Stop Fighting About Money: Ramit Sethi’s “Rich Life” Framework

0:00Welcome to the Jasmine Star Show. In today's episode, we're diving into one of the most important and sometimes uncomfortable topics in any relationship, money. This episode is a repurposed portion from our earlier conversation with Ramit Sethi, the author of I Will Teach You to Be Rich and the host of the wildly popular podcast of the same name. Ramit walks us through money scripts, specific phrases and frameworks you can use to talk to your partner about everything from starting your business to navigating the challenges of money-making. If you've ever felt stuck when it comes to discussing finances with your partner, this episode is for you.

0:37Let's jump in. You had said, it's all about the words that we use when we talk about money. In this post, you wrote that the way we talk about money defines the roles that it plays in our relationship, specifically in our relationship with our partners. Can you speak a little bit more like why this happens and why does the way we talk about money matter? Most people don't talk about money unless there's a problem. We're totally reactive to money. Think about it. If I take the average person and I say, when was the last time you talked about money? They're like, oh, and she spent too much or he spent too much or we couldn't realize which account we're going to pay out of.

1:12I go, when was the last time you sat down proactively with an agenda, set on the calendar and you talked about what you want to do with your money, how you want to dream about your money, how you want to create a rich life. And they look at me like I'm absolutely bonkers. They go, that's weird. Having an agenda with your partner, that's weird. I go, you know what's weird? Spending the next 40 years of your life arguing about who much spent too much on asparagus at the grocery store. I don't want to live that life where I have to pull out that Safeway receipt and look at it and analyze every last amount.

1:44And so first, we don't talk about it proactively. That's number one. Second, when we do talk about it, the language we use is loaded and often negative or accusatory. Why'd you spend that much? What happened here? We're never going to be able to pay this off. And I would like us to reframe that into questions like, when was the last time we sat down and discussed what we get to do with our money? Where do we want to go this year? Who do we want to bring with us? What kind of experiences do we want to create for our children? Those questions. Even how aggressively do we want to pay off our debt?

2:26That also can be a dream. But if you are living down in the weeds and you are consumed with these$3 questions, you never really get to ask yourself the$30 ,000 questions. And that is what money can really be about. I love this. And so somebody's listening like, well, great. How often do you recommend sitting down with your partner and having these conversations, like the time on your calendar conversation? Once a month, minimum. Either once every two weeks or once a month. Should be about a one-hour meeting. And if you have your system set up right, you really should not spend much more than one hour per month talking about money.

3:06So let me break that down. When you sit down for what I call a rich life review, that's once a month. Oh, yeah. It's not a budget meeting. Is that trademark? Like Rich Life Review TM. It's not, exactly. It's not a budget meeting because everybody hates budgets. Right. It's unbelievable. So many people, they go, oh yeah, we really need to keep a budget. I go, really? When was the last time you tried to keep a budget? They go, 1996. I go, how long did that last? 15 days. I go, why? Why do you insist on trying something that never works? Let's do something a different way. And if you're not sure what to do, just do it my way.

3:38Because trust me, my way is going to work better than the way that has not worked for you. So a Rich Life review, once a month, you both sit down. It's structured. You both start off complimenting each other about something. I really appreciate the way you planned our trip. I always know every time you plan our travel, you always make it so we reach there on time and it's always comfortable. We're never stressed out. I just want to say I really recognize that and I appreciate it. That right there, totally different tone talking about money because you're both feeling good. Okay, that's number one.

4:09Two is you have a rapid review of your key numbers. Now, this is important. Most of us don't really know what our key numbers are. That's why people have the same level of urgency with$25 ,000 of credit card debt as they do with their partner who spent$56 at Target. They're not the same. In fact, if you are arguing about something that's$20, you've taken a wrong turn somewhere. We need to be talking about those big, big, big, the$30 ,000 questions. So you have a key review. There are pretty much four numbers you need to know. Fixed cost, savings rate, investment rate, and guilt-free spending number.

4:48These are all part of my conscious spending plan. And then finally, you get the joy and privilege of being able to say, okay, how are we doing towards our goals? What do we want to do this year? Do we have a birthday party coming up? Do we want to take that dinner out with our friends next month? What do we get to do? You do those three things and your money is going to transform because you're focused on the big picture, not the tiny details. This is so good. This is therapy with your wallet. I mean, this is a distinct ROI on your therapy with Ramit. Okay. So what we're going to do is if it's okay with you, and I always just like kind of like playing in these zones.

