Well with Arielle Lorre - 246: How to Allocate Your Money, Invest Easily & Live Your Rich Life with Ramit Sethi 

Episode Date: May 10, 2023

Ramit Sethi is the founder of I Will Teach You To Be Rich - a website with over 1m visitors a month, a New York Times bestselling book, and a hit podcast. He also has a new hit Netflix show, How to Be Rich. He joins the show to discuss how to live your rich life no matter your circumstances, how to create abundant money rules for yourself, and why he doesn’t believe in budgets. He also explains how to invest (and how to make it simple!), the only four numbers you need to know with your finances, how to allocate your money, how to pay off debt and save at the same time, navigating money in your relationship and so much more.    This episode may contain paid endorsements and advertisements for products and services. Individuals on the show may have a direct, or indirect financial interest in products, or services referred to in this episode.   Right now, Sakara is offering our listeners 20% off their first order when they go to Sakara.com/BLONDE or enter code BLONDE at checkout. Ritual is offering my listeners 10% off during your first 3 months. Visit ritual.com/BLONDE to start Ritual or add Essential for Women 18+ to your subscription today.   Go to Zocdoc.com/BLONDE and download the Zocdoc app for FREE. Then start your search for a top-rated doctor today. Many are available within 24 hours.   Visit viveorganic.com and use code BLONDE at checkout for 15% off your first purchase.  Get your hands on this delicious new flavor and join us in supporting Farm Sanctuary by going to gomacro.com and using promo code BLONDE for 30% off plus free shipping on all orders over $50.   Produced by Dear MediaSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Go to your rise-adviseur or sunnycars. The following podcast is a dear media production. Welcome to the Blonde Files podcast. I'm your host, Ariel Lori, and I'm here to talk all things wellness. From how to achieve optimal health and well-being to the best beauty tips and everything in between, no topic is off

limits. I know there's so much information out there, so I'm bringing on expert guests and sharing my own experiences to help you sift through all the wellness stuff without the BS. Enjoy the show. Hi, everybody. Welcome to the show. I have your favorite guest. And I have to say my favorite guest, definitely top three, if not number one, favorite guest. Rameet Saiti. Rameet is the founder of I Will Teach You to Be Rich. He's the author of the New York Times bestselling book, I Will Teach You to Be Rich. He is also now the host of Netflix's hit show How to Get Rich, and he also has a podcast.

I will teach you to be rich. So if you guys haven't listened to the first episode that we did together, I believe it was back in October. You don't have to listen to that one before this one, but it is a really fun episode. So if you haven't listened and you listen to this one and you love it, just know that you can go back and there is another episode with him. He is so fun. He makes talking about and learning about finances an enjoyable thing, which I think for so many people is such a loaded topic that a lot of people really don't know anything about. And I know that when we recorded our first episode, a lot of people sent me messages like, oh, God, I need to listen to this, but I'm scared. I don't want to hear what he's going to tell me. But he really has

such a positive energy, positive attitude towards money and how to create abundance in your life and create your own rich life, whatever that means to you. And no matter what your circumstances are, he's not about restricting. He's not about having strict budgets and not buying the latte and the avocado toast or the purse or whatever it is. So I think if you haven't listened, you're going to find his take on finances really refreshing. And today we get into how to invest, how to make investing really simple. We talk about things like step IRAs, 401Ks. We talk about my investment strategy, which is going to have to change once again after our discussion. We talk about how to create abundant money rules for yourself instead of restructions.

restrictive money rules for yourself. We talk about the only four numbers that you need to know. Specifics for how to live your rich life, how to navigate money differences in a relationship, how to contribute financially in your relationship, whether you're the higher earner or the lower earner. We talk about setting up joint accounts and relationships, how to have an abundant mindset, how to pay off debt and save at the same time, how to allocate your money, and so much more. I know you guys are going to love this episode. So please enjoy, Rameet Satee. All right.

Welcome, Rameet. Welcome back, I should say. Yes, thank you for having me again. Of course. So excited to talk to you. Since you were on last, you now have a hit Netflix TV show, we can say. It's so crazy. It's so crazy to hear that.

Yeah, number nine in the U.S. called How to Get Rich. And it's all about money and money psychology. And it's really the first TV show on money in about 20 years. I'm thrilled. because Netflix took a big bet that money can be fun and it can help us feel good about it. And it seems that people across the world are loving it. I started watching it last night.

And something that I found so interesting was like just how you can glean so much about somebody by looking at their finances. You can figure out everything. So I want to talk to you about that. But since you were on last time, I was just telling you before we started rolling that you inspired me to, reallocate my money. Okay. Tell me. Since we recorded last, so I think we talked about in the previous episode how I had a lot of cash just sitting there. Yep, which is bad. And your least favorite financial institution. Bank of America. Well, it's either that or Wells Fargo. Yes, I think I had both, but yeah, just Bank of America was the majority of it. I decided to invest in fidelity. Okay.

