56 Minutes of Money Wisdom for High-Earning Couples

0:00 50% of the couples who talk to me do not know their household income. Money for most is not a source of connection. It's a wedge. I wanna go deep on this. This is actually cool. In most relationships there is one money person, and this is a huge mistake. How do you get someone who's a warrior to start spending? You need to learn the skill of managing money, but you also need to learn the skill of spend money meaningfully. Tell me what to do.

0:23 I have seven quick steps, very easy. First off. I feel like I can rule the world, I know I could be what I want to I put my lawn in it like my days off on the road, let's travel. Alright, we're live. Uh we're meet. So the reason I wanted to have you on was because Sean and I were talking the other day, and at the end of the episode, at like minute fifty five, we got to the total end, and somehow it came up. that my wife, Sarah and I, we do this thing that we just call our monthly money meeting. And the way it works is that we like break down our monthly expenses, our income And we also look at our net worth and we talk about

0:57 How can we spend the next month to like make ourselves happier? Like what how can we use like money as a tool and are we happy with our consumption and whatever the m the previous month? And Sean made fun of me and he was like That's the right you're running that like a corporation, like a business. And At first I was embarrassed to say that I'm running my marriage like a business. And then Afterwards I was like, actually no, like I can love my wife and that's the number one reason why I do this. And also in order to make it run effectively, you kinda have to run a tight ship like a business or have like

1:29 business attributes. And you have this book, uh Money for Couples. And you tweet all about this the stuff with your relationships and running it like a business, and I thought you should come on and Kind of talk about the other stuff of a relationship other than love, which re requires running it a little bit like a business. Well, uh first of all, I appreciate that Sean makes fun of you. That's one of my favorite parts of this pod.

1:51 But When you are married, you are running a business. It is the business of running a household together. And it's only in the last hundred or so years that Americans became infatuated with this idea of Love as the only reason

2:07 To get married. That's A historical. That's not been the case for A long time. And just to give you an example, it's so culturally dependent. My parents knew each other seven days before they got married. So you have to Remember that it's not unromantic to talk about money. I actually find it very romantic that you are building a connection.

2:26 And there's a whole bunch of other benefits that I'm sure you and I both experience. Because we talk about money regularly. You got this amazing podcast and a lot of the people you have some like really wealthy people. I think you had someone who was making like two or three million dollars a year. And they talked about spending, but I think your typical bread and butter is low ish six figures, but our audience makes like well, I'm gonna just make up the sabotage of like two to four hundred thousand dollars a year and they work at tech companies. I think this topic is so fascinating to me because It cuts across psychology, numbers.

3:04 Communication And I personally think it's underexplored. I think there's a lot of people online who talk about how to make money. How to invest money. Very few people talk about how to spend it meaningfully. And even fewer talk about how to do it in a relationship.

3:18 So if you're listening and you're single or dating Or you've been married for twenty years. Odds are very likely That you have not substantively talked about money.

3:29 With your partner. And It's important. It is It's one of the core things in a relationship. That's why I love talking about this.

3:37 Do you remember Tim Ferris in the four hour work week? He had this thing called like the dream scenario or something it's very similar to the stuff that you do. It's something like write down all of the things you want to own. And then like reverse engineer it to figure out how much do you have to earn in order to afford this and like Like just like be intentional about what you want and specifically say it and work

3:58 backwards towards that. So I used to do that as a twenty two year old. I think I had like Uh at one point I've owned everything that was on that list and I was like oh I like half that list I don't really give a shit about even after I have owned it. But I remember a year into dating my wife, it was like, Hey, this is promising. It appears we're gonna like we're this is going towards marriage, which is great. And we did that dreamlining together and we used to do it all the time where it was like Tell me like what's your ideal like life scenario, like what would you how would you like to live and like let's like how much would that uh require? Like what responsibilities are you willing to take and what should I take on?

4:31 It was so helpful to do that early on in a relationship. And it sounds weird. But it was like a great conversation. I love that. It's Uh. Amazing that the two of you did that early on.

