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Ramit Sethi: How Can Couples Make Peace Over Money?

The personal finance expert and author on how early money experiences shape people's lives and relationships.

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Our guest on the podcast this week is personal finance expert and author, Ramit Sethi. His first book I Will Teach You to Be Rich, published in 2009, was a best-seller. A second edition of the book came out in 2019. Ramit is the founder of IWillTeachYouToBeRich.com, and he is also the host of a new podcast called, I Will Teach You to Be Rich, which features in-depth conversations with couples about money.

Background

Bio

I Will Teach You to Be Rich, Second Edition: No Guilt. No Excuses. No BS. Just a Six-Week Program That Works, by Ramit Sethi

I Will Teach You to Be Rich Podcast

IWillTeachYoutoBeRich.com

In-Depth Conversations With Couples

Ramit Sethi Launches Groundbreaking Podcast,” Yahoo.money.com, Aug. 4, 2021.

Conscious Spending Plan: How to Budget by Looking Into the Future,” by Kara Copple, Iwillteachyoutoberich.com, Nov. 23, 2020.

Is Renting a Waste of Money? Ramit Sethi Explains,” by Ramit Sethi, Iwillteachyoutoberich.com, Sept. 22, 2021.

Episode 17: I Think He Should Pay for Everything Because He’s the Man,” I Will Teach You to Be Rich Podcast, Iwillteachyoutoberich.com, Nov. 9, 2021.

Episode 18: He’s the Man & He Should Pay. We Can’t Go on Like This Anymore,” I Will Teach You to Be Rich Podcast, Iwillteachyoutoberich.com, Nov. 16, 2021.

Episode 14: I Hide My Spending From My Husband,” I Will Teach You to Be Rich Podcast, Iwillteachyoutoberich.com, Oct. 19, 2021.

Episode 16: We’re Worth $8 Million but I Comparison Shop for Strawberries,” I Will Teach You to Be Rich Podcast, Iwillteachyoutoberich.com, Nov. 2, 2021.

Money Dials: The Reason You Spend the Way You Do According to Ramit Sethi,” by Ramit Sethi, Iwillteachyoutoberich.com, Oct. 22, 2021.

Transcript

Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance and retirement planning for Morningstar.

Jeff Ptak: And I'm Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast this week is personal finance expert and author, Ramit Sethi. His first book I Will Teach You to Be Rich, published in 2009, was a best-seller. A second edition of the book came out in 2019. Ramit is the founder of IWillTeachYouToBeRich.com, and he is also the host of a new podcast called I Will Teach You to Be Rich, which features in-depth conversations with couples about money.

Ramit, welcome to The Long View.

Ramit Sethi: Thanks for having me.

Benz: Well, thanks for coming back. You've written extensively on personal finance and helping individuals improve their relationships with money. What was the impetus for your podcast about how couples approach money?

Sethi: On a personal level, when my wife and I started talking about money, when we were engaged, it was really challenging. We were having conversations about a prenup. And I thought, oh, this should be pretty straightforward. I'm the I Will Teach You to Be Rich guy. I know about personal finance, and it was really hard. And we ended up seeing a therapist. And I wished back then that there was some way I could hear how other couples were having conversations about money. And so, that was the genesis of the whole idea.

Ptak: Have the types of financial issues that couples are confronting change during the pandemic period? Or are they pretty evergreen?

Sethi: They're pretty evergreen. You have the typical things that you would expect one person who earns far more than the other, or one person who spends more than the other. But then, you have some really interesting topics that we've gotten into. One of them is a Pakistani couple--the son is expected to pay for his parents, pay for everything. They'll just call him up and say, “We need you to send $5,000 over.” And if you're approaching it from a Western perspective, you might think this is crazy. But anyone who has grown up in one of those cultures, and I have, understands that there are certain expectations. So, I wanted to show people that in money, culture matters--culture matters, gender matters, amount of money you have and sophistication with finance matters. And the only way to really show that is to have conversations from behind closed doors with these couples.

Benz: What's the outreach process for the podcast? How do people find you? Or how do you find them?