And we were just looking at them and you were doing a lot of hmms and, huh. So, yeah. So let's let's go over this live because a lot of people messaged me actually and said that they did the same. Oh, good. So if maybe we're all making the same. No, no, no. First of all, let me tell everybody why this is important. Okay. So having your money sitting in cash, if your money is sitting there for an emergency fund, great.

Put it in a savings account. Just let us sit there. You don't need a bunch of interest. It's fine. If you have money that you're going to use within the year or maybe even up to five years, like a down payment for a house, fine. Keep it in a savings account. label it house, great. But if you've got money that you just don't need for a while, it's investment

money, you do not want it sitting in a bank. It's almost like going swimming and putting a 50 pound weight on your back. You can't go as far as you need to go. You can't earn as much and create real wealth if it's just sitting in cash. It's called a drag. It's dragging you down because cash is really losing money every year. All right. My screen protector. So your fidelity account, okay, so you have have a Fidelity account here, an individual account, great. And I'm looking at the summary. It's showing me like what's happened in the last year. I don't care because one year is too short. So I just, money that's invested is not meant to be used in any shorter than 10 years. Okay, great. Oh, that's good to know too. So let's look. Hold on.

He's making a bad face right now. Well, okay, first of all, I don't log into Fidelity on a phone. So I'm like, okay, this is interesting terminology. But okay, you have like 50 or 100 stocks, like a lot. So then I go, did some dude like choose this for you? Is that true? Yes. Oh, God. All right.

So this is, okay, so it's like a managed account. Okay. Oh, yeah. Okay. By the way, okay. So here's what's going on. you paid somebody at Fidelity to like set your investments up and invest for you, correct? Are you still paying them?

Probably. Okay. All right. Which I know we talked about last time and like having people manage your money. Is not good. No, I know. At least for a percentage base fee, which you're definitely paying here. Okay.

But I think we also talked about I'll pay for convenience. No, no, no. Hold on. Do you ever pay for somebody to like mow your lawn or like clean your house or something? Okay, totally reasonable. You like to pay well? Okay, do you pay them 2% of your net worth? No.

Oh, that would be crazy, right? So for a lot of people who pay a percentage, that's a percentage called AUM Assets Under Management. We don't want that. The reason why I'm a little confused, I'm not saying it's bad, I just would want to talk to you a little bit more, is why is there like literally 75 stocks here? For a lot of people, you hear the word diversification, and people think you just need to like randomly buy stocks. you can actually buy one fund that automatically is diversified. That fund owns all these stocks.

I was kind of under the impression that that's what they were doing. Yeah, that's, but... No, not so much. Well, again, I don't want to say anything. I want to understand more before I say anything, but it's a little curious to me that there are so many individual stocks because really investing is quite simple. When I look at somebody's portfolio that's really dialed in and they're simple,

their portfolio might have three funds, maybe five. They can even be as few as one, a target date fund, which will include everything they need. But if I see more than five, seven, I start to go like, what's going on here? It's a bit of a red flag. Okay. It's like someone who pulls out their wallet and they got that thick dad wallet. You know, it's got like a check from 1984 and you just go like, well, what, got in there? What's going on? What in your life is not in control? And so it just tells me something.

And I'd want to learn more before I make any suggestions. Talk about that target date fund, because I think we touched on it last time, but can somebody walk into Fidelity and say, I want to do a target date fund? And then they would do what you just said. Well, you don't have to walk in. You can do it online. Like you could sit with your phone and do it. So when my family asked me, where should I invest my money? My favorite investment for them, for an everyday person, is called a target date fund. And it is really simple. It is you pick the year that you're going to retire in.

And if you don't know, just pick the year. You're going to turn 65. So let's say somebody's watching or listening. They're going to, 2050 is their year. Cool. You can open up an account at Vanguard, Fidelity, Schwab. Any of those companies are great. And there will be a fund called a Vanguard 2050 fund or a Fidelity 2050 fund.

All you have to do is just buy that fund. And every month you set it up, so it automatically takes some money from your paycheck or your checking account and might be $100 a month. Some people might put $5,000 a month and it just buys it. And the beautiful part about this fund is it's like a pie chart. It's automatically diversified. It has tons of stocks, a little bit of bonds. As you get older, it gets more conservative. You want to be safer as you get older.

And that's it. That is a well-diversified portfolio with just one fund. I love simplicity. Like, don't need complexity. This is how they sold me on this, though. The thing that you were just looking at. We're going to manage it for you. We're going to keep our eye on the market.