5:26Oh, actually, I wanted to ask a personal question. I'm about to spill the tea. How often do you and your partner have a conversation around this? Like, when do you have these meetings? We do it once a month. We recently increased it to once every two weeks because we have some things that we need to iron out that have come up. I will admit, sometimes we go a little bit longer than we should between meetings. And we've realized, like, you know, life gets in the way. That happens. And so what did we do? We recently talked about, okay, I'm in charge of setting the date, putting it on the calendar.

6:00So we assign one person in charge of it. It's just like at work. And you know what? And that's okay. People have this very odd notion that a relationship is purely romantic. I go, yeah, yeah, it's romantic, but it's also a business partnership. It's logistics. Anyone who's bought a house together or had children together or planned a trip together knows that. And so let's just take the romantic part. That's part of it. But we also got to get on the same page. So we have one person who owns certain things. The other person owns certain things. And at a certain point, you can also alternate, which you should, because you should not only have one person being in charge of money.

6:38Never. It should be both partners. So that is how we do it. I love that. Thank you so much for speaking into that and speaking into it so candidly. And even if you're like, no, I refuse to not infuse romance into these financial conversations. Well, let me just tell you, there is nothing sweeter. Like, let me stick my tongue down my husband's mouth when he's like, look at our vacation fund. I was like, yes. So like, let's just be real about that. So in this conversation, but thank you for being so candid. That was really awesome. So there's a myriad of listeners and we're going to break them into four different categories so that we can self-identify in our partnerships and also speak to the person who's not in a partnership, but wants to best prepare for these types of conversations when and if that time comes in the future.

7:20So I want to talk about a new entrepreneur. They're considering starting their own business or growing kind of like their side hustle. And so they know it's going to come at a bit of a financial cost. What is the best way for them to approach this conversation with their partner and how do they bring it up? What do they focus on? Last time in our conversation, you were really great with giving us things to say that really empowered the listener. So what might this new entrepreneur say? How do we navigate that conversation? I'll give you the psychology first, then I'll tell you exactly what to say.

7:46The psychology of the person considering being an entrepreneur is it's likely that they are concerned. How do I know this is going to work? What if I have to take a dramatic pay cut, et cetera? Here's what you need to know. It's your responsibility to figure these things out. You can talk about them with your partner. You can ask him for help, but it's your responsibility as the person who's considering starting something to be the leader in bringing these conversations up. That's it. Hear me loud and clear. It is your responsibility. So you have options. You might be staying at your full-time job and doing this on the side.

8:24I like that approach. I think it's really healthy. or you might be leaving to go full bore onto this business. I don't love that idea, but okay, if some people do that, they lose all their income and start a business. Fine. The way that I would approach it and what I would say is I would go to my partner and I'd say, you know, I've been thinking about this for a long time. I know we've been talking about it and I think it's the right time. I'm ready to start my business. I have an idea. I've proved it with five customers, but I do want to talk to you about what this would mean for us because it's got to be something that we both support and go into eyes wide open.

9:04Would you be open to talking about that? Partner's going to say yes. You say great. I see three major issues. The first one is just going to be time. If I do this, it probably means that I'm going to have to spend Monday, Wednesday, and Friday for three hours after work focusing on my business plus half a Saturday. That would mean that we can't go out on Friday nights like we used to. And I would want to just be totally upfront with you. I want to make sure that we talk about this now instead of later. So you talk about that. The second issue would be risk. It's possible that this just doesn't work.

9:41Or it's possible that me working on this might compromise from my job. Here's my plan for that not to happen. What do you think? Am I missing anything? And third is money. If I'm leaving my full-time job, that's going to mean that we're losing$4 ,000 a month. Here's my plan. I have savings. Or I am planning to do this for six months. If I'm not hitting$3 ,850 within six months, I'm going to go back and get another job. How do you feel about that? Notice that in all of this entire thing I just told you, you are the one coming with a plan, identifying the risks. You should be doing all this work before you ever sit down to have a conversation with your partner.

