Money For Couples with Ramit Sethi - 53. “We want to break the cycle of generational poverty, but we don’t know how” (Part 1)

Episode Date: July 26, 2022

Annie and Austin were both raised without knowing where their next meal would come from. They came to me looking for a way to break the relentless chain of generational poverty that they’ve experienced… and that they fear they’re passing on to their two young children. The good news is that it’s not too late for them, or anyone, to start making the right decisions and move toward a Rich Life they can be proud to pass on. They bring in about $130k a year in a low-cost region, and since they’re only in their twenties, they can expect to make more money as they get further into their careers. Annie and Austin have never been taught about money. So listen in as I meet them where they are: zero savings, $68,000 in debt, and no tools for managing their finances. Stick around next week for part two of this conversation, where we dig into the numbers and present long-term solutions.  Connect with Ramit Website Instagram Twitter Facebook YouTube Linkedin If you and your partner have a money issue and you want my help, I occasionally select a couple to work with, free of charge. Apply for my help here. Produced by Crate Media.

If you or your partner has fallen for a scam, I want to help, especially if you've recently fallen for an email or text scam, or you've gotten bad financial advice from someone who did not keep their promises, or maybe you just have not even told your partner because you are embarrassed. If this is you, I want to talk. Apply for free coaching with me by being on my podcast. Apply today at IWT.com slash apply. That's IWT.com slash apply. Let me share some of the coolest ways that my community has recently used money to live a rich life. One member did a month-long honeymoon in Europe after deciding she didn't want a big wedding. Another member bought a VW SUV that was their dream car that they've wanted for years.

And another member made a rule that any time she buys a ticket for an event, she always buys a second so that she can bring a friend. These are just a few examples of how my money coaching members have built systems to use their money. Notice that there's no more anxiety, that they have a smooth running system. They know when their debt's going to be paid off. They can feel comfortable spending on the things they love. They can actually spend less time on their finances while living an amazing life. In my money coaching program, members also get access to live events every month, including topics like money with aging parents and how to create a lot.

amazing vacations. That was one of my favorites where I shared how I spend my money on travel, plus Q&A directly from me. If you want to start building your rich life today, join us and get instant access to our back catalog of years of live calls. Check out IWT.com slash money coaching to join now. That's IWT.com slash money coaching to join the program right now. How old is your oldest? Six. And you both said that she's spoiled. didn't have anything, so we're overcompensating both of us because I don't want them to go through what we went through. As kids, there was times where the water wasn't there. There was times where we didn't have groceries for the week. For me, there was only situations where money was

never there, so I never learned what to do when you do have it, or more importantly, how to appropriately allocate it or like how to budget. I remember going through that and that's not what I want for her. I never learned any of that. So we're repeating the same pattern because we don't know how to handle money. Austin and Annie wrote this in their application to speak to me. They wrote, We want to break the cycle of generational poverty,

but we don't know how. Today I want you to hear what it's like to grow up without learning about money and how that can trickle down from generation to generation. Austin and Annie are in their 20s and they have two small children. They grew up poor, and even though their income has gone up, they still treat money like they did as children. They don't know how to change the way they feel about money or the way that they behave with it.

Today I want you to listen to them describe how they grew up with money and how it's affected them. And my hope with this episode is that it helps you develop some compassion for people like Austin and Annie. I can guarantee you that while they were growing up, nobody was talking about compound interest. or IRAs, when you don't have enough to eat, you're not talking about that kind of stuff. And those lessons, those feelings about money often persist through the next generation. Now, before I talked to them, I reviewed their conscious spending plan, which you can get a copy of at IWT.com slash episode 53. Austin and Annie are high earners in a low cost of living area.

And if they were truly aligned with their money, they could actually be able to. in an amazing financial situation. But they are saddled with these invisible scripts from childhood, and they're passing down these negative money lessons to their kids. Today, I want to try to help them break that chain. Welcome to I Will Teach You to Be Rich. Can you think of a recent time where you and Austin were not on the same financial page? Probably two, three weeks ago or so.