We don't necessarily aim to beat the market. We just aim to normalize it. We want to make sure you don't lose money. Anything like that? Yes. I mean, there were conversations about how aggressive do you want to be now and when do you need the money. Hold on.

Watch this. All right. So how old are you? 37. 37. So here I am portfolio manager. wearing an ill-fitting suit, you know, no tie these days. It's L.A. And so I ask you, how aggressive would you like to be? What's your answer? Well, I was like, I'll be aggressive. Okay.

Is that? No, it's a fine answer. I would do the same thing in your situation. But what does aggressive mean to you? Like when you say, I'll be aggressive, what does that mean? I mean, the way that I was looking at it was that I was not averse to taking bigger risks, but we were kind of looking at it in the long term anyway. So I was like, I don't mind being aggressive. I don't need this money anytime soon. Okay. Like, this is the long game.

So we can be more aggressive now, be more conservative later, like you were saying, when I'm older. Yeah. Do you mind if you lost 10%? Only not. Good answer. Okay. That's actually, your answer is very sophisticated.

Long-term time horizon, you're not super sensitive. Most people don't really know what they would do when the market drops 15, 20%, but your answer is pretty confident. So actually you have a great answer. These words, this jargon that Wall Street uses is really confusing to people. I mean, even the terms 401k IRA, SEP IRA, people are like, ah. Oh, yeah, I have one of those too. You have a SEP.

Yeah. Yeah, you should max that out. You make a lot of money. How do you max that out? So think of a SEP IRA and a 401K as basically rooms in a house. They are your accounts. Within those rooms, you can buy investments. furniture. And so the more tax advantaged accounts you have, basically the more you can save

on taxes. That's why I opened it. Yeah. So you have a set by IRA. You can probably contribute like $60,000. That's $60,000 of tax advantaged money that you can grow. So I would do that if I were you. Okay. Okay. So what do I say when I walk back in to fidelity. This is what you do. First of all, stop walking in there. Okay. Yeah. I mean when I log into my fidelity account. So ask them, can you explain what is my asset allocation? What that means is what is my pie chart? And they're going to give you a number. They'll say something like, you're 90-10.

That would be 90% equities, 10% bonds. Yeah, we did this. I did that with them. So what's the number? I don't know. Okay, that's fine. Maybe if I log in from a desktop. Yeah, it could be.

A little bit better. So you want to know that. And then they'll give you a big report. Because, again, when somebody sends that question, their antenna go up, they go, oh shit, this person's getting a little smart. I think our fee structure might be a risk. Yeah, Ramit Satee from Netflix. How to Get Rich.

He's been telling them again. Ah, damn it. So again, not necessarily saying something's wrong. Fidelity is actually in general a really good company. But you just want to understand what's my asset allocation? What fees am I paying? Again, for everybody watching, let me give you some shocking math. It's going to blow your mind.

Most people sitting around, especially people in L.A., Oh, I don't know, should I get this aeron coffee? It's $11. They spend their whole life agonizing over $3 questions. Meanwhile, if they're paying 1%, that means that hundreds of thousands of dollars over their life will come from their pocket out to their advisor or Fidelity's pocket. If they're paying 2%, it means over 55% of their returns will go away in fees. So, no, it's not acceptable to pay any amount of fee with a percentage

to an advisor, in my opinion. If your advisor, if you decide you need an advisor, which most people don't, but if you want one and they charge you $200 an hour, even $500 an hour, pay it. It's cheaper than paying a percentage-based fee. Okay. And then the other question that I had for you about myself, not to make it all about me, but I'm sure other people, I saw this variations of this question come in as well from people on Instagram.

So if you have money invested, if you have money in your checking and savings accounts, and then you have an extra X amount, what do you do? Money comes in. Keep putting that in that same fund. Great question. All right. So I'll give you the simple answer and I'll give you the more sophisticated answer. The simple answer is if you have extra money that comes in, you don't need it anytime soon,

then you should create a little rule for yourself. I love money rules and I don't like restrictive ones. I like them to be abundant. So it might be something like, if I make unexpected money, I'm going to take 80% of it and invest it because I don't need it. I'm going to take 20% of it and use it for something amazing, right? And use it this month. To me, that's a rule that I have for myself.

I like it because it kind of motivates me, oh, you know, keep looking for unexpected ways. That's cool. But a more sophisticated answer is that there really four numbers people should be tracking. I'm not a fan of budgets. I don't think anybody needs a budget. I think it's a complete waste of time to track the price of asparagus. Who really gives a shit?

But there are four numbers that matter. The first number is your fixed costs. So a good guideline is 50 to 60% of your take-home pay should be fixed costs. This would be your rent or mortgage, utilities, car payment, gas, groceries, debt payment, anything that's sort of the same every month.