Sethi: That was the hardest part of all. The hardest part was getting people to actually share real numbers. There's one study I cited in my book that says people would be more likely to talk about their sex lives than their credit card debt. So, we knew going into this podcast process, we didn't just want to have generic conversations; I want to know their numbers. I want to share how much they earn, how much they spend, and I want to hear them really discussing the way they discuss it behind their own closed doors. So, the way that we built our recruitment process, thanks to the I Will Teach You to Be Rich community, there's a lot of people who read my material. And so, we will ask them, “Do you have something that has been an issue for you?” I can help, or I may be able to help. And then, we go through a pretty extensive vetting process. We want to make sure that the issue has stakes that are high enough. And we also want to be super clear that these conversations may be shared. We do tell them if they would like to change their names, we're happy to do that. I would say about 20% of couples take me up on that. Honestly, I've been surprised most people are actually surprisingly willing to share their innermost financial secrets if they believe that there's a way they can get help.

Ptak: You said the couples who are fighting over money aren't fighting over money. What are they fighting over?

Sethi: They always come with some specific topic and it's never the real issue. So, there's a couple I recently spoke to, they're fighting over her spending at Target. I'm talking about $50 in overspending at Target. They were on track to be multimillionaires. They lived in the Midwest. They had never considered that they could be rich. When I told her, “I've run your numbers. You're on track to be multimillionaires.” She said, “No, that can’t be.” I said, “Yeah, I'm looking at the math. You will be a millionaire.” And she was silent. She said, “Well, we're not rich.” I said, “You sure are. First of all, rich isn't just a number, but even with numbers you are.” Their real issue is that they had no shared vision. No shared vision of what a rich life is.

And if you think about everybody listening to this podcast, if I asked you, “What is your rich life?” You'll be surprised that the answers that people give you. In many cases, they've never actually considered what that is. Or if they do have an answer, 90% of the time, the answer is the same: “I want to do what I want, when I want.” I say, “OK, that sounds pretty good. What do you want?” And they go silent. So many of us are caught up in our day-to-day emails, day-to-day childcare, day-to-day Target $50 judgment, that we never stop to think, “What are we doing all this for? Why are we saving and investing, talking about our safe withdrawal rate?” That to me is so much more interesting than your 1% change in asset allocation.

Benz: To follow up on that, you've often said that people's financial decisions are often misaligned with their deeper passions and priorities and what gives them a rich life. They care about X thing, but yet they're spending all their money on Y. So, to what extent does two people doing that complicate the process of getting them on the same page with respect to their money? And if those deeper passions and priorities aren't in alignment, how do you help them find their way to a better place with their money?

Sethi: Well, you hit upon something really fantastic, which is that it enormously complicates the situation when you bring another partner in. And then, let's not even talk about children, which complicates it even further. Most of us do not really know about our own financial use. We don't. Most people are not particularly sophisticated at personal finance. And that's OK. I'm not sophisticated at how to operate a car beyond turning on the ignition. I don't know how anything works; it just does. And so, when we take our lack of sophistication and combine it with our partner's lack of sophistication, then we overlay these invisible scripts that we grew up with, like: “You should never spend money on that; or oh my gosh, rich people are evil.” And when you bring those together, it becomes incredibly complicated.

I will say this: the good news is that you do not have to agree on everything when it comes to finances with your partner. It's actually an enormous relief to hear. For example, I like nice hotels, I really like spending money, I like going there. My wife does not really care as much as I do about nice hotels. That's OK. We can live our lives and live rich lives without us having to ever agree. There should be a way, though, where you can either reconcile the two or create some pretty clear boundaries as to like, “If you want to do that, you should; let's find a way to make that possible.” Here's what I care about, and then let's come up with a joint process for what we care about in our rich lives. Too often, this is overlooked, it's neglected. And we just sail through life, spending money as we spend, occasionally getting in fights about spending, papering over the fight, and then waiting for the next fight to occur. To me, that's no way to live.

Ptak: You believe that our life's experiences are influential in shaping our attitudes toward money. In the podcast, you often seem to home in on disclosure that people make about formative experiences. Can you share some examples from the podcast of how someone’s background influenced their current attitudes toward money?

Sethi: These are some of my favorites. I love this question. I had a recent couple where the young woman, Monique, point-blank said, “I always expected a fairy tale-type of relationship. I expected the man to pay for me because I'm a woman.” And then, her boyfriend, Pablo said, “I don't want that. I want something that's fair. I want a partner.” That's just the beginning of the conversation. And so, you can see that they're approaching their financial lives, as well as their entire lives, from two totally different perspectives. Now, it's very easy to judge what you just heard. If I told you go listen to the episode, you might already have in mind what's going to happen. I guarantee you, you will be surprised when you hear that two-part episode.