His parents had given us a call, said that they had a special, basically. they were already going on a cruise. It would be a buy-one, get-one free for, you know, if they invited a couple, then it would be basically you just pay for my flight. His all would be free within, you know, the fine print. It still came out to roughly, I want to say $3,500 as a ballpark, but maybe it was like $4,500 somewhere in there. So it's not a small ticket, especially for something that's an unexpected expense. He pretty much put his foot down immediately and said no. I got flustered and then it made me want to dig into it more. So what were your reactions when you were both on the phone?

What did you both say? He said nothing. He was quiet. I physically had the phone on speaker in my hand and he was on the other side of the couch. So he, I believe, got a look on his face, but he didn't really say anything. I didn't commit. So at that point, I told his mom we would talk about it, knowing it was more than likely to know.

What was the look on his face? Probably irritation. I would describe it more of. Again, we're doing this. I remember that night very well. And my look was more so I was frustrated because I knew I was going to have to let Annie down about my answer. That was probably I felt it was one of the worst decisions we could make. Okay.

So Annie, you hang up the phone and then can you walk me through the conversation? that the two of you had about this vacation? I asked him why, or I more so. It said, what do you think, you know, tried to play out some scenarios, like maybe we could work extra hours here or make payments instead of paying it all at once, just things to maybe make it seem more realistic

or that it could be, kind of gauge the situation. He was pretty quiet for most of it. He more so just contested certain points and why they weren't realistic. You know, working more when I'm already spread thin is not realistic. Just the fact that I'm having to pull holes in it so much and force it means it's probably not a good idea to begin with,

which I know, but at the time I was not thinking rationally. You think it's unrealistic to want to take a vacation? That soon, yes. Is it irresponsible? Yes. Do you think that when the time, two of you talk about money, this pattern replays itself? Over and over again, absolutely.

We point the finger at one another. It'll be a, well, you had this expense and you had this expense, and then somehow that's where we landed, like here's how we got to where we are, when in reality it's an accumulation of things over time. It's usually the same conversation. There's usually more bickering most of the time, the conversation does tend to go the same direction on both sides. Annie says this, I say this, then I say this, and Annie says this.

And we do point the finger at each other. That's the hypocrisy behind it, and it is frustrating. Austin and Annie admit that they spin in circles when they talk about money. This is so common. Every couple has its patterns. They fight about how one person loads the dishwasher, or how how messy the other person leaves the bathroom sink. We have those same patterns with money,

but it's compounded by the fact that most people don't even know much about money. You know how to load the dishwasher, you know how to clean the dishes, but most people have a very rudimentary understanding of money. So they'll argue about some random $3 question, never understanding the big picture of what actually matters with their finances.

Let me try to understand more about their dynamics with money now. He is the, I don't want to say cheap because that has a negative connotation to it or a negative impression, but he is one of the most money conscious, usually, especially out of the two of us. What does that mean money conscious? He's a lot more aware of something realistically than I am. So he'll second guess it before I will or he will be more cautious. I'm more trigger happy. So I'm a lot more impulsive in general.

He tends to want to look at all of the whole picture before he'll make a decision. And impulsive means what? You jump before really thinking through the consequences of the action. You do that? Frequently. Like what's an example? If I go to Target, which is probably not the best place for me to go. But if I go to Target, yes.

He will go with me on purpose. so he can hold my hand, which is sweet, but he's trying to get me away from the makeup. What is this shit? How many relationships has Target ruined? When I go without him a little bit more, because I'll come back and he's like, I won't show him the receipt, obviously,

but like if I just put $400 on my credit card that I didn't need to, and then the bill comes in at the end of the month, and I don't have as much money as I normally do, or he notices me being more conscious in certain areas or careful because I spent $400 more than I needed to a week ago, and I do that twice a month or so, then yes, it'll cause a bickering, but otherwise we don't typically argue about it. Right. Aside from you hiding receipts and not telling him and then having to cut in all

other areas of life, it's totally not an issue. It's bad. Annie, what do you get at Target? Honestly, usually stuff for my kids. Not that that's a justifiable thing, but I, clothing for them. We know that. We know. That's always the first answer. Every mom says it. That's code for. What does that code for, Annie? It's an excuse. It's a way to not take the responsibility. Yes, I'm trying to justify it. You're trying to say, I'm a good mom.

