220. “I carry the baby, the bills, and the stress”
In this episode of I Will Teach You To Be Rich, financial advisor Ramit Sethi works with a couple, Monica and Michael, who face challenges in their financial relationship. The couple's combined income is $233,000, but they struggle with communication about money, managing substantial debt, and running monthly budget talks that function more as accountability sessions than collaborative financial planning.
The episode explores how traditional gender expectations affect their financial dynamic, with Monica—the higher earner at $120,000-$130,000—deferring to Michael on financial decisions despite carrying most financial responsibilities. Their situation is further complicated by undisclosed financial troubles from the past and Michael's feelings of inadequacy about earning less, highlighting how income disparities can strain relationships when coupled with communication barriers.
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1-Page Summary
Financial Communication and Transparency in the Relationship
Monica and Michael's case reveals how financial communication challenges can strain a relationship. Their monthly "budget" talks functioned more as spending accountability sessions, using Michael's spreadsheet without a joint financial perspective. Neither partner knew their combined annual income, and Monica was surprised to learn of Michael's salary increase to $95,000. Michael, viewing himself as a "Swiss Army knife" for the family, showed reluctance to share financial information, even positive news, due to his aversion to attention.
Addressing Past Financial Struggles and Building Financial Stability
Trust issues emerged when Monica discovered Michael's undisclosed financial troubles, including an eviction and significant credit card debt. While Michael has reduced his credit card debt from $26,000 to $12,000, financial advisor Ramit Sethi emphasizes treating this debt as an emergency. Sethi recommends automating payments and reducing discretionary spending, suggesting that by following his advice and paying an extra $100 monthly toward their $130,000 debt, they could achieve debt freedom in 9.5 years instead of 28 years.
Navigating Income/Asset Discrepancies and Gender Dynamics Around Money
The income gap between Monica and Michael creates complex dynamics in their relationship. Monica contributes $120,000-$130,000 of their combined $233,000 income, leading Michael to feel inferior despite working three jobs. Traditional gender expectations affect their financial management, with Monica deferring to Michael on important financial decisions despite being the primary earner. Monica admits to minimizing her presence and accomplishments to avoid overshadowing Michael, while also taking on the responsibility for rent and utilities, creating additional strain in their relationship.
1-Page Summary
Additional Materials
Actionables
- You can create a shared financial vision board with your partner to align your goals and foster open communication. Start by gathering images, quotes, and figures that represent your joint financial aspirations, such as a home, travel, or savings milestones. Set aside a dedicated time to work on this together, discussing each element and what it means to both of you. This visual and collaborative approach can make financial planning more engaging and less daunting, helping to bridge the communication gap.
- Develop a financial transparency game to make discussions about money more comfortable and less confrontational. For example, create a deck of cards with different financial topics or questions, such as "What's one financial success you're proud of?" or "What's a financial fear you have?" Take turns drawing cards and answering the questions during a relaxed evening. This can help normalize conversations about money and encourage sharing without the pressure of formal 'budget talks.'
- Initiate a monthly 'financial accomplishments' celebration to build trust and focus on positive progress. At the end of each month, sit down with your partner and share at least one financial achievement you're each proud of, no matter how small. It could be sticking to a budget category, paying off a certain amount of debt, or even having an open conversation about money. Celebrate these wins together with a simple ritual, like enjoying a homemade dinner or a favorite activity, reinforcing the idea that you're on the same team working towards common goals.
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Financial Communication and Transparency in the Relationship
Monica and Michael’s experiences underscore the importance of financial openness between partners, revealing how disparities in communication styles and personal views about money can lead to broader issues in a relationship.
Monica and Michael Struggled to Discuss Money Honestly, Often Feeling Defensive or Avoiding It
Monica and Michael find financial discussions to be challenging. Monica feels isolated and must be selective with her words, while Michael tends to shut down during these talks, often leading to both parties feeling defensive or avoiding the conversation entirely. This defensiveness, rooted in their ego and protectiveness, has led to financial conversations that are less frequent and possibly less honest than they should be.
