of relationships and finances (19m11s).
• The obsession with small financial decisions, referred to as "$3 questions," distracts from more significant financial concerns, such as long-term investments and financial alignment with a partner (19m26s).
• More important financial considerations, referred to as "$30,000 questions" or "$300,000 questions," include whether a partner is financially aligned, investing for the future, and regularly discussing money in a positive and proactive manner (19m37s).
• Focusing on these larger financial concerns can lead to significant long-term benefits, making smaller financial decisions, such as who pays for appetizers, relatively irrelevant (19m59s).

What Are Financial Red Flags? (20m13s)

• A significant financial red flag in a relationship is when one partner does not want to discuss money, as differing views on money and values can be worked through, but a refusal to talk about it creates a huge problem (20m14s).
• The inability to talk about money prevents understanding each other's perspectives and being curious about each other's financial goals, making it challenging to be on the same page (20m31s).
• Having a conversation about money is not a one-time event, but rather an ongoing process that requires multiple discussions throughout a relationship, similar to conversations about raising children (20m45s).
• To successfully navigate financial discussions, both partners must be willing to talk about money and find ways to make the conversations enjoyable (21m12s).

The Money Types – Avoider (21m19s)

• People who avoid talking about money are referred to as "avoiders," one of four identified money types, and they use various techniques to evade the topic, regardless of their gender (21m29s).
• Avoiders tend to dislike discussing money and will often say things like "Why do you always have to talk about money?" or "You're so much better at this, you just handle it" to shift the conversation away from financial matters (21m45s).
• Avoiders typically do not have a clear understanding of their own financial situation and prefer not to discuss it (22m0s).
• Everyone has something in their life that they know they should address but tend to avoid, such as fitness or relationships with family members (22m7s).
• Avoiding discussions about money or other important topics often does not have immediate consequences, making it easy to procrastinate until a critical point is reached (22m16s).
• Procrastination on issues like fitness or money can continue until a significant problem arises, such as hitting a financial "brick wall" (22m41s).

The Optimizer (22m45s)

• Optimizers are a type of money personality that love to live in spreadsheets, calculating and analyzing financial data, and often take it too far, prioritizing numbers over other aspects of life (22m52s).
• Optimizers are often thought of as boring, as they tend to focus solely on money and numbers, and may struggle to prioritize connection, fun, and experience (23m29s).
• A challenge given to optimizers is to spend $100 on themselves within a week, but they often struggle to do so, instead choosing to spend it on others or invest it (23m46s).
• Optimizers may prioritize saving and investing over enjoying life, and may end up with a large amount of money saved, but having never truly experienced life's pleasures (24m33s).
• The goal is to find a balance between saving and investing, while also enjoying life and trying new experiences, rather than taking optimization too far and living a smaller life than necessary (24m51s).
• Optimizers can be successful in setting up accounts, investing, and earning compound interest returns, but may need to be reminded to also prioritize other aspects of life (24m20s).

The Worrier (24m59s)

• There are three categories of people when it comes to money: optimizers, worriers, and another category mentioned earlier in the discussion, with worriers being the focus of this section (25m9s).
• Worriers typically develop their worrying behavior from their parents and have a relationship with money centered around worry, often concerned about not having enough money (25m12s).
• Worriers often worry about having enough money for everyday expenses, such as paying at the gas station, and may not know their actual income, leading to unnecessary stress (25m20s).
• A significant percentage of couples do not know their combined income, with an example given of a couple who thought they made $70,000 per year but actually made $120,000 per year (25m31s).
• Despite having a higher income than they thought, the couple did not feel any better about their financial situation, illustrating that feelings about money are not directly correlated to the amount in one's bank account (25m58s).
• The goal is to help worriers understand their financial numbers, develop a new relationship with money, and find a sense of security and comfort with their financial situation (26m17s).
• This process involves exploring new perspectives on money and finding ways to make financial decisions that align with one's values and goals, much like discovering a new taste or preference (26m30s).

The Dreamer (26m42s)

• The "Dreamer" believes that success is just one deal away, often falling into get-rich-quick schemes and scams, such as multi-level marketing and cryptocurrency scams, due to their resistance to calm, low-cost, long-term investing. (26m44s)
• Dreamers tend to view traditional methods of building wealth, such as a 9-to-5 job, as boring and unappealing, despite the potential for higher earnings. (27m11s)
• They often have a mindset of "one more deal" and struggle with discussing financial matters, sometimes living in a different financial reality. (27m23s)
• Dreamers may be subsidized by a partner or someone else in their life, allowing them to maintain their unrealistic financial expectations. (27m38s)
• If the subsidizing partner were to leave, the Dreamer's financial situation would likely collapse, potentially prompting them to make significant changes. (27m45s)

Which Money Type Lives A Happier Life? (27m57s)