Okay. You can hear more about the psychology of shopping at Target in episode 31. And in that episode, you'll hear the exact same phrase, too. I buy stuff for my kids. Short version, there are too many people who use Target as a joke for spending on the things they love. You know, the people who share memes about how they went to Target to buy some detergent. They walked out with $500 worth of stuff in their cart. Ha ha. Only it's not really a joke, because Target cannot be your rich life. How can buying random commodity junk at a retail store

be your rich life? It can't. A rich life has got to be bigger than that. More on this in episode 31 of this podcast, which you can get at IWT.com slash podcast. Now, I want to understand more about how Annie describes herself with money. I am surprised, Annie, that you described yourself as impulsive, but you are the one who manages money in the relationship. And you're scrunching your face up. Can you describe what your face just did? I knew you were going to say something about it

because me thinking about it, it sounds just unrealistic and silly. It's a contradiction. It doesn't make any sense for me to be doing it. do you think that you are impulsive? I think so. Do you think it's possible that's a story you tell yourself? Yes. Why are you smiling?

I need help kind of working through these things so I can get to the root of the cause to figure out why I'm doing it. I'm a person that needs to know why. If I know why, I can fix it. I can't fix myself here, but I want to fix everyone else. So if I can figure out what I'm doing, if I can figure out, why I'm doing it wrong. I can fix it. Is that why you came to me? Yes. I need to be more strict and I need to I need to plan better for everything, which means putting money away and sticking to a strict budget and not deviating from an amount I set or just avoiding maybe target or a store like that

altogether until I can learn how to not do those things. Do you think that you can learn it? Yes. Yeah, I do too. I love how quickly you said yes. I totally agree. It's a skill. It's a skill like anything else. And money can be learned. And what I actually love about the skill of money is that a lot of it can be automated. Do you notice that Annie talks to herself like a parent talks to a child? You need to clean your room. You need to do your homework. I need to be less impulsive. I need to be more strict. In a way, it's very childlike. And obviously, it's not working. I shift to ask Austin about how he manages his money. I wonder if he uses automation. Just guess the average wait time to see a doctor in the United States.

I'm not talking about a specialist, just a regular standard family doctor. Do you think it's a week, two weeks? Nope, it's over 30 days. So a lot of times, whatever symptoms you have are going to be gone or maybe worse, by the time you get to that appointment. I don't want you to have to wait weeks to see a doctor. I want you to get seen faster by an in-network doctor using Zocdoc. Zocdog is a free app and website that helps you find and book high-quality in-network doctors

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book a doctor you love today. That's Z-O-C-D-O-C-com.com. slash Rameet. Zocdoch.com slash remit. And I want to thank Zocdoch for sponsoring this message. There's a pretty cool TikTok trend going around right now that I really love. It's called admin nights. Basically, you get your friends together, you get some snacks, maybe some drinks, and you do all the infrastructure stuff in life that most of us skip over. If you're going to set up an admin night, here's my suggestion for you. Use Zoc Doc to book your health appointments and you will be done fast. Zocdog is a free app and website that helps you find and book high quality in network doctors so you can find someone you love. They have over 150,000 doctors across all 50 states in 200 plus

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And I want to thank Zoc-Doc for sponsoring this message. When I have money in the account, I forget to pay the bills. That's why she takes over the most of the finances is because I'll sit there and I'll pay the automatic bills that come out. But then I look and I'm like, oh, I forgot the past two Wi-Fi payments or I forgot my past two phone payments. How is your Wi-Fi bill not automated? So I don't do auto bills. It's one of the things I cannot. I don't like them.

Say the T word. You don't like it because what? You don't? Because I don't know what's going to be in my account. So I don't want something auto pulled out of my account and make me have an issue. No, I don't. Financially speaking, what happens if you forget to pay some of these bills? Then I have a lot larger chunk come out all at once or I start accumulating late fees from the companies that have them.

Yeah. Yeah. And sometimes your credit gets affected. if you pay your credit card late. That can, one late payment can dramatically ding your credit. It can take a long time to repair that. So a lot of bad things can happen. So tell me more.