4:41 'Cause it's one thing to do it solo. It's a entirely another thing to do with a partner, but what that's amazing is that You two were On the same page of even talking about that. They're not like that.

4:54 They're not sitting down to dream. One person is probably a worrier. Another person might be an avoider, or probably for the people listening, there optimizers. spreadsheet freaks who love to look at compound interest all the time.

5:07 And they're not even communicating in the same way. So one person's like, look at our returns, look at our net worth, and the other's like Why are you talking about this? Like I don't think we're gonna have enough. Why did you spend twenty dollars at the gas station? So you guys were speaking the same language. Most couples. Not even in the same

5:25 Planet when it comes to money. Optimizers, what is that? Oh there's four money types. I talk about him in my book. I talk to thousands and thousands of people and I Found these four types that describe

5:37 A lot of people. First Avoider. This is the most common. They avoid money. They do a series of conscious and unconscious techniques to do it. If they're in a relationship they'll say stuff like

5:47 You're just better at money. I'm not good at math. Sometimes they even sabotage conversations by saying stuff like, Why do you always have to talk about money? Can't we just have a good time? That's an avoider. And there's a whole bunch of techniques that you can use to not be an avoider or to have a partner that's an avoider.

6:04 Um Then we have uh optimizer. That is me. That's you. That's a lot of people listening. Optimizers Yeah, they they they can do a lot of good'cause they're saving, they're investing. The problem is you take it to the logical extreme and they become incredibly boring and cheap.

6:21 And all they care about is like the cost and how much is it gonna we shouldn't buy this Coke can,'cause if we compounded that for forty five years, it would actually be One thousand two hundred dollars it's like get a life. Optimizers are really hard to be partners with because they always go how much does it cost? That's all they're concerned with.

6:39 But They can change as well. We have warriors. Warriors worry about everything. Uh

6:45 In in fact, many of them saw that growing up and when I asked them, what would it look like if you didn't worry about money? They have no idea because that's all they have ever known. And finally, dreamers. Dreamers believe that Success is just around the corner. Dreamers, it's it's the next gig.

7:01 It's the next deal. These are the folks who typically fall into get rich quick schemes. And they are incredibly difficult. to be partners with they're not listening. They're not reading my book, let's put it that way. And the only reason they can live in La La Land is that they are often subsidized by someone else, often their partner.

7:19 Those are the four money types. You seem like You know, you teach us stuff, so I assume and I know you, so I know it's true, that you have your act together when it comes to money. And if you are an you're an optimizer now, you said What flaws do you still have and how do they present

7:36 itself like on a daily basis. Yeah. Like for for everyone listening, Sam was like We were texting and Sam was like, Hey, what are you getting on Black Friday? And I was like I don't shop any place that does brat Black Friday sales. And

7:49 And that's like That's the difference. But the fact is like you're you're an optimizer. So am I. They just manifest in different ways. So where do yours manifest in in ways that are good, but also in annoying ways?

8:00 But dude, the annoying ways are the ones that When I was twenty two. It was like all about like look at these numbers. You just need to do this. It's so easy. It's so clear. And And then I could see people's eyes glazing over, but I didn't know why.

8:16 And Once you get a little bit older, a little bit more mature, a little bit better skilled at communicating, you realize Nobody wants to be talked to. Like that. And

8:26 In fact, like in the areas where I have been really weak. like fitness where I didn't grow up knowing what protein was until my late twenties If someone was like Dude, it's so simple. It would have been overwhelming and it would have made me feel stupid. So

8:41 I learned how to Slow down. become a little bit more emotionally connective, but dude, it's still there. When I when I'm talking about money sometimes I'm like Like, okay, I get it. Let's let's get to the part where we do the numbers.

8:56 And it happens regularly. My wife and I have monthly money meetings. We have our annual Rich Life review. And I can see it in myself. I just want to get to the And

9:07 Because for me, you know, I was raised like efficiency is a virtue. Getting to that part. Is a virtue. And I've had to really try to learn and I'm still learning.