• There are four money types: the Avoider, the Optimizer, the Warrior, and the Dreamer, and it's possible to live a happy life with any of these types, as well as change from one type to another (27m57s).
• On average, one person is likely to live a happier life, and in this case, Optimizers are considered great and happy, as they love their spreadsheets and are organized (28m16s).
• Warriors are not likely to live the happiest life, while Dreamers are quite happy, living in optimism, although their lifestyle is often subsidized by someone else and they may be leaving behind financial catastrophes (28m22s).
• The key to a happy life, especially in a relationship, is to deeply understand oneself, communicate with one's partner, and create a rich life vision for the two of them (28m59s).
• Most couples lack a vision for their money, leading to fights over small expenses, and financial problems are rarely about overspending, but rather about the lack of a shared Rich Life vision (29m10s).
• A Rich Life vision involves understanding what money means to the couple, what they want to use it for, and how they want to feel about it, guiding their financial decisions (29m23s).
• Without a shared vision, couples are confronted with numerous financial decisions every week, making it difficult to determine what is and isn't important to them (29m35s).

Do You Know How Much Your Partner Makes? (29m42s)

• Many couples do not know how much money their partner has in their savings account or their total investment portfolio, and this conversation is often never had in a relationship (29m43s).
• The importance of having open conversations about finances in a relationship is highlighted, as not doing so can lead to feelings of unfairness and create tension (30m51s).
• A personal anecdote is shared about a past relationship where one partner knew the other's financial situation, but not vice versa, and how this led to an assertive conversation about fairness and transparency (30m54s).
• The conversation eventually led to a deeper discussion about the couple's financial goals, aspirations, and the life they wanted to build together, which is considered a crucial conversation for every couple to have (31m39s).
• The conversation about possibility and dreams is emphasized as a vital aspect of financial discussions in a relationship, allowing couples to dream and plan together before getting into the logistics (31m46s).
• The importance of talking about money early and regularly in a relationship is stressed, as it can help build trust and understanding (31m2s).

Should You Keep A Bad Financial Situation A Secret? (32m0s)

• Many people in relationships keep their financial situations a secret from their partners due to feelings of shame or embarrassment, fearing that their partner might leave them or be less attracted to them if they knew the truth (32m26s).
• It's essential to remember that having less money than desired doesn't make someone a lesser person, and being open about financial situations can be more appealing than hiding them (32m48s).
• Being proactive and initiating conversations about finances with a partner can be beneficial, especially when considering taking the next step in a relationship (33m1s).
• Shame and embarrassment surrounding financial situations are common, affecting people across the spectrum, regardless of age or financial status (34m36s).
• It's crucial to talk about money with a partner, even if it feels embarrassing or shameful, as it's a necessary aspect of building a life together (34m58s).
• Being open about past financial mistakes, acknowledging them, and having a plan to improve can be attractive and a sign of responsibility (35m35s).
• Removing shame from financial discussions can help solve problems and improve relationships, as keeping them hidden can exacerbate the issue (35m58s).
• Normalizing conversations about taboo subjects like money, gender, prenups, and dating can help inspire people to be more open and honest with their partners (36m7s).

Are Prenups A Good Thing? (36m28s)

• Not all couples should initiate a prenup, but it is recommended for those who bring substantial premarital assets to the marriage, such as a large investment portfolio, a business, rental property, or a house (36m32s).
• Most people should not get a prenup because they don't have substantial assets when they get married (36m59s).
• Bringing up the topic of a prenup can be an art, and it's essential to be honest and not blame it on a lawyer (37m15s).
• Ramit Sethi approached the topic with his wife by explaining his business success, lifestyle, and financial goals, and reassured her that he wouldn't change overnight after getting married (37m48s).
• Ramit's wife responded positively, saying she was willing to learn more about prenups, which led to a series of conversations with lawyers (39m1s).
• The conversations about numbers and financial details became difficult, leading to resentment and feelings of not being heard, and the couple eventually sought the help of a therapist (39m27s).
• In therapy, Ramit and his wife discussed how they see money, with Ramit focusing on growth and optimization, while his wife had a different perspective (39m50s).
• A conversation about money between partners can be a new path to realizing differences in how each person views money, with one partner seeing it as safety, which can be a starting point for discussing financial differences (40m8s).
• The resistance between two partners in discussing money can be due to differences in desired arrangements, such as prenuptial agreements, which involve technical rules and can be adversarial (40m45s).
• Prenuptial agreements involve various rules and technicalities, including what happens in case of separation, children, houses, and joint and individual investments (40m54s).
• The process of creating a prenup can be adversarial, with each partner having a lawyer, and it's essential to manage the lawyers and focus on coming to an agreement with your partner (41m25s).
• When considering a prenup, it's crucial to remember that you manage your lawyers, and your job is to come to an agreement with your partner for the rest of your life (41m53s).
• Marriage statistics show a 60% chance of breaking up, but this statistic is skewed and includes second marriages and various socioeconomic factors; however, the divorce rate has been decreasing for decades (42m14s).
• It's essential to think about how things can go right and wrong in a marriage, especially when it comes to money, and to make a plan for both scenarios (42m47s).
• Couples should discuss and plan for potential challenges, such as losing a job or separating, to ensure they are prepared for any situation (42m55s).