Why do you not feel comfortable setting these things up on automatic payments? I don't trust myself that I will have money in the account at that time. But one way I've combated that, if the bill is, say the bill's, $91 or even if it's just $90. Nope, bills $100. The bill's $80, the bill's $100. And I always, in my head,

if the bill is like $90, $80, $70, something like that, I automatically bump it up to a lot higher of a number when I'm doing my, like trying to budget in my head to see how much money is in the account. So if I pay a bill that's $91 and I'm out and I pay it in my head, I counted as 100. Where did you learn that from? I don't know.

It was just, I don't know if I learned it in maybe school, maybe talking with a family member, maybe my bank previously. It's just something I've done. It's easier to add the numbers that way. And I know I'm exaggerating the numbers a little bit. When I then see my count after the bills are paid, there's a little bit more, like, oh, I'm going to have $35 left. And when I actually go and look at the account,

oh, you've got $85, not $35. This is fascinating. Austin has developed a little trick to feel in control of his money. And a lot of us do this. For example, some people will stash an extra $10 in their winter coat to surprise themselves next season and feel good. I don't mind the tricks,

but it's also a bit of a red flag for me. It's a gimmick. Sure, rounding up might work, but that's not really the way to properly manage your money. What are some other ways that you might describe yourself? Choose any way you like. Unrealistic, controlling. I don't know how to phrase it.

I don't know. It's probably a really hard question for me is how do you describe yourself? That's the one I would struggle with the most. It's frustrating. It's embarrassing. I'm I'm 26 years old. I can completely tear your car apart, put it back together easily.

Give me a day. Not a problem. Come to money. I don't know what those words on my paycheck mean, but I know what those numbers mean. I just limit the zeros and make sure I'm all right. Yeah. I don't know the financial terms. I'm not versed in that.

That's kind of the opposite of where I, was in school. I didn't have anything to do with that. So a lot of it, the term-wise, is new or I need certain explanations. When I work with my students, I never like to hear them beating themselves up. I never like to hear them saying things like, I know I'm irresponsible. I know I'm bad. I don't want that. That's not the way to treat money. That puts you in a small our position than money. It almost makes money your parents. I know I didn't please the money. I know I didn't do the right thing. I'll try to be better tomorrow. It's almost childlike. What I want us to be able to get to you today on this call is for you to really acknowledge what it is you want from life. What do you want to

use money for? Austin, same thing for you. And then the two of you together. And then we figure out how to make your money serve you. Okay, money doesn't control you. You control it. You tell it where to go. And sometimes you might have debt. It might take a while. Sometimes you might be ahead of the game.

But I don't want you being children to the parent of money. Money serves you. You don't serve it. Annie, how much do you make per year? 54,000. Austin. About 6,700 or 67,000 without incentive and about. and about 75 after incentive.

Okay. If we add up the two numbers you gave me, it's $129,000 per year. Wow. Annie, what's that look on your face about? The same look I had yesterday when filling out the spreadsheet. I had just said to him earlier,

where the hell does it go? Tell me more. It looks way different on paper. We look comfortable or like we should be more comfortable than what we are. realistically and in our actual finances. But on paper, if I were to read that, I would think we were fine.

You've got a couple making almost $130,000 a year in a moderately priced state. We're not in California. We're in Kansas. The cost of living is significantly lower. Makes me wonder what else is, again, it's the onion. I feel like there is more contributing to this than just a couple of extra. extra target trips. Yeah.

We've made a budget numerous times, and it... How long does it last? Every time we make one? Well, it's... Every time we make one, we look at it, we think the same thing. Damn, where is it all going? And we set this budget, and I don't know if something happens, and we don't follow through, but it doesn't seem to last very long.