50 to 60% to take-home. the next number is your savings, 5 to 10% of take-home pay, and that would be an emergency fund or money you don't need for roughly 1 to 5 years. Third is investments, 5 to 10% of take-home pay. In your case, you do way more than that because your income is very high, but the more you can put in, the better because that money really grows your wealth. And then fourth is my favorite of all, which is guilt-free spending. And this is like, where's that bag?

Okay, we got to get this bag and show it to the camera. So last time we had a little bag demo, this is a nice one. What is this? This is an Hermes, Mini-Celly, Limited Edition, Tricolor. Okay, very nice. You see the two-tone, the navy. This is actually like your color palette. Yeah, yeah, it is.

And what's the... With the red inside. Last time you bleeped out the price of your bag. Yes. What is the price of this bag? This was... Okay, all right. You know what I love?

And it appreciates. That's not why you bought it. Don't bullshit me. No. Okay. I love... You sound like my husband. He's like, you're never going to stay.

Tell it. So why are you telling me that? You bought it because you love it and you can afford it. Fantastic. Last time we had this awesome conversation where you were like, oh, kind of frivolous. I said, what was that one? Did you say frivolous? Funny, no one ever says that about their Ford F-450.

But what I love, and I love that your audience listened and saw this was, I don't care if your thing is handbags, cashmere sweaters, vacations, whatever. if you can afford it and you understand your numbers and you love it, fantastic. Your rich life is yours. So every time I come here, I see another beautiful bag. I'm like, what am I going to see this time? And it's really cool to see that you're super unapologetic and confident about it. Thank you. I actually had a conversation with my accountant before I bought that.

And we were talking about taxes. It was like towards the end of last year and my income and investments, this, that, and the other. and I said, can I write this bag off? How could I write, if I take a picture, if I bring it in the pot and I talk about it? And he said, do you love it? And I said, yeah. And he's like, then get it. That's the only justification.

You can afford it, so buy it. Great, great, great answer. Love that. In L.A., you know, there's a lot of quack accountants telling everyone, oh, yeah, you can write that out. First of all, that stuff is like mostly not true. Okay, like, I can't write this sweater off because I'm coming on camera. Unless you sell it. This is what I learned because I tried. Okay. I don't know about that. Sorry, IRS, if you're listening.

Well, all right. Yeah. And let me put it this way. I don't write that off. And I've been on TV. But I do love the idea that we should start with really getting crystal clear about what our rich life is. And part of your rich life is obviously beautiful bags. Fantastic. You own it. And I often ask people like, what if you could quadruple the amount you spent on that thing you love? And most people, we, we, never think about spending more because the world has beaten into us that we should only spend less. But how can you have a vision for a rich life today and a richer life tomorrow if you don't know what you're going to use money for?

So coming back to this idea of if you make unexpected money, you have that final category, guilt-free spending, 20 to 35%. So now, let's say you make an extra $100,000,000, $10,000, you could just have the money flow through your system. Some of it would go to fixed costs. some of it would go to guilt-free, all that stuff. That would be perfectly fine. But, you know, sometimes people like to do a little special thing with unexpected income.

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but this is really helping to make your body more efficient in hydrating your skin, anti-aging, all of that. So aging like fine wine, addressing fine lines, and making your skincare a little simpler every day. Hyacera from Ritual is a skin supplement that you can actually trust. And Ritual is offering my listeners 10% off during your first three months. Visit ritual.com slash blonde to start ritual or add Hyacera to your lineup today. Hi, I'm Pia Berenjini, the creative director of LPA, an entrepreneur, a wife, and a dog mom based in Los Angeles. This is my new podcast, Everything is the Best, where we basically ask interesting people, how did you go from zero to yacht? I'm always curious how to help people became successful, and I figured you would be too.

Get on the internet with me. Let's laugh, let's cry, let's overshare, and let's get inspired to live our best lives. Check out new episodes every Wednesday. It's all for you, baby. Thanks for listening. Love You Mean It. You mentioned that you don't like budgets, but how does somebody go through and kind of audit what they're spending? Because I know, like, in your show, for example, the first episode you come in, you sit down with this couple, you look at their checking account, which you're like, this is very illuminating, looking at anybody's checking, savings account, see where the money is coming in and they were spending more than they were making in that case. So do you recommend that somebody sit down and look at what they're spending and do some sort of inventory initially for that so that then they can determine, okay, I'm going to allocate 50% for this, 10% for that. Let me give you the order of how I would approach this. All right. So first off, I would ask people, what is your rich life?

And I already know what they're going to tell me. I want to do what I want when I want. I go, wow, it's so creative. Okay. So what do you want? And then we get into the real stuff. You know, people go, oh, I like to travel. I go, cool, where?

They go, I don't know, like anywhere. I go, just found a fucking answer. Where? So we get really specific, vivid crisp. In your case, it might be like, I love bags. Okay, what bag? And then deep down, everyone knows. They go, this is the one.