Do We Need A "Money Guy"? (43m12s)

• A common red flag in personal finance is when someone does not want to discuss money, and instead, they have a "money guy" who handles their financial matters (43m12s).
• A "money guy" often refers to a financial advisor who charges a percentage of the client's assets, typically in the form of an Assets Under Management (AUM) fee (43m25s).
• This type of fee can be costly, with a 1% fee resulting in the client paying around 28% of their lifetime investment returns in fees, which can amount to tens or hundreds of thousands of dollars (43m54s).
• It is generally recommended to avoid financial advisors who charge percentage-based fees and instead opt for those who charge hourly or project-based fees (44m16s).
• Many people in America do not want to learn the basics of money and therefore hire a financial advisor, but it is essential to be aware of the potential costs and fees associated with their services (43m32s).

Red Flag: They're Cheap (44m27s)

• Cheap people prioritize cost above all else, making it the first and last thing they consider, which can suck the life out of every room and make them come across as miserable (44m28s).
• Cheap individuals rarely recognize the negative impact their behavior has on their loved ones and find it difficult to change, often reinterpreting their actions as a virtue (44m50s).
• Cheap people's behavior can be off-putting, not just to others, but also to their partners, who may not appreciate their frugal nature, especially when it comes to things like tipping (45m18s).
• The point of money is not just to save it, but to use it to live a rich life, which involves spending extravagantly on certain things and cutting costs mercilessly on others (45m26s).
• Creating a "rich life Vision" involves deciding what to spend money on and what to cut back on, allowing individuals to "play different notes" and live a more balanced life (45m30s).
• Having a single-minded focus on spending less can lead to a miserable existence, and it's essential to be able to make different financial choices to live a more fulfilling life (45m46s).

Robert Kiyosaki's Advice Is Rubbish (45m52s)

• Certain behaviors or beliefs can be considered red flags when it comes to people's relationships with money, such as following the advice of Robert Kiyosaki, who has been known to provide questionable investment advice, including suggesting that a can of tuna is a good investment (46m1s).
• Robert Kiyosaki's advice has become increasingly unreliable in recent years, and he has made outlandish claims, such as the tuna investment suggestion, which is not a viable or sensible investment strategy (46m13s).
• The personal finance and money space is filled with charlatans who promise get-rich-quick schemes or try to create a sense of urgency by claiming the sky is falling, and it's essential to be cautious of these individuals (46m31s).
• A healthy relationship with money involves being balanced, having fun, and making long-term financial decisions, rather than seeking quick fixes or following fad advice (46m43s).
• When seeking financial advice, it's crucial to find individuals who provide long-term guidance and avoid those who make unrealistic promises or promote cheap, get-rich-quick schemes (46m51s).

What Makes A Worrier? (47m4s)

• People who are frugal with money, referred to as "Warriors," often have an origin story that links to their frugalness, which can be attributed to their upbringing and experiences with money (47m4s).
• When asked about their parents' views on money, many people recall their parents saying things like "we can't afford it," "money doesn't grow on trees," and "we don't talk about money in this family" (47m30s).
• A significant event, often occurring during their teenage years, such as a parent losing their job, can have a profound impact on a person's relationship with money, leading to a change in their socioeconomic status (47m52s).
• This event can affect people in one of two ways: some develop a healthy relationship with money, characterized by a high savings rate, investments, and entrepreneurship, while others become extremely cheap and anxious about money (48m11s).
• The latter group often does not recognize the connection between their past experiences and their current relationship with money until it is pointed out to them (48m37s).

What Is A Rich Life Vision? (48m42s)

• A Rich Life Vision is a concept that involves having a positive conversation about money, which is often a rare occurrence for most people, as discussions about money usually revolve around negative topics such as overspending (48m44s).
• To create a Rich Life Vision, one should start by having a positive conversation with their partner about money, using an agenda that includes topics such as how they currently feel about money and how they want to feel about it in the future (49m1s).
• The conversation should be short, fun, and end with a positive note, such as saying "I love you," to associate talking about money with positivity (49m25s).
• A useful exercise to create a Rich Life Vision is to fill in the blanks of sentences such as "I wish we spent more money on" and "I think we could cut back on," and then compare notes with your partner (49m41s).
• Another exercise is to create a 10-year bucket list with your partner, where you both write down what would make the next 10 years incredibly rich and meaningful to you, and then compare notes and find common goals (49m55s).
• Once you have identified a common goal, estimate the cost, decide when you want to achieve it, and calculate how much you need to save each month to make it happen (50m53s).
• Having a joint bank account and separate bank accounts can be a good system for managing finances, but it ultimately depends on individual preferences and financial goals (52m5s).
• In the case of the person being interviewed, their partner is an avoider who doesn't care about material things, so they have a system where they pay for most things and their partner focuses on quality time and experiences (52m18s).