Well, first of all, I hate budgets. You probably need to change a few things, and we'll talk about that. But this is actually... lesson number one. If something doesn't work for you, stop beating yourself up and find a different way to achieve the goal. So how many times have you tried to do a budget? Many times. And it doesn't work. And so what was your reaction to that? What did you both tell yourself? That it wasn't going to work. We're bad. We're irresponsible. We need to buckle down. We need to try harder. I mean, does any of that feel good? No. No. No. So we start from the place of lesson number one. If something doesn't work,

let's stop beating ourselves up. Let's find a different way to achieve the same goal. Okay. Budgets don't work. You give up after a month and a half. This probably sounds familiar because you've done this, right? Yeah, they're nodding. You don't need somebody to come in here and tell you to stop spending at Target. That's not what's really going on here. Something probably be some things much deeper than that. I'm not a fan of budgets. They're backwards looking. They make you feel bad.

They're hard to do. And frankly, they don't actually tell you much. Budgets are also one of those things that people beat themselves up about. I really should keep a budget. That's something virtually every American tells themselves at some point. I've noticed that a lot of people believe

that this mythical, mystical budget will somehow magically fix all of their financial problems. But in my opinion, it doesn't work. I use something different, a conscious spending plan which lets you decide where you want your money to go in the future. And it even provides specific guidelines for different categories, like guilt-free spending, saving, and investing. You can get your own conscious spending plan at IWT.com slash episode 53.

I'm just very, very poor family growing up, or at least before I was adopted. Long story, but just very, very poor, didn't have money for lights necessarily or know what we were eating. So things like seeing a picture hanging up on a wall was non-existent. Really? Yes. There were times where we just didn't know what we were going to eat just due to the fact that there wasn't money.

How long did this go on for? The first 12 years of my life. Wow. And then what happened after 12th? I was adopted by my current, by my mom, and she owns a law firm. So to say the lifestyle change was overnight is not an exaggeration. Things shifted for me. I lived a more, like my lifestyle couldn't have been more opposite from his.

How did that affect you looking back in terms of finances? When you think about the first money messages that you received growing up as a young child, what do you think those money messages were? There is not a lot of financial literacy to go off of from that point. It was necessity. So it was, there was not enough money for the basic necessities to begin with. then you'd start crossing off and prioritizing which ones we're going to take precedence versus the ones that were still needed.

But if you're paying rent, you have the actual house. If you're paying the electricity to the place that you're no longer in because you're evicted, that sort of situation. Right. I don't think a lot of people understand the type of tradeoffs you make when there really is not enough money. And you realize what you really don't need and what you do need. What else do you take away from your tradeoffs? childhood in terms of finances?

I didn't learn anything. I didn't actually learn important lessons. There was only situations where money was never there. So I never learned what to do when you do have it. Or more importantly, how to appropriately allocate it or like how to budget. I never learned any of that. Or when I started to, it was too late. And that's why I'm having to undo things.

What did money mean to you in the early part of your childhood? It was a burden. It was a chore because it was always an argument. When you would look around at other people who had money as a young child, what are the things you remember? Freedom or my perception of their freedom. The newest toys, name brands, anything of a status symbol, experiences, boats. I grew up in Southern California, Palm Springs, to be specific in Palm Desert. So country clubs, nice food. From your perspective as a young child who did not have money, what did people with money do?

Anything they wanted. Go on trips, so go on vacation, shopping whenever they wanted without restriction, or having to look at tags or add things up, going out to eat more often than not. So now with that additional, layer of understanding that you have, knowing how much a restaurant costs or a vacation, et cetera. What do you see about how adults spend money that you didn't see as a child?

They plan for it. It's not and no strings attached. Because as a kid, it looked like they just swiped a card and called it even, not understanding if that was a credit card, a debit card, anything like that. So it seems like there's more to it than what immediately is more than what meets the eye. Pretty observant. Would you say that you plan for expenses in your life? Some of them. What do you not plan for? How about a vacation? A vacation would be one of those things. You don't plan for that? No. How about $400 at Target? I don't plan for those trips either. What do you make of that? I'm not doing as well as I hoped to be. And I'm self, definitely some self-sabotage going on. What an interesting response. For a kid with no money,

it's easy to mythologize what having money would mean. To Annie, it meant buying whatever you want. And when I ask what she learned as an adult, she says that those people with money plan for things. But when I ask her if she plans for the spending in her life, she admits that she doesn't. Annie is earning a lot more, but she hasn't yet changed the way she treats money, the way she feels about money and the way she thinks about money. Just guess the average wait time to see a doctor in the United States. I'm not talking about a specialist, just a regular standard family doctor. Do you think it's a week, two weeks?