I have it bookmarked like 50 places. I'm waiting. I go beautiful. I love the excitement. I was going to say, though, why do you think it's deep down? I feel like people have shame around the things that they really want. What was your reaction when I asked you about your bag last time? Initially, it was that, I think.

Because we're judged. Yeah, yeah. What's this money guy going to say? Yeah. And then like, even today, like, well, you know, it's like, it appreciates. It's like, that's not why you bought that bag. So I actually love when someone is super honest. And I love when someone has turned their dials on their life so much that their rich life is bewildering to me.

Because my rich life is bewildering to other people. That's because I've really turned it up and down. Like, I drive an old car. I don't care. People like, why you drive that car? I don't care. On the other hand, I love nice hotels. I love clothes. I love convenience. So I spend an astronomical amount on that. And that's what I want for everybody. One of my readers used my stuff and he retired in his mid-30s. He and his wife traveled the country in an RV. He goes, that's my rich life. I go, that sounds like hell to me. But to them, that's their rich life. So I want people to start

by really getting crystal clear, what would we love to do this quarter, this year, in 10 years, a fun little exercise you can do. My wife and I did this is our 10-year bucket list. And so we sat down two pieces of paper. We wrote down our bucket list items that we want to do that at the end of a decade would mean we lived a rich and meaningful life. And this is a fun, if you're in a relationship, this is a fun exercise. You could do it solo. You might be surprised. You know, we want to learn Spanish in Mexico City. want to go skydiving, want to do this, want to do that. Then you pick one of them and you actually say, okay, this is going to be our thing.

We're going to make this happen. In our case, it was a 10-year wedding anniversary abroad. And so we basically approximated how much it would cost and we started putting money away every single month for it. So we know, as a matter of fact, in this month of this year, we're going to have this incredible 10-year wedding anniversary with all our loved ones. And that is part of our rich life. Love that. Do you think, well, actually I kind of already know the answer to this because I listened to your podcast and watched your show. But can people who have dramatically different attitudes and approaches to money be successful in a relationship?

Yes. Yes. The good news is you don't have to agree about everything with your partner. One partner can love cars and the other can love. massages. That's okay. But it is important to have a similar value system. I find that couples who just speak about money, think about money, feel about money completely differently, it's really tough for them. I'll give you a couple examples. I often find that one partner grew up with an affluent, perhaps highly educated family. The other may have grown up completely differently. I bring these folks on my podcast because, like, I had a young man. He grew up, he said I grew up.

We were food insecure. We basically grew up on the other side of the tracks. And he was like, like, I've been poor before. I don't mind being poor again. Point blank said it. I said, okay, I appreciate the honesty. His wife, her parents are, one of them is a doctor, sort of started talking about investing early on.

Now, just imagine the experiences they had with money growing up. repeated thousands of times. And now when they see money, one of them might go like, well, let's spend it. I've been poor. I don't mind being poor again. The other says like,

we need to save because one day we need to open up a 529 for our kids. Like just a completely different world. It's like we're looking at the same thing with two different lenses. That's challenging. Now, a lot of times I can work with them

and I can help them create a vision together. That's the goal. It's not to say you're wrong or you're better. It's like, what's our vision together? That's possible, but it can get hard. Do you deal with a lot of couples where one person makes much less and they're dealing with the insecurity and the shame around that? Yeah. Because I got some questions about that too.

Like how can somebody who feels insecure because they don't make as much as their partner, but they want to contribute, overcome that? You said the C word. Contribute. The lower earner is always obsessed with contributing. I'll tell you why. in our culture, we value that which is quantifiable. So if we are contributing, what we really mean is I'm sending money to our joint account because that's quantifiable.

And quantifiable is only the valuable thing in this country. But I always say you can contribute in lots of ways, right? There's things around the home. There's planning vacations. There's a variety of different ways that we can all contribute. And we all kind of like go, yeah, that's true, but we don't really believe it. And so in this country and in our culture, a lot of our beliefs are deeply tuned to the idea of money is value, quantifiable is value.

And I reject that. Yes, money is important, but it's one part of a healthy relationship and a rich life. So in talking about this, what I like to do is get the couples talking. And oftentimes, the higher earner is like, I love. I love you. I value you. I don't need you. They may be a software engineer at Google, make an 800K a year. Like, you're not going to make as much as me, and that's okay. But often it may be the lower earners' insecurity or beliefs. Sometimes it may be the higher earner actually saying things. Well, it's my money, you know. If you didn't have me blah, blah, blah. Well, that needs to be

talked about, maybe in therapy. These are conversations that need to be had regularly and openly. I got a lot of questions too from people in relationships who are asking how to split finances in a relationship, which I would imagine is such an individualized thing. Yes. Well, how do you do it? What's his is mine and what's mine is mine. Come on. Is this for real? Just kidding. She's like, I'm just kidding. Just kidding, kind of.