What I try to do with these episodes, and when I talk to people about finances in their relationships, is to start off by saying, “What caused you to be here? What's happened in the last 30 days when the two of you were not aligned on money?” I want a specific example. I want details. Then, as I unpeel that, I want to know, how did you grow up? How do you think about money? What word do you use to describe money? And these are huge clues that tell us a lot about how we think about money. You have to remember, again, I said most people are not sophisticated about money. So, the way that you find out how they think about money is through these largely invisible clues. They don't even know how they think about money. That's my job. So, Monique and Pablo were one example.

I have another example where Chuck and Mary--Mary, in this case, was hiding money from her husband. Turns out, her mom also did the same thing. So, a lot of times, we will find that these money attitudes and behaviors were passed down from parents. There are so many other examples of these different expectations. But a lot of them do tie back, Jeff, as you pointed out, to upbringing.

Benz: So, how do you disentangle your own feelings about these things? For example, I hear that someone wants to be taken care of because she's female, and I think, “Well, that's kind of sexist and outdated.” How do you step back and keep from injecting your own feelings into these matters, which feels like it could complicate things further still?

Sethi: That is very true. When I am recording these podcasts and speaking with these couples, the way that I think of myself is a detective. I'm looking for clues. And so, it is the case that occasionally I will be very direct. For example, with Monique, the young woman--who I just referred to--at one point, she said, “We should spend money proportional.” She's earning less, so she should contribute less. I said, “OK, but one day, because of your job, you're going to earn more than he is. Will you still want to contribute proportionally?” And at that point, she said, “No, 50-50 would be good.” So, at that point, all I have to do is simply remain silent. Because everybody listening can draw their own conclusions.

As a detective, my job is just to find all the threads that might be relevant. Of course, I have my own beliefs, and sometimes I strongly disagree. The things I disagree with most are when people have no vision and no interest in doing anything. There was a Canadian couple where the woman in the relationship, she reached out to me because she wanted to renovate their bathroom. He had no interest in talking about money, no interest. He grew up lower middle class, and his entire life he was taught, you just save money and then you basically die. Actually, that's what most people in America are taught: save money, go to Florida, get some leathery skin, and then die. And it was very frustrating to talk to him because I wanted to engage him. I said, “Tell me your rich life.” And I could see that he worked out. So, I said, “Tell me about working out.” He was not giving me anything. Eventually, he told me, “Well, if I was rich, one day, I could go to the Super Bowl.” And I looked at his numbers, and I said, “You can do that. In just a few years, you could easily do that.” And he said, “Well, I don't believe that.” That, you will hear me, being very direct on that episode. Because I consider it a tragedy to live a smaller life than you have to. But for the most part, I try really hard to just pull on the threads and let the listener decide.

Ptak: Do you observe any gender differences with respect to money attitudes? We sometimes hear that women are more goal-oriented and men are maybe more performance- and winning-oriented, so to speak. Is that too simplistic a breakdown in your experience?

Sethi: It is. I do think there are gender differences. Absolutely. And we should not run from that. However, I do think that it's becoming increasingly complicated. So, for example, you have young women in urban areas in their 20s, who are actually earning more than men. You have women who are graduating at higher rates than men. This is profoundly reshaping views on money, dating, all kinds of things. In general, I would say that, when I speak to a couple, if there's one person in the relationship who is scarcity-minded or scarcity-oriented, in heterosexual couples, it tends to be the woman. And even from speaking to my own wife, when we first got together, there's these invisible messages that are passed down in our culture about money and gender, and they're often passed down from our mothers and grandmothers. And I am a big fan of couples having open conversations about how do I feel about money, where did I learn that from, what will the numbers do for us. And the big conclusion that I have had from the podcast is that your feelings about your financial situation are highly uncorrelated with the amount you have in the bank. I want to say it again, because this is a profound point: Your feelings about your financial situation are highly uncorrelated with the amount you have in the bank.

That is why I speak to couples who have $6 million, and they feel unsafe. They feel like they don't have enough. They have been looking at the world through one lens, basically Excel: “Ooh, let me use Excel, that will make me feel good.” Excel is never going to make you feel good. Everybody listening to me, all the FIRE nerds out there, your 4% withdrawal rate is not going to make you feel safe. Trust me, it's not. No matter how many sheets you add to your Excel spreadsheet, you're not going to cuddle up with it and feel like it loves you. And you’re certainly not going to make your partner feel like that. So, when we finally acknowledge that, then we can talk about what is going to make you feel safe? And we can talk about what do you want to do with your money, and how do you want to experience joy and adventure? That is so much more meaningful than only talking about compound interest.