9:17 Sometimes slow it down. Take the journey, have fun along the way. We'll get there. But Don't be in a rush to get where we're gonna get anyway. What's this uh

9:29 You know, it's december thirtieth when we're filming this. What's the annual review? Oh man. We're we're in the middle of it right now. So this is like one of my favorite times of the year. So in every December We have an annual Rich Life Review, and I would encourage everybody to do this.

9:46 So we sit down. And we do it over several days. We're in no rush. And we start off by just going through our photos from the year and we go like what were our most memorable things that happened this year. And a lot of them are favorites.

10:02 But some of them are not so good. You know, things that just bring up Visceral memories. You're talking about like uh like a death or something like that. Yeah. Yeah. Something bad that happened, but a lot of good things like travel we did, family we saw, things like that. And you just know it when you see it. You just know it.

10:18 And Looking over our photos, what we do is we just Put like Ten, twenty, and we text into each other and then we talk about it. What's this look like though? Uh

10:28 W actually look like. Like in the evening or you're just hanging out over dinner? What are you guys doing? What if I'm like, Sam, I told you we're running a freaking business. We're in a conference room. What do you think? No Okay, the truth is, um, when we did this just recently, we were sitting across from each other. Like basically on our couch. Chilling. But mo most of the time we have these conversations, we're actually traveling.

10:48 So we love to do this in a place that is different than our normal Yeah. It's expansive. Usually we try to surround ourselves with beauty, but you know, that's not always possible. So the point the setting helps, but it's just about the two of us having. Time and space.

11:04 So Here I am looking at my photos and it becomes very obvious to me the photos, like out of twenty eighteen of'em were with friends and family. Wow, like that really tells me something about what's important to me. And so we start off there like wow, what was memorable.

11:21 We then talk about We have this little exercise that we did this year. I came up with these um questions Which was What if Twenty twenty five, next year.

11:31 was incredibly Generous. And we started there. Or we're just like what would we do if we were incredibly generous? And we just like Came up with idea back and forth. Next, Adventurous.

11:43 So it's like uh like a wilderness course, you know. I don't even know how to start a fire. What if I went to a three day wilderness course? And my and my wife was like Go on your own. I'm not trying to go to that. But that's cool too. You find out what you like, what you don't like. Next was luxurious. That was cool.

11:58 Relaxed. And then social. So we're just dreaming. We're just like coming up with ideas. And we're writing'em down and that's it.

12:06 Then we start getting into a little bit more specific stuff. What did we love this year? What do we want to do more of? These would be things like

12:15 Take a trip with friends. spend time with our parents, that kind of thing. And then we're like What do we not like? What do I want to do less of?

12:23 Oh, we tried to eat at this we got this reservation at this restaurant and it was a big deal and We actually don't really care about that type of stuff. And then the last thing we do is we get into the numbers. You don't need to say your numbers, but tell me the the title of the numbers. So for example, you look at like your like your personal family's annual burn. Your personal family's income. What else? We're talking at the expense level now. So we're talking line item, but these are like the major categories in my conscious spending plan. So things like

12:52 Um housing Uh travel for us is a big discretionary expense. All the Mick clothes. Fitness. Those are the items we're talking about and we're like, okay, we projected this, we hit this

13:05 Why did we diverge? And so then it's like do we need to tweak it next year? Do we need to Add more income. This is the type of stuff where we're talking about like what are our distributions, I don't know if we can handle that next year, et cetera. And when you this is like I wanna go deep on this. So you're setting the budget

13:22 For the n next year as well. And and when you're doing the review, what percentage on track are you typically? Are you typically over? What is your family over or under That's a very good question. We're never Exactly on.

13:35 Never. We are pr we are definitely over in certain categories. Travel almost always over, so we adjust it every year. The dream is like you're gonna nail it, but We never will.

13:47 We leave buffer. We always leave buffer. You add twenty percent. Oh yeah, I have like handy guidelines for buffers. So for example For uh like a wedding.

13:58 Mm. Two point five X. Like right there. Yeah. Okay. For a trip for travel at fifty percent. right off the bat. So if you think your trip is gonna be three thousand, it's actually gonna be forty five. Got it. So it's it's not like unilaterally like all right, we budgeted one hundred dollars.