It's kind of a unique situation because his wealth is crazy. Yeah. And I do well for myself too. So it's like, but when we started dating, I was in a different position financially. And it's funny that you were saying that about the C word contribution because I remember when I moved in, I was like, well, I still want to contribute. Even though like, I'm not really making money right now. And so I'm going to like pay the utilities. bills and I feel like I'm contributing. He could not care less. But for me, it was a way to

feel less of that, I don't know if it was even really shame at that time. But I just felt like it was something that I needed to do. I like that though. Honestly, I think there's a lot of pride in being able to say, look, like, of course I can't pay for, let's say, the mortgage on a house like this, but this is important to me that I show I am a partner. Partners do not always have to be 50-50. Partners can carry different loads at different times and in different ways, but I think that's kind of cool that you said, I'm going to do this. Now, I think it becomes less cool when someone is obsessed, when they start going like, oh, like, I'm not doing this. Well, what about this? What about that? And they start ruminating and spinning in their head. I love that you recognize he didn't care. This is where

having an open conversation could go something like this, you might say, you know what, I've been thinking a lot about money in our relationship. And I know you may not think about it as much as I do, but it's obvious that the elephant in the room is you earn many, many, many times more than I do. And that's not going to change. But it's important to me to show you that I'm also a partner in this relationship. I may not be able to contribute as much, but I would love it if we could find something that I could pay for. Could be utilities, could be dinners out, hotel, whatever. That would make me feel good.

And it would, I want to show that we are partners. That's a really nice way of acknowledging what's going on and just saying like, hey, I'd love to talk about what would make us both feel good. Yeah. My husband loves when I pay for a meal. Yeah? That's the biggest kickout.

What do you think that is? I don't know. I mean, I think he thinks it's cute, like honestly. Not in like a condescending way, but he's just, he thinks it's like very charming. Because like the way that we split finances is really like, I spend on the things that I love with my own money. And then the things for the house and the food and the this and that and the, you know,

a lot of the kind of joint things. Yeah. He pays for. Okay. I'll tell you. So it's like the gesture more than, because it doesn't make a difference. But gestures do matter. Yes.

When was the last time? Like, let me go out on a limb and guess. when he goes out to eat with friends, business partners, et cetera, I'm going to guess that he's picking up the check maybe 95% of the time. Would that be fair? Yeah. So I know what that's like. I love picking up the check because as a kid, I couldn't.

But when somebody picks up the check, it feels really good. And it's not about the money. It's the gesture that like, oh, wow, like that was really thoughtful. It could be at a taco spot. could be at a whatever, but it feels so good. So I actually totally understand that. I think that's really cool that you do that. Mm-hmm. Thank you.

Sometimes it's like, it's not that expensive to be generous. Yeah. It's the thought that counts and it really, that's cool that you do that. Mm-hmm. Thank you. I'm also a really good gift giver. Oh, okay. So that's another.

That's a good one. Yes, that's another, but that's something that I love doing. Like, I love buying people gifts. How many people do you think listening here might have lower, incomes and their partner, but gift giving is one of the things they do in their relationship. That's contributing. That's valuable to track everybody's birthdays, anniversaries, send a meaningful gift. Like, that's hard. And so, again, we shouldn't shortchange ourselves, whether it's money, labor, mental labor, variety of things that are all valuable

parts of a relationship. Okay. Oh, you want me to give you the answer for the splitting money? Yes. So here's a simplest way to set up accounts to split money in a a relationship. The simplest way is to set up one joint account and to have two individual accounts. The individual accounts are no questions asked money. So if one person loves massage, the other person loves hockey, you have some money in your account. Nobody asks questions. It's yours. The joint money is nice. It's like your apartment or your mortgage, car payments, groceries. And I like this because it gives you a joint financial future together. It also gives you your own individual control. So that's what I like, but I will say something that I've discovered is quite

surprising. I talk to plenty of couples who have split accounts. They don't combine at all, and they do just fine. The key is not combining accounts. The key is actually talking about it. Most couples who don't combine accounts just simply don't talk about it. And that's why they get in trouble. If you sit down with your partner and you talk about it and you go, you know what, we're going to keep our accounts separate for whatever reason, but here's why we both acknowledge it, this makes sense to us, chances are you're going to probably do fine. Yeah, I feel like it's the secrecy and like deception and lying around money and overspending, yes. Like, oh, he should do this, she should do that. I have an interesting episode on one of my podcasts. We had a couple. They were in

roughly their late 30s and they met. They were dating for about a year or two. And she really wanted him to pick up the check at dinner. He said, cool, I'll pick it up. But when he tried to pick up the check, she would push it back and say, I want you to take that money and put in your Roth IRA. Okay, that's interesting.