Nope. It's over 30 days. So a lot of times whatever symptoms you have are going to be gone or maybe worse by the time you get to that appointment. I don't want you to have to wait weeks to see a doctor. I want you to get seen faster by an in-network doctor using Zocdoc. Zocdog is a free app and website that helps you find and book high-quality in-network doctors so you can find someone you love. They have over 150,000 doctors across all 50 states in 200-plus specialties, including mental health, dental, primary care, whatever you need. Just filter for doctors based on

insurance, location, ratings, even virtual care options. And Zoc Doc appointments happen fast, usually within 24 to 72 hours. You can look through your options, book an appointment, and you are done. If I needed to find a new doctor today, Zokdoc is what I would use. Stop putting off those doctors appointments and go to Zocdoc.com slash remit to find and instantly book a doctor you love today. That's Z-O-C-D-O-C dot com slash Rameet. Zok-D-D-com slash Rameh. And I want to thank Zok-Dak for sponsoring this message. This episode of Money for Couples is brought to you by Wild Grain. Do you have someone in your life who always tries to one-up you?

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plus free croissants in every box when you go to wildgrain.com slash remit to start your subscription. That's right, free croissants in every box and $30 off your first box when you go to wildgrained.com slash remit. That's wildgrain.com slash remit or you can use promo code remit at checkout. Now I'm wondering how Austin was raised. Can you just summarize what happened in your childhood as it relates to money? We, my parents made sure that we had food on the table and we had clothes on our back. We had a roof over our heads. We went to school.

There was times where power was out. There was times where the water wasn't there. There was times where we didn't have groceries for the week. We ate at Grandma and Grandpa's every night. There was times where we just didn't have it. And there was a lot of things that we weren't able to do that all the other kids were able to do. I think one of the larger issues with that is the particular area I lived in. I was in the school district, unfortunately.

I wasn't far enough out that I was out of that school district. And that particular school district in our area was the school district that all of the, they have the huge houses, like they were the kids that came from money. Their parents were the doctors and the lawyers. And they had the money. They were very prominent in our community. They were all,

their names were plastered across our community. community. So coming from and then being the low kid on that where everybody was like, oh, you're you and looked down upon and bullied because of that, that was a huge like, oh, that's how that happened to me. And I remember going through that and that's not what I want for her. It got so bad. I know when I was a kid that my father actually left to go overseas, he was a civilian contractor and working in Iraq and Afghanistan for years

while I was at home. So he worked over there for years at a time. He would be gone for about six months, come back for two weeks, six months, two weeks. He did that for like eight years, ten years. And I don't want that for my kids. And I don't want that for Annie. I don't want that for us.

I don't want that on me. It sounds to me like both of you had some difficult childhoods when it came to money. Sounds like you just did not have healthy role models talking about money. Suddenly the money part of their situation starts to make sense. It makes sense why they hardly save any money and why they don't invest. It also makes sense why they're spoiling their daughter. I'm not saying I agree with their decisions, but at least we can start to understand them.

You know why I wanted to talk to Austin and Annie on this podcast? Because I think a lot of people hear stories about people making bad money decisions, and they judge them for being stupid. How could you not save any money? How could you not know you're supposed to invest? Why would you spoil your daughter like that? I feel that way sometimes. We all do.

But Austin and Annie are courageous enough to let us into their lives, including their childhoods to help us see the effect of how they were raised. Sometimes we just haven't been exposed to different money ideas. Again, I can guarantee Austin and Annie never had people around them talking about compound interest.

If you don't know where your food is coming from, you're not talking about a Roth IRA. So I have a lot of compassion for them, especially since they're now passing on their negative money lessons to their daughter. If they can get this right, I think they can change the trajectory of their lives and their future generations. But if not, they'll pass a generational lack of money onto their daughter. How old is your oldest?