Benz: You mentioned this scarcity mindset and it tends to be more common among women in heterosexual relationships. So, can you talk about what that is and what the practical implications of it are? And also, if someone is inappropriately scarcity-oriented, how do you get them through that?

Sethi: Well, often it's the smallest phrases that a parent unconsciously mentions--things like, do you think money grows on trees? Now, imagine saying that once. Fine. It’s a kind of funny comment when you're young. But imagine hearing that at the end of every month when your parents are looking stressed sitting around the dinner table. What do you think children take away from that? Children are quite intelligent. They pick up on that. And they will concoct their own stories about money.

I remember a young woman I spoke to who was very scarcity-oriented. And to her safety meant being able to buy an apartment. She was obsessed with buying. And as we spoke about on our last episode, I really enjoyed it. I talked about how one of the common myths in America is that buying a house is always the best investment. It's just not true. We've talked about that extensively last time. So, I probed her. I said, “Tell me why? What is that going to mean for you?” And she said, “ I don't need an apartment in Manhattan. It can be in Brooklyn; it can be here, there. But I want something that's mine.” And then, she proceeded to repeat all these myths that have been promulgated by the media: rent is just throwing money away, and they're not building more land.

It’s funny, when I ask people, “Do you say the same thing about when you go out to eat dinner? Oh, I'm just throwing money away on dinner.” Funny. Everybody knows that that's not a good example. But somehow, we're magically throwing money away on rent. So, I kept probing her. And I said, “Why do you want to buy an apartment, even though it may cost you in these ways?” Guess what? Turns out that her dad had lost his apartment in The Great Recession. So, you can imagine what kind of trauma that causes to someone to see her dad lose their childhood apartment. And as a result, she concluded that, above all, she needed to own an apartment. Now, as she was saying this to me, she was tearing up because she had never made the connection between her obsessive need to own and why she actually felt that way--her dad's loss of the apartment.

This is the strategy that I like to take when it comes to scarcity. You have to pull a lot of threads to help people understand their own attitudes and behaviors. Me coming in and lecturing somebody on, “Well, did you know that renting in Manhattan can actually be a superior financial position?” That's not going to convince anybody. Trust me, I want to do that. But nobody cares. Nobody wants to hear Ramit Sethi's lectures 101. Instead, we went through quite an emotional journey. And when she was ready to hear—“Now I understand why I feel the need to own an apartment.” Now, she's receptive to all kinds of more sophisticated financial decisions. That's how I pull on the scarcity thread.

Ptak: Much of your work is focused on whether people are using their financial resources to live their best lives. And you've alluded to that at least several times during our conversation so far. But time is an even more finite resource. And it seems worthwhile to be talking to people about how they allocate that too. Does that come up in your discussions how people allocate time as well as money? And is the process for being mindful about time allocation, is it basically the same as the process for being mindful of financial allocations?

Sethi: Well, I do consistently remind my readers that you got to stop asking $3 questions and start asking $30,000 questions. So, $3 questions are things like: Can I afford that latte? Or my Allied bank account interest rate changed by 0.003%. Should I switch my accounts? I say, “Don't ever write me with this question again, ever.” I don't want to talk about this. It's literally $3 difference over the course of a year. It's not worth even talking about. $30,000 or $300,000 questions are really important. They're things like: Should I negotiate my salary? How? Is my asset allocation properly set up? Am I automatically and consistently investing every single month in a low-cost index or target-date fund? Those are big, big, big questions. With time, you will often see people focusing in the same way they do on $3 questions.