Merging Finances As A Couple (53m2s)

• In a relationship, one partner may pay for most things, and the other partner may be okay with it, as long as there's no resentment, (53m2s).
• The concept of "money dials" refers to things that individuals love to spend money on, and partners may have different money dials, (53m46s).
• Merging finances can help couples discuss and come up with a way to manage their money, especially when it comes to discretionary spending, (54m6s).
• Merging finances means putting paychecks into a joint checking account, which then pays for joint expenses, joint credit card bills, and individual accounts, (54m36s).
• Each partner can have their own individual checking and savings accounts, with no questions asked, for guilt-free spending, (55m3s).
• The amount allocated to each partner from the joint account can be the same or proportional, depending on individual circumstances, (55m26s).
• Setting up accounts to drive the right behavior is more important than proportionality, and simplicity is often better than complicated calculations, (56m17s).
• Combining finances in a marriage involves putting all money into a joint account, making it easier to manage and make decisions about spending, and this approach is part of a philosophy around a "rich life vision" that values simplicity (56m33s).
• Initially, the couple had separate accounts and paid into a joint account, but this became complicated due to variable business income, requiring recalculations every month and reconciliations at the end of the year (57m0s).
• The couple's approach to finances is based on the idea that their future is together, and they want their accounts to reflect that, with all money going into a joint checking account and then being distributed to individual accounts and joint expenses (58m0s).
• In the event of a divorce, the joint checking account would be split 50/50, as the money earned during the marriage is considered community property (58m20s).
• A prenuptial agreement (prenup) only concerns assets and property acquired before the marriage, not what is earned during the marriage (58m35s).

Should You Sweat The Small Stuff? (58m43s)

• Caring too much about small expenses, such as buying coffee, is a waste of time because the actual cost is not that much and it brings simple joy, (58m44s)
• Agonizing over small expenses requires making daily decisions to save and properly invest the money, which can be overwhelming and may not be worth the effort, (59m16s)
• Instead of focusing on small expenses, it's more important to make a few critical financial decisions, such as investing properly and having a target savings rate, (59m25s)
• Couples often argue about small expenses, but rarely discuss important financial topics, such as their savings and investment rates, (59m45s)
• Increasing the investment rate by 1% every year can lead to significant financial gains, worth hundreds of thousands of dollars, (1h0m7s)
• Starting with a 5-10% investment rate and increasing it by 1% annually can lead to substantial long-term financial benefits, (1h0m15s)
• Focusing on making one important financial decision per year, such as increasing the investment rate, can be more beneficial than trying to save money on small expenses, (1h0m35s)

Is Buying A House Financially Savvy? (1h0m41s)

• Many people consider buying a house as the only investment they make together, but it's questionably not even an investment, and the logic that renting is wasting money is flawed (1h0m45s).
• Renting is not throwing away money, just like going to a sushi restaurant is not throwing money away on sushi, as you're paying for something you're getting value from (1h1m15s).
• The argument that you're paying your landlord's mortgage when renting is also flawed, as you're also paying the sushi owner's mortgage when you go there and get sushi (1h1m27s).
• Buying a house can be a good financial decision, but renting and investing the difference can also be a good decision, and in the top 50 US Metro cities, it is currently cheaper to rent than to buy (1h1m43s).
• When considering buying a house, people often don't factor in "phantom costs" like maintenance, taxes, transaction costs, and opportunity costs, and instead simply look at the monthly mortgage payment (1h2m19s).
• The decision to buy or rent a house should be based on a combination of financial and non-financial factors, including lifestyle and personal preferences (1h3m5s).
• Running a buy versus rent calculation and an amortization chart can help determine whether buying a house is financially savvy, and it's essential to consider whether the purchase aligns with one's "Rich Life vision" (1h3m13s).
• Non-financial reasons to buy or rent a house include the desire for stability, the need to live in a particular area for kids, and the enjoyment of decorating (1h3m33s).
• Most people spend a significant amount of money on the total cost of ownership for a house without running any calculations, and it's essential to consider both financial and non-financial factors when making this decision (1h3m50s).

Why Is It Hard To Buy A House In 2024? (1h4m27s)

• Many people view buying a house as a good investment, partly because they don't know other ways to invest, and it's seen as a key life milestone, following a sequence of events such as going to school, getting a job, and getting married (1h4m29s).
• Historically, it was possible to buy a house on a reasonable salary, but that's no longer the case, and housing is now historically expensive (1h5m10s).
• The high cost of housing is not due to young people's spending habits, but rather due to a lack of housing supply, caused by people who bought houses in the 60s, 70s, and 80s preventing new housing from being built, a phenomenon known as NIMBYism (Not In My Backyard) (1h5m24s).
• This limited supply has driven up housing prices, but some cities are starting to see a decrease in housing prices as more housing is being built (1h5m52s).
• It's essential to build more housing to make it affordable for people of all income levels, and it's a significant problem that many people can't afford rent or housing (1h6m8s).
• Investing in a primary residence may not be the best financial decision, as it comes with massive costs, including maintenance, opportunity costs, and phantom costs (1h6m28s).
• When taking a 30-year mortgage, most people will pay more towards interest than principal for 21 years, which could be seen as "throwing money away on interest" rather than rent (1h7m1s).