14:13 Just assume that our in or whatever, a hundred thousand dollars for the year for our whole life, assume that it's gonna be one twenty. Um, we would do that for fixed costs. So fixed costs which are like Your rent, your auto, you know, your fixed things. Typically I would say add fifteen percent because there are things that people forget about. That's just a good guideline. By the way, that's what I do at my businesses. I like whatever we say the budget is in my head, I'm like thirty percent over. Okay, let me tell you why.

14:40 I think there are so many different ways with money you can internalize lessons like fitness, luxury. I had this experience, we stayed in a hotel. in Thailand. It's a it's a high end hotel. And I Whenever I go to one of these hotels I always Asked to see the general manager.

14:55 And I go on a walk on the property with him. Him or her. And I go, Why why are you laughing? It's weird. It's it's just that's a really caring thing to do, but you're doing it for a positive. No, what the hell are you talking about? I'm not saying like here are all the things that are wrong. I asked them Tell me how you run this hotel. Like what are the clientels? So for the front desk, or does your assistant or you send an email, I'll be checking in. Like, dude I want to get because because Let me explain. All right, here's why. Remit said, Hey, do you want to come to New York City and hang out with me?

15:23 I'm gonna uh plan for something to us to do. And I was like, Hell yeah. And he was like, What do you wanna do? And I was like Whatever you're interested in,'cause I know you're super into it, take me along. And so we went to the I'm on Giri or I'm on New York is that what it's called? I'm I'm on New York. Yeah. Like the fanciest hotel in New York City and the general manager or some like a s uh some manager type gave us this like one hour. specialty tour of this like three or four thousand dollar night hotel. And I was like Dude, how do who did you email to get this?

15:52 So I li I like hotels, I like hospitality. And Whenever I go to these hotels, the manager will when you're staying there, the manager will come up to you at a certain point and greet you. So I'm always like, Hey, I'd love to like learn more about the property. Do you have any time? And they love it. They love it. So we went on a walk.

16:10 And it was December at the time. So I said, What's your occupancy? And they had something like forty keys or forty hotel rooms, he said Um it's about to get busy. Christmas is our busiest of all, but we always keep

16:23 one room off market. And I'm like Why would you do that when it's the busiest, most high demand, most expensive time of the year? He goes Luxury is about always. having something in your back pocket.

16:35 He goes maybe. Our regular guests who come every year for the last decade bring an extra family member. We need to be able to accommodate that. So I will hold it off market. And I'm like, Uh. That's a very expensive thing, but I think about my mom growing up She always had

16:52 Extra food if we brought a friend over. Luxury. Just at a different level. So same thing with money. I wanna always build in a buffer. So that if something happens

17:02 We're good. No sweat. And how much what percentage do you um Like do you do you assume that every year your spending is gonna go up like five percent, ten percent? Uh no. I probably should, but I don't do that. That that would be good.

17:16 We we look at what we're gonna do next year and Typically like um we have like certain things don't really change. For example rent or whatever, it won't change that much. But if there are big life events those might change. So we're not doing it on a percentage basis. We're looking at big

17:33 discrete events'cause we already have the foundation kind of laid out. And then do you assume and you g you guys are both entrepreneurs. And so let's do it for the question of like you and me, entrepreneurs, and also let's do this for uh like a Facebook employee. Do assume that your income is uh flat up or down. Great question. My wife and I are both entrepreneurs, so

17:55 We we a s we take a standard salary, which we talk about at that annual Rich Life Review. What is our salary going to be? And it's typically the same salary. I didn't change my salary for like Thirteen years. But

18:08 We talk about distributions. So Are we playing how does the business look next year? What numbers are we going for? What do we think our distributions will be? And we use distributions, which makes our system a little bit complex.