"Budget" Talks Were "Spending Accountability" Sessions, With Michael's Spreadsheet but No Joint Financial View
Their monthly "budget" talks served more as "spending accountability" sessions, focused on day-to-day transactions using Michael's spreadsheet, which did not reflect a joint financial perspective. Neither Monica nor Michael were aware of their combined annual income, and Monica was surprised to learn during a live conversation about Michael's substantial salary increase to $95,000.
Michael Was Mellow and Unresponsive About Money, Viewing Himself As a "Swiss Army Knife" Instead Of an Equal Partner
Michael possesses a mellow and unresponsive attitude towards money, viewing himself as a “Swiss Army knife” for the family—utilitarian and adaptable. This mindset has led to a reluctance on his part to share financial information, even when it's positive. Monica felt shocked to discover Michael's pay increase, a discussion avoided by Michael due to his aversion to attention.
Michael's Reluctance to Share Good News, Like His Salary Increase, Reflects His Aversion to Attention
Michael’s reluctance to share good news, such as his salary rise, reflects a deeper tendency to shy away from attention, resonating with his self-description as a Swiss Army knife rather than an equal partner. This has culminated in a lack of transparency, as Michael did not communica ...
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Financial Communication and Transparency in the Relationship
Additional Materials
Counterarguments
- While financial openness is important, some individuals or cultures may prioritize privacy around finances, even within relationships, and may find alternative ways to maintain a healthy relationship without full financial disclosure.
- The assertion that disparities in communication and views about money lead to broader issues might not account for couples who have found a balance despite these differences, or who use other strengths in their relationship to mitigate financial communication issues.
- The idea that defensiveness is rooted in ego and protectiveness could be oversimplified; it might also stem from past experiences, trauma, or a lack of financial literacy that isn't addressed in the text.
- The concept of "spending accountability" sessions being negative could be challenged by the view that accountability is a crucial aspect of financial management and can be constructive if approached with the right mindset.
- The surprise about Michael's salary increase could be seen as a failure of joint financial planning rather than just a communication issue.
- Viewing oneself as a "Swiss Army knife" might not necessarily be negative; it could indicate a willingness to adapt and serve the family in various ways, which could be a strength rather than a weakness.
- The reluctance to share good news like a salary increase could be a sign of humility or a desire to avoid potential jealousy or conflict, rather than just an aversion to attention.
- The emphasis on combining incomes might not be the best approach for all couples; some may maintain healthier relationships by keeping ...
Actionables
- Create a financial vision board together to visualize shared goals and foster open communication about money. Sit down with your partner and use magazines, printouts, or digital images to represent your joint financial aspirations, such as a home, travel, or retirement. This visual tool can serve as a conversation starter and a constant reminder of what you're working towards as a team.
- Develop a financial celebration ritual to make sharing good news a positive and expected part of your relationship. Whenever there's a financial achievement, like a raise or a debt paid off, plan a small celebration like a special dinner or a shared activity. This practice can help associate financial transparency with positive experiences and reduce the reluctance to share.
- Use a third-party financial app designed for coup ...
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Addressing Past Financial Struggles and Building Financial Stability
Michael and Monica grapple with past financial struggles, trust issues, and the need for a clear plan to achieve financial stability.
Michael's Financial Woes Damage Trust With Monica
Michael's Hidden Financial Troubles Damaged Trust
Caller Monica expresses doubts about her relationship with Michael, especially regarding his past undisclosed financial issues. After learning of Michael's eviction and his significant credit card debt, which he didn't communicate to Monica or his family, the trust in their relationship has been affected. Despite Michael's portrayal of being on top of his finances, as evidenced by spreadsheets and listening to Bloomberg, Monica felt betrayed by Michael not sharing his financial struggles or seeking help from loved ones.
Guided, Michael and Monica Planned to Aggressively Pay Off High-Interest Credit Card Debt
Monica, who carries most of the income, found herself surprised at the couple's combined earnings and Michael's income increase. This highlights the lack of transparency in their financial communication. Michael, who once had credit card debt close to $26,000, has reduced it to $12,000, thanks to Monica taking on most expenses, allowing him to focus on debt repayment. He optimistically aims to be free from credit card debt by the year's end.