Six. Six. And if your daughter were here and I asked her, what do mommy and daddy do with their money? What would she say? What money? No, that's what he tells her. He always tells her we have nothing so she won't ask. She'll with me, she'll say they pay for my gymnastics,

and they buy me toys, and we take trips, and we go places, and she'll start listing stuff off. They buy me clothes. And you both said that she's spoiled. Yes, they both are. We didn't have anything, so we're overcompensating, both of us. Because what? Because why?

Because I don't want them to go through what we went through. So therefore you buy them toys. Overcompensate and buy them things they don't necessarily need. Yes. What are the ramifications of raising a spoiled child? She's six now. Oh, I'm ashamed of it. For me, it's a shameful thing because I didn't realize how bad it is.

When did you realize how bad it was? Probably about a year ago, six months ago. she started to expect things and move to more of an entitlement. Like, well, I always get this. What do you mean? I can't do this right now. I took a step back.

And then that's when I fully assessed that I had created a or we, rather, I think more so me, but created an unfortunate situation that is contributing to financial issues. Well, if I ask either of you, do you remember your parents talking positively about money or teaching you something positive about money. Austin, what would you say? No. Annie? Very later on, half-hazard or half-passing comments of you should invest. Make sure you

save a retirement. Nothing in depth. Just out of curiosity, if I asked your six-year-old daughter the same question, what would she say? I don't think she would have anything to say about it being positive. When was the last time you told her no? Her or me? Yeah, I'm like, I'm usually the one that won't tell her no. He will always, I'm sorry, he will usually tell her no. But I think that's because I usually do not tell her no. So she goes, she, she asks daddy and daddy says no, so she goes to mommy. Okay, time tested, kids are smart. And so what's an example where she played that game with both of you? This was probably about four months ago, three months ago.

We were in a store. She wanted to do something. I don't remember if she was asking for a toy. I don't remember if she was asking for like maybe a ride, whatever the case in point that she was asking for. I remember the price of it was extremely high. We could not afford it obviously right then and there. We would need to look at the account, figure out what we had,

and it probably just needed to wait a couple days just to make sure everything is clear that we're good to go. But I think me or Annie responded with maybe the wrong response to her, because whatever she had said the next day at school, she was talking to her teacher, and she came home with baskets of food. And it was like, Emmy, where did you get this? That was hilarious. Where did you? Why do you bring you home food from? And she's like, well, the teacher gave it to me because we have no money.

And I'm like, what do you mean? I'm like, you guys eat every meal. You guys are more than fed. We have food in the house. There's never been a meal missed. Like you guys, you have everything. Why did the teacher give you this? Why does it not, why is it coming home with you?

And talking with the teacher, it somehow, in Emmie's mind, we had no money for anything. And at what point does it become too much for her to understand the adult side of it? Annie, you said it was hilarious. Austin, I don't think you read that situation as hilarious, did you? I was embarrassed. It was a flashback. It brought me back.

And that was, that's one of the things I don't want it all to happen for our kids. I want them. I will go without food before they will go without food. I know that. And for the school to do that, that just brought me back to when I was a kid. And not only that is okay, now, but other kids are going to see her walking out with all these baskets of food. What are they going to say to her? How was she going to take that? Are they going to bully her for that? Is she going to be embarrassed? how was she going to feel because of decisions me and Annie have made as the adults, as the parents?

What are, what negative impacts are we showing her, are we giving her because of a decision we made? And maybe if I spent five more minutes in my explanation about it of trying to explain it to her, or maybe I said it different, maybe I was more blunt about it. Maybe I brought it down to her level more. who knows, but maybe it wouldn't have happened that way. It was a very embarrassing moment and it was not a proud parent moment. Annie, can you understand that he did not find that basket of food example hilarious at all?

Yes, because we briefly, we didn't fight. We had a brief argument about it because I had the exact opposite reaction. I locked it off. not realizing that it had pissed him off initially and that it was going to be a thing. The way they both reacted to this so differently is quite interesting, especially Austin, who literally tells his daughter that they have no money, yet he's shocked and embarrassed when she comes home with free food from her school. I don't think Austin has yet made the connection that talking about money with your kids is normal and even positive.