Is this the woman who was making like 200 grand a month? A month. And he was making... 2000. Okay. So she was making 100 times what he makes. And as I dive into it, when you hear the numbers,

it's just so common people go, this is crazy, but it's not crazy. The numbers are quite large, but the psychology is fascinating. There are gender expectations. There are financial expectations. Of course, I learned that her family has taught her about investing since the age of five. His family never used the word compound interest. So we're all starting from different places, right?

And, you know, there are a lot of sort of a very interesting conclusion to that episode. But I want us listening to this to realize that all of us are emotional with money. irrational with money, that's totally normal. We are not robots. We're never going to squash all of our feelings. The better approach is to actually embrace our feelings. Hey, yeah, I do feel like that. Here's why, and here's what I'd like to do about it. If you guys have been following me for a long time, then you know that there is one snack, one protein bar in particular that I have been eating for years that is my go-to. And that is go-macro. So I actually found Go Macro when I was low FODMAP a few years ago when I was dealing with some gut issues

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Zocdoc.com slash blonde. Somebody asked me if anybody actually ever feels like they have enough money or if we're always operating from a scarcity mindset. I'm curious if you feel like you have enough money. I do. I do. Yeah. I feel, I know when I started off, it was a number.

And I think like sort of like techie style dudes come up with a number. And they're like, yeah, that number is going to be enough because I could take 4% in perpetuity, blah, blah, blah. And then as you start to get older, maybe you get in a relationship, you realize that money's more than math. And a rich life is certainly more than just money. I have enough because I know that, first of all, I'll always be financially safe. Okay. Next, I know that I have enough flexibility if something bad happens to me, like a job loss or something like that. And third, I have enough because I have regular conversations with my wife. In my experience, almost

nobody has the answer I have enough. Almost nobody. I know many, many friends, multi-millionaires, and we talk about their money. Some of them have invested well. Some of them have some insane investments. He just pointed to my phone for all of those listeners who are not here. Do you have enough? Like the answer, the question has never occurred to them. And when we probe on it, they really believe it's a number. In fact, all of us at whatever income level, we really believe if, if If I just have $5,000 more, I'll feel safe. If I have 50, I'll stop worrying. If I have 500, then I can finally enjoy money.

And I'm sorry to say that will never happen because it's not a number. You got to do two things with your money to live a rich life. First of all, you've got to understand your numbers. That means you've got to speak the basic language of money. You got to know what the rule of 72 is. You've got to know what percentage of your gross income is going to housing. Like a few key things, you got to be able to see. speak, like just driving, the rules of the road. But second, this is very commonly ignored. You've got to

work on your money psychology. You've got to start living a rich life today and tomorrow. If you have debt, that's okay. You can still feel good about debt while you pay it off. And you've got to start realizing that reacting with money is not going to get you any place. You've got to have a vision. That's why I get excited doing what I do. Yeah. When I saw that question come in, I was thinking about it for myself and I was thinking about it in terms of a number two. And I'm like, I just know myself and I know that with any goal in life for me, when I reach that goal, I just want to get to the next goal. Of course. And the field goal is constantly moving or the goal post is constantly moving. And I feel that way financially too. Like if you're just thinking about it in terms of a quantity.

Yeah. It's never going to be enough. Yeah. So let's think of it in terms of a rich life. You know, For me, a rich life means I can travel at least two months a year. It means that when I eat out, I never have to look at the price. It means you can shop at Brunello. Yeah. Wow. Sharp eye. Yeah.

So, you know, it means that I can do the things I love and bring my family with me. And again, we got to get crisp about a rich life. But of course, like, yeah, there are things I want to do that are going to take more money. Cool. Like, I feel at peace knowing that I'm on my journey. but if we don't even know what our rich life is, then how can we know if we have enough? How much of living a rich life and abundant life, how much of that do you think is mindset? I think it's a part of it, for sure.

Oh, sure. Maybe 30%. Do you thought I was going to say like 70? Yeah, I was expecting it to be a little bit higher. No. I like that, though. It's realistic. Honestly, one of the biggest determinants of success is structural.

Like if I was born in a different zip code, if I was born to a single parent, if I was born in a different country, certainly, that would have had far more effect on my success than my mindset. Now, yeah, I've been lucky. My mindset has been refined thanks to my educated parents and luck and my friends. But I grew up with two parents from India who encouraged me, like, work hard, get scholarships, education is important. And like that is, that's luck.

Structurally, I grew up in the U.S., and, you know, all those things I think are far more influential than mindset. Mindset matters, no doubt. It's huge, but not as big as where you grew up and how you grew up. That's very refreshing to hear. And I think that applies to so many other things. And we live in a time where everyone's like, it's just your mindset. Just try harder.