So, I had a couple--they're actually quite wealthy--and he would drive around town, price comparison-shopping for blueberries. And you hear this and you go, “What? This multimillionaire is driving around town?” Now, I have to tell you, it's so easy to judge, but in America, we glorify this. We love rich people who act like they have no money. Just think about it. Warren Buffett, oh, what a friendly old guy. He looks so nice eating McDonald's every day and living in his old 1969 house. Oh, by the way, let's just totally not mention that he owns a private jet. In fact, a private jet company. Oh, Bill Gates, he still wears Dockers. Let's neglect to mention the fact that he has like a 60,000-square-foot house. Or, oh, this multimillionaire who works at Netflix or Facebook, she still keeps it real; still in touch, didn't get too big for her britches. She won't overpay for blueberries. To me, this is not something to be glorified or glamorized. In America, we have this sort of sneering phrase we use—"money changes people”--as if that's bad. Money changes people. Money should change people. Money has allowed me to think bigger, be more generous, be more adventurous. And if you have built up a considerable net worth, it might not be worth the time for you to be driving around town, price comparison shopping for blueberries. Very difficult, because it involves turning the page on your rich life, and the very things that got you here may not serve you anymore for the next part of your rich life.

Benz: I wanted to ask about that because you've tackled that in the podcast, someone who's been a successful saver yet has trouble transitioning to enjoy the fruits of their labors. Do you find that people struggle with that? It sounds like you do. And how do you help them make that transition from a frugality mindset--it got them in a good place financially--to actually being able to start spending a little bit?

Sethi: This is a skill that we are not very good at. Everybody teaches you how to save, but nobody teaches you how to spend. And think about it. It's no surprise. It's really easy to berate Americans and tell them you need to cut back on this and that. That's basically the personal finance industry for the last 50 years. But who's teaching the skills of spending? That's one of the reasons I started the podcast, and I created the concept of money dials, was to show people, you should spend extravagantly on the things you love as long as you cut costs mercilessly on the things you don't.

I will say that it's a big myth that you will suddenly one day feel safe and ready to spend. I hear it all the time. I asked them, “What age or what amount are you going to finally be ready to take that vacation?” They go, “$1.8 million.” And I just look at them, I say, “Never going to happen.” Because at $1.8 million, you're going to be switching the goals to $2.5 million. Or at $2.5 million, $3.2 million. This is not something that you can turn on and off. You don't turn 50 or 60, and then suddenly start spending. This is a skill that you need to build and cultivate and develop over your lifetime. It's skill. Spending is a skill. And just like there are certain things that are better done in the younger parts of our lives. For example, if you want to climb Everest--of course, there are some people who have climbed Everest in the later parts of their lives--but predominantly people are doing it in the earlier parts of their lives.

Well, spending also has a target couple of decades. And we want to be optimizing not just for saving--although, yes, saving matters and investments matter, of course. But spending matters. We want to be spending in the season of our life where it's appropriate, where we can maximize things. And we want to be being conscious and proactive about that. So, the way that I work with these couples, when I talk to them is, first is being very nonjudgmental, saying, “What do you love to spend money on?” And you will find that people find it very difficult to admit what they like spending on. They have often repressed it. They've been shamed for it. They find it frivolous, even though deep down, they want to. And I just say, “Put it out. Let's put that on the table.” I spend money on a lot of crazy stuff, it's fine. As long as I can afford it, awesome. And I normalize that spending on the things you love is good. I want to say that again. It should not be surprising, but for some reason it is: Spending money on the things you love is good. I want people to come to me and say, “Ramit, I use your money dials concept. My money dial is convenience, or health and fitness, and I spend a ton on that thing that's important to me.” That is how I begin working with people to slowly and gradually get them used to the idea of spending on the things they love.

Ptak: And how does that have to be adapted for those who are approaching retirement, are having to think for the first time in a real purposeful way about how they transition from saving and accumulating to spending?

Sethi: As people are making the shift to retirement, they're often very, very interested in the financial questions--they want to get the spreadsheet, they want to talk to a financial advisor, all those things are good. You need to know how much you can afford to spend. But there are very few people and very few advisors I've found that are talking about the lifestyle parts of it. What do you love to spend? And it becomes very difficult. If you've gone 60 years without knowing how to spend money, without developing that skill, and you ask somebody, “Where would you like to travel?” They're often dumbfounded. “I don't know, Europe?” So, what I do in that case, some of the folks I've spoken to who are close to retirement, we try to visualize things. And I'll ask them, “OK, where in Europe do you want to go?” “Hmm, Italy?” Awesome. Love it. And I get excited with them as they get excited. “What do you want to see in Italy?” “Well, I want to see the Colosseum.” “OK, what else?” And what I do is I encourage them to think about what would make this extraordinary.