But how could he make that connection? He never had a role model do that with him. His only experience with money as a kid was negative, even depressing. Now you see how these money messages can be passed from one generation to another. To all the parents out there listening, I would ask you to consider what money messages you might be invisibly communicating to your children. Listen in as I try to gently talk about this with Austin. Why is it that people who tell me I'm stupid on social media always have the profile picture of a jar of mustard?

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completely opposite realm from her. She would have nothing to do with that. Exactly. And that is my point. When was the last time you talked to your daughter about money? I tried to leave the conversations about the money. I try to leave that after she's in bed. Or maybe she's taking in a nap or maybe she's playing, watching a movie to playing with friends. Austin, I heard you mentioned, and I heard Annie mention that you tell your daughter that you don't have any money. Is that true? Yes. And why do you do that? It's easier to give an excuse than to tell her the truth. It's easier for just to give her an answer that she can't question and poke holes in and make it so I have to talk about it to her because I, as is, I'm uncomfortable with money.

I've always been. It's just how I look at it. And if I can get her to just leave the question alone, then it will go away. Do you see any connection between you telling her you have no money and her going to school and coming back with a basket of food? Yeah. Austin, this is the key. This is the key to the whole thing.

Finish this sentence for me, please. I leave my daughter out of money discussions because what? Embarrassed or ashamed. I'm embarrassed or ashamed to talk to her about it, talk with her about it. And I don't. There's a lot of it I don't understand still. So if I don't understand it, how can I explain it to a six-year-old if I can't even understand it? That answer is not really working.

It's an answer based out of fear. I don't know about money. I'm embarrassed about it. I'm ashamed. And so I don't want to engage with my six-year-old daughter. So I'm just going to tell her we don't have any. Austin wants to protect his daughter from the pain he felt about money. so he avoids talking to her about it.

What he doesn't realize is that until he takes control of money himself, he can't change the cycle. Right now you make $130,000, you have $0 in savings. You have $68,000 in debt. If your daughter understood these numbers like she will in a few years, what would she say about the two of you? She'd be disappointed. I was going to say disappointment.

Confused. because they don't make sense. In a few years, she will be able to process this stuff. And we do not want to set an example for her the same as the example that was set for both of you when you were younger. This is exactly how things get passed down generation to generation. That's why I'm having this conversation with you.

That's why it is so important for me. you have the opportunity to change the trajectory of your kids' lives and their kids' lives and their kids. This is a very pivotal moment where you get to change the way you think about money, the way you manage your money, and you get to show that to your kids and talk about it every week. It's not something to be afraid of. It's something to celebrate. It's something to talk about, something to engage with your kids. and with each other on.

That is what I'm afraid of, is that we are not teaching our kids anything. We're repeating the same pattern. We're just piddling and pissing our money away before we have a chance to have it be as bad as our parents had it with us. But we're not setting a good example either. And I think that's what's sticking to me

is we don't know how to handle money. It's not taught in school. And if it were taught in school, it probably wouldn't be taught very well. You can't expect teachers to know all this stuff. you didn't have role models to explain this to you. Sure, there's a lot of free information out there, but how do you know what's good and what's not?

And it frustrates me because I don't think anyone should have to become a financial expert to learn how to deal with their money. So that's the reason I want to talk to you because it matters for the two of you and it matters for your kids. I really enjoyed speaking to Austin and Annie today. And in part two of this episode,

which will air next week, you're going to hear me get much more tactical. How do you help a couple start to change the way they think about money when they've thought about it a different way for so long? You're going to hear me talk about gas prices. You're going to hear me talk about spending. You're even going to hear me suggest to them that they might be millionaires and see how they respond.

It's quite surprising. So if you would like to get a conscious spending plan for your sales, plug in your numbers and follow along. I would invite you to do that. It is quite illuminating. Go to IWT.com slash episode 5.3. That's IWT.com slash episode 53 to get a copy of the conscious spending plan

which you can use for your money. Thanks for listening to I Will Teach You to Be Rich. I'm Ramit Sethi. Please follow the show on Apple, Spotify, or wherever you listen to podcasts. If you haven't read I Will Teach You to Be Rich, my book, pick up a copy. You can get it at any bookstore or any library and it will show you the specific tactics for how to build the I Will Teach You to Be Rich system into your personal finances.