And it's with wellness, too. It's like, well, you just have to do these things. But no, you can literally look at neighborhoods where people are born and predict their life expectancy and certain outcomes based on that. They don't have the same advantages that we have. Thank you. In our country, it's quite shocking. If you look at the ability to move up and down in socioeconomics, it's actually decreased.

We're actually way lower than other countries. And that is radical because in our country we're taught like, if you work hard, you can live the American dream. Well, that American dream has been pulled from a lot of people. So my solution, what I've tried to do is, number one, figure out how to live it myself. Two, teach it to other people. But I also know that if you're watching this right now, chances are you have time. Chances are you have an education that brought you here.

And if you're working a 16-hour day, you are not watching this. So, yeah, of course, we want to do. what we do in our little part of the world. But structurally, I really want huge structural changes too. Yeah. Okay. We have a couple minutes. Let's do some rapid fire.

Let's do it. Because everyone likes to hear the, they want to hear the numbers. Okay. What is the rule of 72 that you mentioned before? I bookmarked that in my head. Okay. I love this. A little cocktail party trick.

72 divided by your return rate is the number of years it will take you to double your money. So, for example, if you invest in the S&P 500, 72 divided by roughly 10% means you're doubling your money every seven years. Or if we, just to get a little fancy, 72 divided by 7, which is your post-inflation rate, 10 years to double your money. That's kind of cool. If you have 5,000 bucks, you just put it in the market. In seven years, turns into 10,000, 10 to 20. It doesn't sound like a lot.

20 turns into 40, 40, 80, 80, 160. That money really starts to accuse. accumulate later in life, which is why Warren Buffett made something like 98% of his wealth in the last like 10 years. It's powerful. I didn't see those projections on my fidelity. They don't do that here, but I will help you do those for yourself. Yeah, we're going to talk after. Okay. I got a lot of questions around paying off debt. Basically, people ask, should all of their money go to paying off the debt or should they be saving a percentage of that as well? I like to do both. One is pay off debt and two is invest at the same time. I'll tell you why. I have this principle yes and yes. And I think a lot of times we say, should I do this or should I do that? And often the answer is yes and yes. When it comes to investing in debt, there's a mathematical answer. Like if you have an interest rate on your debt of like 2%, mathematically you should pay the minimum and actually pay more, blah, blah, blah. But like most people don't actually understand that or care. They just go, Rameet, I hate you.

debt. I go, okay, fine. Even though you may mathematically be making the wrong decision, whatever. Here's why it's important. Investing is like building friendships. You can't wait until later in life to do it. You've got to do it all along the way. And so even if you're paying your debt off and you're only putting 50 bucks a month towards investing, at least you've got that habit. Once the debt is paid off, you can transfer all that money to investments. But I really love to see people doing both at the same time. Okay, you mentioned the percentage of money that should be allocated to things like housing costs and all of that, but what is the specific percentage for like a mortgage or rent? 28%. 28%.

Yeah, good guideline. Let me tell you about this. A good guideline is you should spend no more than 28% of gross income on all housing costs. All. That means sprinklers, light bulbs, taxes, interest, all of it. Now, the fact of the matter is in this city and in a lot of cities, it's almost impossible. So if you go up to 30, 31, 32, okay, okay. Even if you have no debt, maybe 34, okay.

But the higher you go, the more at risk you are of not being able to save and invest and even spend money. So be careful. Okay. Last question. Where do you shop for elevated casual? I throw out my guess. I do love clothes. my wife is a personal stylist. So, you know, for the show, she styled like every look for me.

So my style is, yeah, elevated casual. I love beautiful cashmere sweater. So for me, places would be like Brunello Cucinelli, Officine General, Zena, places like that. I would have begged you for that. Yeah. In a good way. I love your style. It's great. Okay, tell everybody where they can find you. Okay, you can find my show. It's on Netflix called How to It's fun. It's a way to really get into money through seeing the voyeuristic way that we handle it. You can find my podcast. It's called I Will Teach You to Be Rich. Again, very voyeuristic couples sharing everything about money and my newsletter at I Will Teach You to Be Rich.com. Amazing. Thank you so much for coming back. Thanks for having me.

We'll have you back next time I get a new bag. I hope you enjoyed that episode. If you liked it, and if you like the show in general, please take a second to rate, review, and subscribe. It goes a long way, and it's actually the best way to support the show. Also, if you want to see more about each episode, you can head over to The Blonde Files podcast on Instagram. You can go to Arialore.com. And I'm always posting about each episode over on my personal page at Arial Lori. Please note that this episode may contain paid endorsements and advertisements for products and services.

Individuals on the show may have a direct or indirect financial interest in products or services referred to in this episode.