Automating Payments and Cutting Spending Could Free Debt In 9.5 Years
Ramit Sethi urges the couple to address their debt as an emergency. He suggests automating payments and cutting discretionary spending to pay off the $12,000 debt swiftly. Sethi advises evaluating and possibly reducing insurance costs, cutting ...
Here’s what you’ll find in our full summary
Addressing Past Financial Struggles and Building Financial Stability
Additional Materials
Counterarguments
- Michael's aim to be debt-free by the year's end may be overly optimistic and not fully account for potential financial setbacks or emergencies.
- Automating payments and cutting spending are helpful strategies, but they may not be feasible for everyone, depending on their income stability and necessary living expenses.
- The advice to cut discretionary spending like tithing and gifts may conflict with personal values or social obligations, suggesting a one-size-fits-all approach may not be suitable.
- Reducing insurance costs could potentially leave Monica and Michael underinsured and vulnerable to future financial shocks.
- The projection of being debt-free in 9.5 years with the suggested strategies may not consider changes in interest rates, unexpected life events, or changes in employment.
- The recommendation to lower "guilt-free" spending to 10% of income might not be realistic for those with lower incomes or higher cost of living, potentially lead ...
Actionables
- You can create a visual debt tracker to maintain motivation and transparency with your partner. Draw a large thermometer on a poster board and fill it in as you pay off debt, similar to fundraising efforts. This visual representation can make the progress feel more tangible and encourage both of you to find additional ways to contribute to the debt payoff.
- Establish a monthly "financial date night" to discuss money matters in a relaxed setting. Use this time to review your budget, discuss any changes in income or expenses, and make adjustments to your financial plan. This can help ensure ongoing transparency and joint responsibility for financial goals.
- Experiment with a "spending freeze" challenge for a set period, like one week per month, whe ...
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Navigating Income/Asset Discrepancies and Gender Dynamics Around Money
A conversation with Monica and Michael reveals complexities in income gaps, gender dynamics around financial decisions, and the impacts these can have on relationships and self-perception.
Monica Earned More Than Michael, Making Him Feel Inferior
Income Gap Strains Equality
Monica's and Michael's situation highlights how a significant income gap can lead to self-esteem issues and feelings of inadequacy. Michael acknowledges that he feels inferior due to the income discrepancy within their relationship. Although he works three jobs, Monica earns substantially more, contributing $120,000 or $130,000 of their combined $233,000 income. This causes Michael to feel not equally yoked and perhaps more like a dependent or roommate that Monica has to care for.
To avoid overshadowing Michael, Monica admits to minimizing her presence and accomplishments. This reaction to their income differential is a physical manifestation of her shrinking herself in discussions, indicating a deference to Michael despite her financial contributions. The mention of Michael considering himself a provider suggests he is grappling with traditional gender expectations around money and is feeling inadequate because he earns less.
Monica Deferred To Michael On Financial Decisions; Not Engaged With Retirement Savings and Debt
Monica and Michael Struggled With Unequal Gender Norms in Provision
There is a notable dynamic where Monica appears to defer to Michael on important financial decisions, further complicating their approach to gender norms and financial management. In discussions about expenses such as daycare, Monica allows Michael to lead the decision-making process, even though she harbors concerns about the cost and his ability to work extra shifts to cover full-time daycare.
These interactions hint at Monica's passive engagement with financial decisions, a lack of inquiry into the details, and a desire not to challenge Michael. Her remark about not wanting t ...
Here’s what you’ll find in our full summary
Navigating Income/Asset Discrepancies and Gender Dynamics Around Money
Additional Materials
Actionables
- You can create a shared financial vision board with your partner to align your goals and openly acknowledge each other's contributions. Start by gathering images, quotes, and symbols that represent your joint financial aspirations and values. Then, arrange a time to sit down together and create a vision board that reflects both of your incomes and the roles you wish to play in managing finances. This visual tool can serve as a daily reminder of your shared objectives and encourage a more balanced approach to financial decisions.
- Establish a monthly 'finance date night' to discuss money matters in a relaxed setting. Choose a comfortable environment, perhaps over a favorite meal, and use this time to review your budget, discuss upcoming expenses, and address any concerns either of you may have. This regular check-in can help both partners feel equally involved and informed, reducing the tendency for one to defer to the other.
- Rotate the responsibility of managing ...
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