You have to remember that we all have a set of money lenses through which we view the world. The primary money lens for almost all Americans is cost. How much does that cost? But if you only use that money lens, it's like playing one note in an orchestra. It's not very effective. What I want to do is provide them other notes or money lenses through which to view the world. So, I might ask them a relationship money lens: Who are you going to bring with you? I might ask them a safety money lens: What can you spend money on to feel safer or more secure? I might ask in just a pure delight money lens: What could you do on this trip to Italy to absolutely knock your socks off and your husband's or wife's socks off? Suddenly, it gets them thinking, “Oh my gosh, they're all these different ways to look at money that I've never considered.” And that starts to get the wheels turning.

Benz: What practical guidance do you have for people who might be listening who find themselves disagreeing with their partners over money? They can't come on your podcast and benefit from your expertise. I'm sure it depends completely on the source of disagreement, but are there any key steps that they should take to sort through it and get through the argument phase, regardless of whatever that source of money stress might be?

Sethi: Absolutely. The first thing I want to say is that there is light at the end of the tunnel. So, every time I speak to a couple on this podcast, I tell them the same thing. I say, “Nothing you can say will faze me.” Because I've truly talked to some unbelievable money situations. So, each couple thinks that their situation is unique, and that it's often unsolvable. There is light at the end of the tunnel, whether it's disagreeing over a $50 Target bill or millions of dollars are at play, and you've been fighting for one year or 40 years, it can be resolved. I have seen it myself, and you can hear a lot of these on the podcast.

I'm going to give you three practical steps for what you can do. The first step is an audit. And this is not an audit with a 45-question questionnaire that you might get at a financial advisor. It's not like that. It's a fun one. You know those cards you buy off Amazon where you and your partner can ask questions like, what was the craziest trip you ever took? It's like that. Do an audit with money. Come up with your own five or 10 questions and say, “I listened to this podcast with this guy Ramit. Let's just talk how we grew up with money. I'm really curious. I've never actually heard how you grew up with money.” So, you pull these cards out that you created, and one of them could be: What do you remember your parents teaching you about money when you were a kid? Another one: What's something you wish we could spend more on? And then, another one: What's something you wish I spent less on? And on and on. It's fun. It's not judgmental. It's just curiosity-driven. That's the first, the audit. Now, of course, you can do more. I talk about that on my newsletter and in some of my programs.

The second step is, create a rich life vision. So, what is your rich life? When you ask your partner this, you're often going to find that they just look at you like you're crazy. What? If you've never asked this question, it's going to come out of left field. But stick with it. And if you have to give an example of yourself, go ahead and say, “When I think about money, my dream for us is that we can travel for four weeks per year, and I made a list of the places. It gets me really excited to think about going to these places with you for the first time and seeing it through both of our eyes.” Getting excited, creating that rich life vision. Rich life vision, you can break it down for what's our rich life in the next one year, what's our rich life in the next 10 years.

And then, finally, step number three: create a system that brings this rich life vision to reality. I'll share how my wife and I did this. We sat down. And we said, what's our rich life? What's your rich life, and what's our rich life? So, we sat down with separate pieces of paper, and we came up with a whole bunch of stuff that we want to do in the next 10 years. Some of it was just focused individually. For example, I want to write another book while like living in a hotel. I know it sounds weird. That's what I want to do. I love hotels. I don't love writing books, but I like having written books. So, put me in the hotel. That's what I want to do. And my wife wanted to do certain other things for herself. Great. Then we came up with a few that we want to do together. And we picked one that we thought was really exciting and really big. And that was we want to have a big 10-year wedding anniversary. We know exactly where we want to do it. We know we want to invite all of our friends and family because we love any excuse to celebrate. And so, this is what I did. I said, “How much do you think that would cost?” And she picked a number just off the back of her head and I wrote down my number. My number was about 5 or 10 times larger than hers. And I said, “You know what? Let's go with the bigger number. This is a 10-year or eight-year goal. Let's dream big.” And she looked kind of uncomfortable, but we went with it. We put it into our system. So, we have a system. We talk about money once a month. And now, we have our rich life goals. What do we want to accomplish this year and what do we want to accomplish in the next 10 years? And we picked some big things. This was one of the big ones. And so, each month, we are saving and investing toward these rich life goals.

So, you can see that this all happened in three steps. First, audit: who are we, how do we think about money. Two: what's our rich life vision? That's where we came up with this 10-year wedding anniversary. Third: let's put it into the system, which includes monitoring it every month. And each month we look at that, we get excited. We know we're just one month closer to this rich life goal. It's going to happen.