A Better Use Of Money Than Buying A House (1h7m41s)

• A couple's savings goal is to save around $50,000, and the question is how to use that amount to drive a financial return (1h7m41s).
• A conscious spending plan involves four key numbers that couples should discuss: fixed costs, savings, investments, and guilt-free spending (1h7m54s).
• Fixed costs, including housing, utilities, car payments, debt payments, and groceries, should account for 50-60% of take-home pay (1h7m59s).
• The two main areas where couples tend to overspend on fixed costs are housing and cars, often due to cultural pressures to own a big house and a big SUV (1h8m40s).
• Savings should account for 5-10% of take-home pay, including emergency funds and savings for specific goals like a down payment (1h9m5s).
• Investments should also account for 5-10% of take-home pay, as this is where real wealth is created, and couples often neglect this area (1h9m9s).
• Guilt-free spending, such as going out for drinks or travel, should account for 20-35% of take-home pay, allowing couples to enjoy themselves without financial stress (1h9m42s).
• It's essential to set up an automatic system for investing, rather than doing it manually, to ensure consistent and stress-free investing (1h10m20s).
• Couples should have a monthly money meeting to discuss their finances, celebrate their progress, and review their investments (1h10m34s).
• When one partner wants to buy a house and the other doesn't, it's essential to pick your battles and have an open discussion, considering individual levels of conviction and financial awareness (1h10m55s).
• When considering buying a house, it's essential to run the numbers and calculate the opportunity cost, as well as factor in non-financial reasons for making the purchase (1h12m22s).
• Opportunity cost refers to all the things you could have done with the money instead of buying a house, and it's crucial to understand this concept when making significant financial decisions (1h11m35s).
• Buying a house can be an emotional decision, and it's essential to acknowledge this and separate it from other investment decisions (1h11m54s).
• Before making a big financial decision, it's crucial to know all the pieces on the board and be able to discuss it with your partner, even if one person is more financially savvy (1h13m28s).
• It's essential to bring your partner into the financial decision-making process and get them involved, even if they're not as interested or knowledgeable (1h13m47s).
• Having open and honest conversations with your partner about financial decisions, such as investments and big purchases, is vital for making informed choices (1h14m6s).
• It's okay to make a "bad" financial decision if it's something you want and can afford, as long as you're aware of the financial implications and have discussed it with your partner (1h14m25s).
• The example of buying a house as a bad financial investment but a good personal decision highlights the importance of considering both financial and non-financial factors in decision-making (1h14m28s).

Alternatives To House Buying For Investments (1h14m32s)

• Investing in a house may not be the best decision if the objective is to make more money, but it can have non-monetary benefits that are valuable to some people (1h14m32s).
• Many people buy houses because they don't know of alternative ways to invest, but simple, low-cost, long-term index funds can be a great option (1h15m7s).
• Index funds allow individuals to invest in the stock market with minimal effort and low fees, and can be set up to automatically diversify and become more conservative over time (1h15m34s).
• Target date funds, such as Vanguard, Fidelity, or Schwab 2050 funds, are a type of index fund that can be used to invest for retirement by automatically adjusting the investment portfolio based on the target retirement year (1h15m25s).
• Investing in index funds can be as simple as setting up automatic monthly transfers, which can be as low as $50 per month, and can be a consistent and low-fee way to create wealth over time (1h15m46s).
• The key to successful investing is to cut through the noise and focus on consistent investing, time, and low fees, rather than trying to analyze complex financial data or follow trendy investment advice (1h16m21s).

Uncovering Finances And The Shock It Can Have (1h16m44s)

• Many couples are shocked when they review their financial documents together, sometimes realizing their financial situation is worse or better than they thought, and this realization can lead to emotional moments, such as one partner crying upon hearing the other express their feelings for the first time (1h16m44s).
• A woman in her mid-40s who had a double lung transplant and was given a limited time to live by her doctors struggled to quit her job despite being a multi-millionaire, due to her desire for a stable income and the fear of not seeing money come into her checking account (1h17m32s).
• The desire for a stable income can be a significant obstacle for people, even in life-or-death situations, and can prevent them from making significant life changes, such as retiring or spending time with loved ones (1h19m18s).
• Earning more money is often seen as a solution to financial problems, but this approach can be flawed, as it may not address underlying spending issues, and couples who focus on earning more may be surprised to find that they are already earning more than they thought when they review their finances (1h19m32s).
• The idea that earning more money can solve financial problems is a common bias, and it can lead people to ignore the importance of managing their finances effectively, as seen in the case of someone who had a bias towards earning more to outpace their debt problems, but ultimately had to confront the reality of their financial situation (1h19m38s).
• Couples with spending problems often believe that earning more money is the solution, but when they review their finances, they may realize that they are already earning enough and that their spending habits are the root of their financial issues (1h20m20s).
• Many people who earn a higher income, such as $25,000 more, still struggle with managing their finances and often have a "hole in their bucket" where all their money is going out, regardless of their income (1h20m40s).
• When asked if they want to make no change, small change, or big changes to their spending habits, 100% of people say they want to make big changes, but they often find it difficult to make even minor changes (1h20m59s).
• Couples with hundreds of thousands of dollars in debt may be calm about their situation, but it's often because they don't understand the impact of interest rates, and making changes to their spending habits can be a slow and difficult process (1h21m14s).
• When making lifestyle purchases, it's essential to be careful about what becomes tied to one's identity, as it can be challenging to downgrade or make changes to those purchases, such as a luxury car, in the future (1h22m10s).
• It's not necessary to avoid buying nice things, but it's crucial to make sure that one can afford to do so forever, rather than making impulse purchases that may not be sustainable in the long term (1h22m36s).

