#524: Ramit Sethi on How Couples Can Talk about Money, Bucket Lists, The $100 Challenge, and More | The Tim Ferriss Show

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Key Takeaways

  • “The more dialed-in your rich life becomes to you, the more incomprehensible it should become to everyone else” – Ramit Sethi
    • We spend our whole life thinking about what we can’t do with our money, so it’s hard to imagine your rich life initially
    • Don’t bs your goals, they’re your goals for a reason. Rich life is not a number; it’s understanding you and your partner’s values/interests and achieving them without the influence of society
    • What is your rich life? Talk about this with your partner
  • Money is opaque and unclear to compare across situations
    • We always try to compare ourselves to others but it’s more important to take a deep dive into understanding your goals
    • “It’s a tragedy to live a smaller life than you have to” – Ramit Sethi
  • Spending/saving habits are not always directly correlated to wealth
  • Ramit gives an amazing step by step questionnaire to outline your current feelings about money between you and your partner
  • The $100 challenge forces the habitual saver to spend money on things that they find value, this can be just as important as saving

Intro

  • Ramit Sethi (@ramit) is an American personal finance advisor and entrepreneur, best known for being the founder of GrowthLab and author of New York Times Best Seller, I Will Teach You To Be Rich. This episode provides a different perspective on finances in your relationship and how there is great value in defining your rich life.
  • Also, see the I Will Teach You To Be Rich book, website and upcoming podcast premiering on August 4, 2021
  • More Podcast Notes with Ramit Sethi
  • Host: Tim Ferriss (@tferriss)

Ramit’s Financial Couple Counseling

  • Ramit has been fascinated with the stories, tendencies, successes, and shortcomings of how and why couples handle their finances the way they do
  • Even after debt is paid off, many couples don’t change their spending or savings habits. It is the biggest issue holding couples back according to Ramit
    • It’s not a certain number that changes the way we feel about money
    • We rationalize habits with if-then statements like: “if I get the promotion, then I will change”
  • Many couples are raised to never talk about money until there is a fight…not true

Ramit’s Introductory Questionnaire

  • In the last 30 days have you not been ‘on the same page’ with your partner in a financial decision?
    • Doesn’t have to be an argument, can just be misaligned on a decision
  • What is your ‘rich life’?
    • Most people have never thought about this question, individually and as a partnership
    • E.g., You may want to spend the extra dollars to shop from Whole Foods
    • “People’s feelings on how they are doing financially are highly uncorrelated with their actual financial status”Ramit Sethi referencing the example above who was actually an extremely wealthy individual who could easily afford this
    • Americans love to compare themselves to their neighbors
      • Money is opaque and unclear to compare across situations
    • Financial plans are more exciting and successful when you shoot for the moon rather than sacrificing your values and interests right away
    • “The more dialed-in your rich life becomes to you, the more incomprehensible it should become to everyone else” – Ramit Sethi
  • Have you ever said no?
    • This answer defines if you have a financial problem or interpersonal problem
  • How big of a problem is the recent issue on a scale of 1-10?
  • Does this specific problem get worse as your circumstances (kids, new debt, health expenses) change?
    • Does the $5 latte go from a scale-2 to a scale-10 problem given a change in circumstances?
    • If yes, this means it isn’t a money problem, it was always a latte problem

Counseling Exercise

  • We spend our whole life thinking about what we can’t do with our money, so it’s hard to imagine your rich life initially
  • Step by step process with your partner:
    • On separate pieces of paper, write down your bucket list
    • Share them with each other
    • Pick a couple and put a dollar value on them
      • The numbers can be very different
      • Go with the bigger number – it will make the moment that much more worth it!
    • This makes talking about finances more fun to talk about each month while you slowly but surely chip away at the goal

Weekly Financial Meetings

  • You’re off to a bad start if one person is dragging the other to the meeting
    • Don’t blame, always ask questions to understand the context around spending/saving habits
  • Spreadsheet built on what’s important to you
    • Spend less time looking at fixed expenses (rent, groceries, gas), spend more but still little time on variable expenses (travel, gifts)
    • Spend most of the time examining rich life goals and update progress, maintain a backlog of more rich life goals as you achieve them
  • These meetings can be depressing/challenging, make it a positive experience my going out to dinner or something out of the ordinary

Other Resources, Exercises, Notes

  • $100 Challenge:
    • In the next 48 hours, spend $100 on something you love. Can not be on kids, family, or charity. On yourself
    • Challenge is made for people who have trouble spending, designed to create a habit of spending money on things that are valuable to you
    • “It’s a tragedy to live a smaller life than you have to” – Ramit Sethi
  • Saving can be just as bad as spending:
    • Everyone is taught how to save money but nobody teaches you how to spend money
      • Family history can be very influential on this
    • Many people collect money eternally without having any rewarding goals
    • Would you rather end up at 60 years old with more money or more experiences and a little less money at 60?
  • People create a false financial story and live it
    • “I’m not good with money” is a narrative that can easily be changed if committing to a plan
  • Treat your financial plan like a business

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Notes By Drew Waterstreet

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