18:22 We get them on a quarterly basis if we take them, and then we have uh determination we have a percentage like Where does it go? How does it get split up? All that stuff is all document. We look at the document once a year in December and we decide, is this fair? Does this feel good? Do we need to tweak anything? But it's once a year. Yeah, and that's where it gets complicated,'cause I do this with Sarah and I'm like

18:43 Well, if business goes good, then it could be this. If it If something happen you know, shit happens. You know, like if you run an SEO based company, Google makes a change and like Uh my s my situation has just changed. Um I don't

18:57 I have to tell you, I this is maybe a strength, also a weakness. I don't wanna have to go backwards. Right. So like It that appeal to me that's true in a lot of parts of life. For example, speaking of hotels, if I stayed at one hotel room One time.

19:11 I'm not going to a lower level hotel room. I wanna stay at the same level or go higher. Why just because for me that's a point of pride and something I value. For other people it might be their car. You know, they finally got a whatever's a nice car. And they don't wanna go back to the

19:26 Honda civic that they grew up driving. Whatever. Say I feel the same with money. I if we decide we want something I'm gonna be very, very careful before I commit to spending on something that is probably something we don't wanna go backwards on. Otherwise I just wouldn't do it.

19:44 As an example. If somebody starts to fly well, I know you've talked about flying private, you know, for a lot of entrepreneurs, it's like one of the things they want to do. Great if that's a goal. I wouldn't do that until I knew I have no

19:56 Financial chance of ever going backwards. Because that's actually really hard for And that's but that's rooted in your business, which means like my business is stable enough that it's likely gonna continue to grow at some even if it's a small five or ten percent, but it's like a stable Recurring ish revenue business. That type of thing. Yeah, or you have enough net worth to float it.

20:16 Yeah. Well what what I'm really encouraging people to do is You don't have to do this for everything. You know, like some years you have a uh splurge on some restaurant. Maybe you're gonna go back, maybe not, whatever. But if it's really important to you, it might be we're sending kids to this school or we're gonna decide that we're flying business class or whatever. Be very, very

20:37 Careful. Before you make A purchase that is recurring and you don't want to go back. Make sure you're solid forever.

20:50 How long does this annual meeting Annual review last and what's the homework to prepare for it. It lasts several days. We're in no rush, so it's like we'll talk for a couple of hours and then We're off doing whatever we're doing, whether we're on your calendar.

21:05 Yeah. It's on the calendar, has a link to Um all of our docs, the one from last year, we review it. Some of it is so some of it is structured, like we're talking about. We have these questions, what do we wanna change, et cetera. And Some of it though.

21:19 is really organic. And I think that is the part that might surprise Pete. So In my life, I'm an optimizer. And so I'm I love

21:28 Structure. I love it. And I think That has become a weakness of mine.

21:33 Where I always want the black or white answer and I need to like make sure it fits in these cells. And so I've been trying to become more Intuitive. And I find that

21:46 I'm most intuitive when I'm travelling because I'm like, what do I feel like seeing? Where do I feel like going? W what about us? And I'm trying to bring that to these meetings. So like this question about like Generous and adventurous. That was a intuitive thing that I was thinking about. And then we started talking about it and there was a lot of energy. So we spent

22:05 Like Few hours talking about that. That is how I love to approach this a combination of Literal. And also intuitive.

22:15 What's the um Monthly meetings look like. Ours usually looks like we use monarch. Do you know monarch money? That's just like a a cool thing. That in my opinion, that's my favorite tool for tracking monthly expenses. We so we go over that. And then we say like all right, next month like what adventures or things do we have planned and is there any like deviations or alterations that we want to make?

22:37 Make for that. We also talk about um different goals that we have throughout the year. Like um it could be um We wanna take family on trips. Well it's like all right, like do we have a do we have that plan and what went well last time, what didn't go well, whatever. And then we talk about like do you wanna buy anything? Like is there anything you wanna buy? I love that.

22:55 Uh I love Every time I hear you guys talk about How you do money, it makes me really happy. Because

23:01 Like there's a lot of connection. And I hope that's inspiring to other folks because money for most is not a source of connection, it's a wedge. It's actually something that's avoided. Most couples really substantively talk about money. about four times in their entire life. What does that mean?

