Personal finance guru Ramit Sethi has issued a stark warning about the perils of dodging crucial money talks, suggesting it could spell financial chaos for couples.
He’s slammed the common practice of splitting the bill on a first date, arguing that it’s not the act itself but the mindset behind it that’s problematic.
According to Sethi, most people are “so obsessed with $3 questions” like “Can I afford this appetiser? ” or “Should I buy this coffee” that they miss out on addressing the more significant issues.
He believes that questions such as “Is this person financially aligned with me? How do I even find out? ” are worth far more in the long run—potentially $30,000 or $300,000.
He stressed: “In fact, get the big answers in life right and you can buy all the appetisers you ever want.”
Ramit underscored the importance of financial transparency with your partner, branding the avoidance of such discussions as the “biggest red flag” in a relationship.
“We could differ on how we see money. We can even have different values for a few things. But if your partner simply will not talk about money, you have a huge problem. If you can’t talk about money, then you can’t even understand where they’re coming from and they are not curious about what you want. So how are you ever going to get on the same page?” he added.
In a frank discussion with Steven Bartlett on the Diary of a CEO podcast, the expert outlined the four money personalities in relationships, first pinpointing these “red flags” in relationships as the Avoider money personality.
Avoiders are defined as individuals who dodge discussing finances at all costs, whether they’re aware of their fears or not. They often lack knowledge of their own financial situation and can be seen as delaying crucial financial decisions or steps.
The complete opposite of Avoiders are Optimisers, as the expert himself admitted to being one: “We love to live in the spreadsheet. I love calculating everything and left alone, I would sit there and do that for the rest of my life. The problem is you can take it a little too far…deep down they are boring.”
Offering some advice specifically for Optimizers, Ramit cautioned them against hoarding their income as money is only as valuable as the life it can provide you. He added: “These are the people that die, and then you figure out that they had like $9 million.”
The third archetype identified by finance mogul Ramit is the ‘Worriers’, individuals who hoard cash fearing financial instability, likely borne from a childhood overshadowed by their parents’ monetary anxieties. These people often underestimate their earnings and mistakenly believe that accumulating wealth will alleviate their insecurities, observed Ramit.
The final type, ‘Dreamers’, are usually supported by another money personality, according to Ramit, who also warned that Dreamers commonly fall prey to scams, pyramid schemes, and volatile investments like cryptocurrencies because they find traditional wealth-building tedious.
Ramit pointed out their mentality with an example: “They even have little phrases like; ‘I don’t want to be stuck in a nine to five like those suckers.’ I’m like, that sucker makes 10 times what you make…But they have simply been surrounded with the idea; ‘One more deal and I’ll finally make it’.”
Nonetheless, he posits that irrespective of their financial idiosyncrasies, everyone possesses the potential to live joyfully and harmoniously, as our money mindsets are malleable.
In closing, Ramit emphasised self-awareness and communication as key, stating: “You have to deeply understand yourself and then you have to be willing to communicate with your partner and really create a rich life vision for the two of you.”