Benz: I have a question. What about when couples are completely in opposite directions with their visions--the things that make them happy are not connected at all? I would imagine that comes up periodically.

Sethi: Give me an example.

Benz: Well, say, someone's vision of their really happy life is living in a really rural area away from other people, and then the other person wants much more human connection and spending on those disparate sets of goals are informing how they're operating.

Sethi: Well, I have to tell you, I have not spoken to a couple where one wants to live on a farm and the other wants to live in Manhattan. That would be an interesting conversation. Boy, if anyone is in that situation, come to my podcast page and get in touch. I would love to see what we can do on that. I think, Christine, that I do have a lot of experience with folks who have different views on money. The good news is that you don't have to agree on everything. Your partner might want to buy an expensive mattress and you don't. That's a relatively easy one to solve. You can figure that out. I can show you how to do that. The larger ones about how do we want to raise our children, public or private school? These questions can become consuming and quite contentious.

What I do is to first take a full 50,000-foot-view at their finances. Often, I will find that one person says, “That's a waste of money, or we can't afford it.” Oh, I hate that phrase: “We can't afford it.” It's wielded like a weapon in relationships. And when I probe, I say, “How do you know that?” They just get silent. Because for a lot of people taking a vacation, or private school, or whatever, is not something they considered a reality when they were children. And so, they carry those same messages to their current self. What I want to do is look at their numbers and say, is that true? Can you actually afford it? If you truly can't, fine. Then, either make a plan so that you can afford it, and that could involve saving more, investing, earning more, negotiating your salary--all things that we teach on our website. Or it could involve saying we're not going to do that. But now we understand why.

In general, Christine, I don't think that most people have vastly divergent goals. I spoke to one couple where one person overspent. They spent more than the other. And as we peeled it back as to why, it turned out that when she was a kid, she grew up in another country, they had no food, they were very poor. And so, when they got something like a Coca Cola, that was a huge deal. It meant that their dad had had a big success at work. Well, you can understand how that carries through to today. So, as soon as money came in, she would spend it. But rather than judging, I said, “Well, look, you're not in the same situation you were. You and your partner can make a joint vision. You can still buy Coke if you want to buy Coke, or whatever belt you want to buy. But you can actually dream much bigger than you thought.” And in my experience, it's not that people have vastly diverging views on money. It's that they don't have a shared vision at all.

Ptak: What about a scenario--despite best efforts and some of the very practical guidance you've just given, there's just a financial incompatibility there. So, in a scenario where those red flags are visible, say, early on in a relationship, is that a deal breaker in your opinion? Are those just people who are not meant to be together because they are so financially incompatible?

Sethi: Yes, absolutely. There are people I've spoken to, and in my own head, I go, they should not be together. All of us, we've seen it. We've watched reality TV. And we've said to ourselves, how can this couple be together? That's real. I may not say it to them. But if you're listening, you may conclude that for yourself. I think that there are deal breakers, particularly early on.

So, number one for me, lying. Lack of integrity with money, that's red-flag number one. That is not just a difference of opinion on investment rates. That is a true values and integrity question. Another one is an inability to want to change. I never judge people for being ignorant about personal finance. I don't. But when you see how your view on personal finance is affecting you and your relationship, if you don't want to make a change, that's a huge red flag. And third, echoing what Christine asked about, is radically different expectations. If you want to live on a farm and your partner wants the opposite, that's one of those things that's going to be very difficult to resolve together.

Benz: There are probably some financial advisors listening in who deal with couples' differences all the time, and they wrestle with communicating with two people. We often hear from married couples, where especially the female partner might say, oh, he just talks to my partner. So, how would you coach financial professionals about getting better at communicating with both parties in a relationship and understanding both of those partners?

Sethi: Yes, this is such a great question. And I'm so glad. I hear from women all the time, who tell me how frustrated they are with their experience with the financial industry. It drives me insane. And so, first off, I know that that's been discussed extensively--the sexism of only speaking to the male or the man in the room, horrible. Let's talk about for advisors--what can help them quickly connect with their clients? I have some simple guidelines I'm going to suggest.