Should You Make A Budget? (1h22m47s)

• Budgets are not effective as they look backwards and focus on tracking every last line item, whereas a conscious spending plan looks forward and allows for a more flexible approach to managing finances (1h22m48s).
• Traditional budgets involve laboriously tracking expenses, but most couples do not know what to do with the information gathered, as it does not provide insight into their net worth or progress towards financial goals (1h23m6s).
• A conscious spending plan, on the other hand, enables individuals to zoom out and create a vision for their "rich life," prioritizing extravagant spending on desired items and cutting costs mercilessly on non-essential expenses (1h23m45s).
• The 50-60% rule for fixed costs is suggested, but individuals have the flexibility to allocate their expenses as they see fit, making adjustments to accommodate their priorities, such as spending more on housing or less on car payments (1h24m2s).
• A conscious spending plan allows individuals to make deliberate financial decisions, ensuring that their money aligns with their values and goals, and that they can make the necessary adjustments to achieve their desired lifestyle (1h24m22s).

How Do We Teach Our Kids About Money? (1h24m29s)

• Parents' behavior and communication about money can significantly impact their children's financial literacy and attitudes towards money, as seen in the case of a couple who made $130,000 a year but still struggled with financial management due to their negative communication about money (1h24m51s).
• Many parents believe that money is something to protect kids from, but this approach can be counterproductive and lead to financial illiteracy (1h25m47s).
• A more effective approach is to involve children in financial decisions and activities from a young age, such as letting them help with paying bills or planning grocery shopping trips (1h26m19s).
• By getting children involved in financial decisions, parents can help them develop essential skills, such as budgeting and decision-making, and teach them about the importance of trade-offs and responsible spending (1h26m56s).
• As children get older, they can take on more significant responsibilities, such as planning family vacations or helping with major purchases, to further develop their financial literacy (1h27m18s).
• Parents should also be mindful of the messages they convey about money and avoid perpetuating negative attitudes or behaviors, such as associating worrying about bills with one parent (1h26m44s).
• By teaching children about money and involving them in financial decisions, parents can help them develop healthy attitudes towards money and prepare them for financial independence (1h27m40s).

Should We Let Our Kids Enjoy Our Wealth? (1h27m44s)

• There is a concern about children being "sport brats" and the potential impact of wealth on their upbringing (1h27m44s).
• The idea of whether children should be treated equally and be upfront with their parents, or be kept at a distance, is being considered (1h27m55s).
• The individual's personal experience of attending public school and then receiving scholarships to attend a private school for college has influenced their views on money and kids (1h27m59s).
• The assumption that attending a private school means being spoiled and not willing to work was found to be untrue, with some kids being spoiled and others not, regardless of the type of school they attended (1h28m20s).
• The correlation between attending a private school and being spoiled is not strong, and it is more about the parents and how they teach their children, as well as an element of luck (1h28m31s).
• It is possible to teach children not to be spoiled, and there are many examples of wealthy kids who grew up appreciating what they have (1h28m40s).
• Parents can still enjoy their wealth while teaching their children to appreciate what they have, such as by saying "I want to go to a nice hotel" (1h28m48s).

How To Raise Kids Without Spoiling Them (1h28m51s)

• To raise kids without spoiling them, it's essential to start teaching them about money from the beginning, making it a family effort and a topic of open discussion (1h28m52s).
• Teaching kids to have a healthy relationship with money involves shining a light on it, talking about it, and asking them questions, just like teaching them to have a healthy relationship with food (1h29m19s).
• Families should have conversations about money, such as how to afford a house, the proper use of credit cards, and how to give to a worthy cause, to help kids engage with money and understand its value (1h29m23s).
• By involving kids in money conversations and decisions, they develop a sense of agency and control, which helps prevent them from being spoiled (1h29m54s).
• Parents should model healthy money behaviors for their kids, as children learn from observing their parents' actions and attitudes towards money (1h29m47s).