23:17 Is there like a bunch of I mean, I guess this is obvious. This is an obvious question, but I guess there's typically a bunch of wives out there who have no idea, like what the income is and like Is is that like typically what it is? Fifty percent of the Couples who talk to me do not know their household income.

23:33 Five zero. They don't know their household income. I as an example, this happens All the time. I had a couple recently who said um

23:42 I think we would uh we would feel good if we made A hundred and twenty thousand. And we're look I'm looking at their numbers, which they prepared for me. And according to their preparation, they make eighty K.

23:55 Okay. So now I'm digging into this and I'm asking about bonuses. They go, Oh yeah, we get a bonus once in a while, and I'm adding it all together. It turns out they make something like a hundred and twenty one thousand. And they just look completely dumbfounded. Why?

24:08 Because For years they've been telling themselves We'll stop worrying. When we make a hundred and twenty K, they've been making it for years. And what it really shows is

24:19 The way you feel about money is highly uncorrelated. to the amount in your bank account. So no, they don't talk about money. most see it as a negative thing. They see it as something to protect their partner from They see it as something like you do the dishes, all mow the lawn.

24:34 But it's none of those. It's got to be a source of connection. Which is the thing you talk about, but by the way, you were giving me credit for these meetings. Like they still like occasionally end in fighting. Like uh like it's like it does it always it doesn't they don't always end well. Which is like there's not we are on the same page to discuss it, but we are not always on the same page of our wants. Sometimes there's decisions where

24:57 There's a winner and there's a loser, and so it's like how you know how can we both win and and one of these situations. But It definitely becomes like a who's the money person and it's like not just like who's earning it, but who's driving I guess it's frustrating to have if I'm the one driving all the time, I'm like

25:14 I want you to care about this as much as I care about this. Sam, I'm with you. Okay, listen. So The in most relationships there is one money person. And this is a huge mistake. Again, most of us think of it as something that's just divided, like every couple does. We all divide tasks just on Time, intuition, et cetera.

25:33 Or just habit. But Money. When I got together with my wife. Of course I was

25:40 It would have been natural for me to be the money person. This is what I do for a living. I think about it every day. And I very early on realized that would be a horrible mistake. And I Told.

25:51 Cassandra, I said We're gonna do this together. I'll tell you why. Number one One day I'm gonna get hit by a bus. Some shithead from Goldman Sachs wealth management is going to call her. Oh we'd love to help you be a steward of your portfolio.

26:06 Fuck you. Wealth management. Industry. So she knows exactly about expense ratios and fees. Otherwise I'd be looking up from hell, saying

26:16 what's about to happen right now with this conversation. But I know she's an amazing manager of money. Then I wanted us To have a second set of eyes. No matter how good you are at money. It's always better to have another person

26:29 Make decisions together. And third is just way more fun. Way more fun to be doing this together. Where we want to go next year. Who do we want to be generous with? All those things.

26:40 So it's a huge mistake. to be the money person in a relationship or let your partner and that is becoming Bigger and bigger. Because a lot of men die early Leaving

26:50 In in heterosexual relationships they leave their wife often defenseless. The white doesn't even know where the money is, much less how much, much less what to do with it. Bad, bad situation, so that is a big note. Dude, I was telling Sarah the other day.

27:04 Ever since we had a kid. I have this weird dream. It sounds Weird to even say it. But I have this dream that she dies. And like

27:13 Three weeks after her death. I'm like I don't even like so the way up my household works is I like focus on making the money. And she is in charge of like tracking and spending it. So like paying rent or mortgages and things like that. And like I like when we when I when she died in my dream, I'm like Who do I pay this rent to? Or like do you know what I mean? I was like I I literally don't know like what health insurance provider we have and how they get their money versus how like we like there's or like

27:42 Well, who's our dentist? You know what I mean? Like I didn't even know like certain things like that. And it honestly freaked me out. And I couldn't imagine being on the other side of that of like How do we earn? Exactly. I mean, it's kind of funny when you say it, but it's not funny if you're the person who doesn't know where the money comes from or how are things supposed to be paid. And it's actually terrifying and very, very bad situation to be. So all right, let me talk about the monthly money meeting.