10:23And then you're totally receptive to what your partner needs. Your job is not to convince your partner. That is not your job. Your job is to identify all the risks, to ask them to identify any you may have missed, and then for both of you to make a decision, ideally together. Ooh, and like the church is like, hey man. I mean, this is just so powerful with these actionable steps and tips. and to infuse a little bit of like a real life situation, what I hear is like, hey, think about the worst case scenario and then ask and invite your partner to have an opinion or weigh in. Just this past weekend, I've been given an opportunity to hang out with a group of entrepreneurs and I really wanted my daughter and my husband there.

11:06However, things get complicated because we are co-founders and I'm like, let's have a conversation around what it looks like to take our daughter. We're not talking about finances, but when we go back into, we're having a business relationship as you start a family, these are the conversations and very similar in this situation because just like a new business owner, this is like the first time that I am stepping into a time where I am not gonna be present as much and I need to lay out all the risks all the time and then the additional investment that it would take for me to be there. So these three key factors, not just playing finances, but as you start building your family and as you start growing your business.

11:39So thank you, that was amazing. Now, let's talk about a person who has started a business, but they haven't been making a lot of profit quite yet. A little bit of traction. Let's say this person has a partner who doesn't quite understand what they're doing and is starting to get frustrated with the lack of money that's coming or not coming in. What are some scripts or ideas this person can use to have a healthy conversation? I find that the psychology of people in this situation, specifically entrepreneurs, is very inwardly focused versus focused on their partner and their family. Yes. So they're obviously frustrated as an entrepreneur who's starting out and is not making what they thought they would.

12:20And so they often will say things like, I just need a couple more clients. It just takes a few more months. It just, it just, it just will take longer. And the partner's like, listen, you've been saying that for the last 12 months. Why is anything going to change? And so the entrepreneur will get frustrated because they're not being supported by their partner emotionally or otherwise. And this is a recipe for disaster. I've spoken to couples like this on my podcast. One of them I discovered was doing a business that had very little chance of succeeding. She'd been doing it for like years. She was making basically nothing.

12:56It was very clear from the outside that this business was going nowhere. It should just close down. Remember, sometimes the best thing you can do in life is to stop doing something. because life is too short to be failing at something for years and years if it's important to you. On the other hand, sometimes you're right around the corner for some success. And if you give up too early, it's a tragedy. So the script of what I would say is to get honest with yourself, first of all, is this working or not? If you're not honest about something not working, then all the rest of the stuff you're going to say is just BS.

13:34Let's say that you used to make$5 ,000 a month at your nine to five job. Okay. Let's say you've started this business and you're currently making$700 a month and you've been doing it for a year. That's not working. That is not working. We have to be honest. Now, if you were making$4 ,700 a month, sure, You're close within striking distance of what you used to make. But if you are taking home a tenth of what you used to make after a year, that's not working. So you need to decide what is working and what is not for your family. And that is based on your fixed costs and what you both agreed on way early on.

14:13If you didn't agree on it, now's the time. Second, you can go to your partner and say, look, I realized that I haven't checked in enough about the state of my business. and I realized if I were in your shoes, I would feel a little lost because you don't know how my business is going. You don't know what's working, what's not and it's my job to tell you that. So if you're open to it, I'd love to share that and I'd love to get your thoughts. Partner goes, yeah, thank God. Okay, yes. You go, all right, when I started off, here's the goal I set out for myself, okay? Unfortunately, I have not reached that goal and I spent the last couple of days really analyzing what's working and what's not.

14:54And here's what I realized. Right now, I have three clients. In order for me to hit my goals, I need to have 30 clients. So this is what I've decided. I'm going to give myself four more months. If I can get to 25 clients, I will keep going. And what that means for us is soon I would be able to contribute X thousand dollars a month, we would be able to travel and XYZ, etc. But if I can't achieve that within four months, then I'm prepared to shut this down and focus on the next thing. And that could be getting a job or starting another idea. The point is you need to give some certainty as an entrepreneur to your partner because entrepreneurs are by definition going through uncertainty, but it's triply uncertain for your partner.

15:46And it is your job as the entrepreneur to over-communicate with your partner. And there you have it. Practical, actionable advice from Ramit Sethi on navigating money conversations in your relationship. Whether you're talking about your business, asking for support, or even explaining some of the growth pains of entrepreneurship, these scripts can totally transform the way you communicate about money with your partner. If you want to go deeper into this journey of financial freedom in your business and relationships, don't forget to subscribe to The Jasmine Starr Show. We'll see you in the next episode.