How To Educate Your Kids If They Want To Be Wealthy (1h30m2s)

• When kids express a desire to be wealthy, it's essential to understand what being "rich" means to them, which often translates to having financial freedom and not having to worry about price tags. (1h30m8s)
• The initial response to a child's desire to be wealthy should be one of excitement and curiosity, asking questions like "what do you mean by rich" to encourage them to think critically about their goals. (1h30m35s)
• Avoid discouraging or squashing a child's dreams of wealth by making statements like "you don't need to be rich" or "that's not for people like us." (1h30m47s)
• Encourage kids to think about specific financial goals, such as buying a luxury item, and help them understand the costs and savings required to achieve those goals. (1h30m59s)
• Children as young as three or four years old can pick up on their parents' attitudes towards money, so it's essential for parents to be mindful of their own financial behaviors and emotions. (1h31m18s)
• Some children may develop anxiety about money at a young age due to their parents' financial situations, and it's crucial for parents to recognize the impact of their behavior on their kids. (1h31m32s)
• Parents who are struggling with debt or financial difficulties may find it challenging to discuss money with their kids, but it's essential to address these issues to build a healthy financial relationship for their children. (1h31m52s)
• Couples can work together to get on the same page and build a healthy financial relationship, which is critical for their kids' financial well-being. (1h32m17s)

The Principles Of Wealth Creation (1h32m22s)

• When teaching children about wealth creation, it's essential to explain the principles in a way they can understand, such as finding something they love to do, working hard, and automatically investing every month (1h32m23s).
• To be financially free, one must also enjoy money, not just making it or managing it, but also spending it, and this mindset should be instilled in children from a young age (1h32m46s).
• Children should be encouraged to get credit cards when the time is right, with the understanding that they should always pay it off every month, and eventually, they can get rewards cards for benefits like free trips or cash back (1h32m55s).
• Parents should not be restrictive when it comes to their children's spending habits, but instead, encourage them to think about how they can earn enough to afford the things they want, such as buying coffee every day (1h33m12s).
• When children express their desires, such as buying a Lamborghini, parents should challenge them to think about how they can achieve their goals, rather than dismissing their aspirations (1h33m20s).
• To become an investor, one doesn't need a lot of money, and children can start with as little as $100, and parents should encourage them to think creatively about how they can make extra money to reach their investment goals (1h33m50s).
• Parents should challenge their children to learn how to think for themselves and come up with solutions to their financial problems, rather than providing them with the answers (1h34m15s).
• With determination and hard work, children can achieve their financial goals, such as making $93 to start investing, and parents should encourage them to take action and make it happen (1h34m18s).

How Much Money Do You Need To Start Investing? (1h34m25s)

• It is recommended to start investing as soon as possible, even with a small amount of money, such as $50 per month, as it can make a huge difference in the long run (1h34m26s).
• Starting to invest at a young age can be beneficial, as seen in the case of the individual who started investing at 14 years old with the help of their father, who immigrated from India (1h34m33s).
• Investing consistently, without selling or making random stock picks, can lead to fantastic results, as seen in the individual's experience with index funds (1h34m55s).
• Having a diversified portfolio is crucial, and investing in crypto should be done with caution, as it is considered speculation and should not exceed 1-5% of the portfolio (1h35m15s).
• Crypto investors often fail to follow classic principles of investing, such as diversification, and may have all their money invested in crypto, which is not recommended (1h35m26s).
• While crypto has performed well in certain areas, it is not advisable to have the majority of assets invested in one thing, as it can be a problem (1h35m52s).

Gambling In Relationships (1h35m55s)

• Survivorship bias is a phenomenon where people only hear about successful investments, such as cryptocurrency, when they are doing well, and the individuals involved often become quiet or delete their accounts when the market declines (1h36m6s).
• Gambling can be a quiet issue in relationships, and it is not often discussed, possibly because gamblers do not want to talk about it (1h36m35s).
• The issue of gambling in relationships is not frequently addressed, but it can have significant consequences, such as individuals losing money on bad investments or being financially drained by family members (1h36m45s).
• On the other hand, some couples quietly accumulate money over time and may not even realize their financial success, which can be a positive outcome (1h37m1s).
• In some cases, it is possible to have a positive conversation with couples about their financial situation, acknowledging their love and cooperation in achieving financial stability (1h37m7s).

Money Issues Destroying Marriages (1h37m14s)

• Money issues can be a significant factor in the breakdown of marriages, with some couples breaking up directly after discussing their financial problems (1h37m14s).
• Research suggests that couples rarely fight about money directly, instead, they argue about other issues such as kids, chores, and communication, with money being a less common topic of argument (1h37m32s).
• There is a stigma surrounding discussions of money, with many people viewing it as unromantic or taboo (1h37m56s).
• To address this issue, it is recommended that couples have a monthly money meeting to discuss their financial situation and goals (1h38m0s).
• A suggested agenda for these meetings includes starting with a compliment to set a positive tone, and can be adapted to suit the couple's individual needs (1h38m4s).
• Using an agenda for these meetings may seem unusual to some people, but it can help couples create a shared vision for their financial future and avoid years of arguing about money (1h38m26s).

Steven's Parents' Money Mystery (1h38m37s)

• The issues in Steven's household growing up were largely money-related, with his mother having no idea how much money his father had or the household had as a whole (1h38m37s).
• Steven believes that if his parents had just sat down and had a conversation about their finances, their childhood would have been drastically different (1h38m56s).
• The conversation is interrupted to discuss the sponsor, Whoop, a device that monitors how activities and behaviors affect sleep, training, recovery, and stress (1h39m4s).
• The user of Whoop has been wearing the device for a couple of years and is currently participating in the Whoop Sober October Challenge, which has resulted in significantly lower stress levels compared to when they used to drink (1h39m26s).
• The user encourages others to check out Whoop and start a free trial at woop.com, and for existing members participating in the challenge, to send a message about their progress (1h39m39s).