Let me start off with this rule. Never use these words: budget or overspend. Just don't use them. Take them out of your vocabulary. They are loaded phrases. Nobody wants to hear them. They're all negative and restrictive. Just stop using them. Don't use the following words in your first month of discussion with your clients, which would be compound interests, tax advantages. It's not the right time. That is way down the line. And let me now suggest a third guideline, which is to always use these words: phrases like rich life; love, what do you love spending on; exciting, what excites the two of you; and finally, together, what kind of rich life do you want to create together? If you follow those guidelines, you're going to shift the conversation from this typically restrictive, mechanical, numerical-oriented conversation to something that's so much more meaningful. It's about your rich life. Money exists to support the rich life. But if you don't have that rich life vision, if you don't understand what you're going for and why, and really connect on that emotional level, then all these words like 401(k) and 529, and all that stuff, is totally irrelevant.

Ptak: One of the most common issues among couples who disagree about money is that one person is a disciplined saver and focused on the future, and the other is a spender who is more focused on the here and now. Would you say that a lot of the issues that you've encountered with couples and money boiled down to that, in essence?

Sethi: It's more complicated than that. That's how they think the problem is. They come to me, and they'll say, “He always overspends; or she always spends too much.” And as you pull it apart, you realize that it's far more complicated than that. For example, if you're a saver, what are you saving for? And often, you'll get answers like, “well, you just have to save.” OK, for what? “I don't know, you just have to save.” So, we want to pull on that thread. What is the purpose of saving and investing this money? When do you finally get to invest it?

I have to tell you a funny story. I recently asked people, what would you do if you got, I think I said, $10 million? I asked this on Twitter. And you know how many people replied to me, and they go, “I would invest in multifamily real estate.” I said, “For what? You made $10 million free overnight. And now all you're talking about is investing in crypto and multifamily real estate? When do you finally get to use your money? When? Maybe you're never going to use it at all.” And they were just dumbfounded. Because again, everybody teaches you how to save and invest. Nobody teaches you how to spend. So, these are the kind of threads that I pull.

If the other person is a spender, I'll ask them a series of questions like “What do you love to spend on?” And they'll get really excited, “Oh my gosh, I love this, I love that.” Tell me why? “Well, it makes me feel that…” I say, “Tell me why. What does it get you excited about?” And you can see it in their eyes. Their partner has never asked them this question. So, one couple I spoke to--I think he liked to go to Walmart and he just bought a bunch of trinkets and stuff. And I asked him why. You could see his partner had never asked him that question. She had only kind of judged him and said you're overspending. Well, it turns out that there's a reason in his history why--he feels rich being able to come out with bags full, even from Walmart. This the kind of conversation that I want to encourage among people, so that you can realize it's not as simple as, we have an over-spender and an over-saver, but really underneath it, what are the dynamics? Why are they saving? What's the purpose? Why are they spending? What are they getting out of it? And then, we can come up with that rich life vision that serves them both.

Benz: So, you're making me think. Do you think that there's a reflexive response on the part of the financial-services industry, and I would say, I probably fall into this camp, where it's like, save, save, save, invest, invest, invest, without really being thoughtful about what it's all for? And a related question is, are there conflicted incentives perhaps in place in the industry that want people…

Sethi: Yes.

Sethi: What a great question. Of course. A lot of financial advisors will tell me that they wish they could talk about this more. They don't want to sit there and go through this binder of numbers either. But clients don't want to pay for somebody to talk about this. And the money is made typically in the investment advisory area. So, we have a huge mess on the incentive structure. We have the financial-services industry that doesn't have the skills or incentive to talk about the softer side of finance, which in my opinion, is equally important, if not more important, than your savings rates, and so on.

And so, yes, it's a huge problem. And this is one of the reasons that I wrote my book, and I've created my site and podcast, which is to show people that money is not simply about saving. And there's a reason everybody hates money. We hate it, but we love it. We hate it because we think it's restrictive and it makes us feel guilt and shame. But we also love it, because we see people on Instagram going to Bora Bora, and we want that too. So, as so many things in American culture, we are driven by this puritanical view of something, but also quite the opposite. And with money, I think that we need to develop a healthier relationship with it. A healthier relationship really has nothing to do with your Excel spreadsheet. It really does not. In fact, don't even talk about Excel, please. Financial advisors stop talking about your model, okay? Talk about your rich life, talk about what excites you, and then, you can get to the model and the numbers later.

Benz: Well, Ramit, this has been such a fun and informative conversation. Thank you so much for coming back on the podcast. We really loved talking to you today.

Sethi: Thank you for having me.

Ptak: Thank you.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast, and Kari Greczek produces the show notes each week.

Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc., and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)