If You Have Enough, Why Continue? (1h39m51s)

• Having enough does not necessarily mean stopping the pursuit of more, as one can continue striving for more, investing, earning, and working while enjoying the process (1h39m51s).
• The motivation behind continuing to work and earn more is the creation of value, with increased earnings serving as a sign of that value creation (1h40m3s).
• A systematic approach to earning more can be achieved through personal rules, such as allocating a significant portion of unexpected income towards investments (1h40m13s).
• Specifically, 70 to 90% of unexpected income is invested, with 10% set aside for personal enjoyment (1h40m16s).

What Ramit Would Do With A Surprise $100M (1h40m29s)

• Receiving a $100 million windfall would not significantly change one's life if they already have a good life, as it would mainly accelerate existing plans (1h40m29s).
• With the $100 million, plans for charity and building a house would be accelerated, but the actual process of building the house would be outsourced to avoid personal involvement (1h40m52s).
• The reason for buying a house with the money is that there are limited options for using such a large sum, and simply saving or investing it is not a viable alternative (1h41m16s).
• Many people's relationship with money is focused on playing defense, constantly worrying about having enough for daily expenses, but once financial stability is achieved, this mindset can shift (1h41m41s).
• Achieving financial stability through automatic saving and investing allows individuals to focus on earning and understanding how money works, eventually leading to a point where they no longer need to worry about everyday expenses (1h41m53s).
• Once financial stability is achieved, the question of what to do with the money becomes more philosophical, with giving it away being a potential option, as seen in the case of some retirees who have accumulated wealth but struggle to find meaning in it (1h42m12s).

What People Love To Spend Their Money On (1h42m23s)

• People often have uncreative answers when asked about their "money dial," which is what they love to spend money on, with common answers including food, travel, and health and wellness, but one person's answer of just coffee was considered boring and uninspired (1h42m23s).
• To deepen the experience of a money dial, consider spending money to appreciate it more, such as hiring a barista to come to the house and teach how to fine-tune coffee, rather than just buying more coffee bags (1h43m20s).
• A person who initially said their money dial was coffee later traveled to different locations to appreciate coffee and learned to spend money to deepen the experience (1h43m40s).
• The goal is to spend money on things that are appreciated and cut costs mercilessly on things that are not, which is part of creating a "Rich Life vision" (1h44m7s).
• Exercises such as describing a "perfect week" can help people identify what they want to spend more on and what they want to cut costs on, and can also give them something to look forward to (1h44m23s).
• Research has shown that happiness and self-satisfaction continue to increase with household income, contradicting the idea that there is a certain income level, such as $75,000, after which happiness does not increase (1h45m4s).
• Creating a shared vision and discussing what would make life amazing, without worrying about affordability, can help people design their "Rich Life" together (1h45m25s).
• Knowing one's numbers and having enough money to pay for things such as kids' college or an extra iPhone charger can help people create and design their "Rich Life" (1h45m31s).
• A divorce lawyer mentioned that money problems are one of the top two reasons couples get divorced, often due to opaqueness and unaddressed resentment surrounding the subject of money (1h45m53s).
• The book being discussed addresses the issue of money in relationships and is considered a well-timed and highly recommended read, with the potential to save relationships by forming the foundation of a necessary conversation (1h47m9s).
• The author's first book sold seven figures worth of copies, and there is a suspicion that this book will be equally successful due to its relevance to a common issue in many relationships (1h46m21s).
• The importance of talking about issues in relationships is highlighted, with a correlation between the amount of discussion and the size of the issue, applicable to various topics including sex, in-laws, and friendships (1h46m57s).
• The book is set to be released in December, and a link to pre-order is provided, encouraging listeners to start a necessary conversation about money in their relationships (1h47m14s).

The Guest's Last Question (1h47m29s)

• The guest is asked to leave a question for the next guest in the diary of the CEO, and the question is what they can do to improve humanity and the life of people. (1h47m30s)
• The guest believes that the best thing they can do is set an example by publicly speaking about the things that are important to them, waking up every day and having a great time teaching, and modeling a loving relationship with the people around them. (1h47m48s)
• The guest appreciates the conversation and hopes to walk away with actionable insights into something that matters in their life. (1h48m24s)
• Every time a person eats, they have an opportunity to improve their health, and using Zoe can help make the smartest food choices for their body. (1h48m39s)
• Zoe combines a person's health data with world-class science to guide them to better health every time they make a food choice, resulting in more energy, better sleep, better mood, and less hunger. (1h48m57s)
• Zoe is backed by a recent clinical trial called the PREDICT study, which is the gold standard of scientific research, and the guest has been able to track their progress week after week since joining Zoe over a year ago. (1h49m15s)
• The guest is offering 10% off to new Zoe members who use the code ce10 at checkout. (1h49m31s)