28:07 And how to do it. It's quick. It's Sixty minutes. So you're kind of moving through these things. I have six quick uh seven quick steps. It's very easy. All right. First off, appreciation. Kind of unexpected. Always start off with something you appreciate about your partner. Look at Sam's face right now. Sam's going, What the fuck is this woo woo weirdo talking about move to LA, start talking about appreciation? Where's the crystals?

28:28 I laugh because we do that. Uh And it's definitely still uncomfortable. Oh yeah, okay. Fine.

28:36 F Damn. Impressed. Like I think you told me about it. Like I've been doing we've been doing these for years, but I like I'll like you or someone else like share something and I'm like I'm gonna add that.

28:47 Yeah, I'm thankful. I'm so uh I appreciate that Whenever we travel as a family, you always Make sure we get to the airport at the right time. Simple. I mean, you cannot say enough nice things.

28:59 All right, so that's number one. Number two is Partner one updates. Quick things. Usually each partner will own one part of the financial system. It could be they own how much you spent on groceries last month, or it could be making sure that this account flows to that and changing things. Just a quick update.

29:15 If something has not gone right, like hey, we agreed that w we're gonna spend seven hundred on groceries last month. I actually Wasn't able to hit that. It was eight fifty. Here's what I'm doing about it next month.

29:27 Right. They own it. They get ahead of it, they talk about what they're doing as a player. Um Take a shine a light on it. N don't let it fester. Partner two does the same thing.

29:37 Three then you're doing joint updates. So are there any things we need to talk about together? Hey, what's up with your four oh one K? Are you having the correct match? That kinda thing. Five, review our numbers. So like are there any critical numbers? I actually Don't Look at many numbers on a monthly basis.

29:53 Because we plan it. On an annual basis. And we look at it on a six month quick check-in, because that gives us time to adapt if we need to. But I'm not trying to look at the freaking price of uh noodles In February. I don't want to talk about that.

30:08 Six open issues. Anything open? And then seven wrap it up. Always end with I love you, I appreciate you, give each other a hug. Start to align. Money with feeling good. And it might feel cheesy at first.

30:21 You do it four, five, ten times. You're gonna actually start to feel it. You tweeted out this thing or I think it was from the book that you shared, but it had percentages For it had like th um Like benchmark numbers of like save this percent, um invest this percent, spend this amount on guilt free things.

30:42 Can you do those same percentages, but for a couple that earns three hundred or let's we're we're actually gonna round up for math, uh five hundred thousand dollars a year. Okay. I'll give you the standard numbers first quickly and then let's talk about how things change if you earn more. So there are four key numbers you need to know in your financial infrastructure. I love it. Just four. You don't need to track the price of pickles. Uh The first is fixed costs.

31:04 That's rent, mortgage, groceries. Debt. Uh auto that's fifty to sixty percent of take home pay. Next up is investing. That's five to ten percent of take home pay.

31:16 Of course, that's where real wealth is created, so I would prefer the higher the better. Next is saving. This is an emergency fund, saving for a down payment, even saving for a kid's activity or a vacation. Five to ten percent. And finally my favorite one of all, guilt free spending. This is speeding up, travel.

31:33 Buying a round of drinks, whatever. twenty to thirty five percent. So for me the beautiful part is if you can fit it in like Tetris Fantastic. You can buy whatever you want as long as you're hitting these key numbers. It's very freeing. Now when I look at couples

31:48 Or individuals who make a lot of money. Five hundred K as an example. There's a couple of things that are Comment. The first is their fixed cost number tends to go lower because

32:00 They're Income is higher. So instead of sixty percent, or in some cases people have sixty, seventy, eighty percent. Their number is like Fifty.

32:10 It's on the lower end of that range. Once in a while, depending on where they live, it can even be lower than that. Their investing is typically higher. People who are making that kind of money. typically not always but typically tend to be a little savier with investing. And because the price of bread Is basically the same.

32:28 Like yeah, you might spend double the price on bread, but you're not gonna spend fifty times more on bread. Therefore you have more money left over. Typically that goes into investing. Some of'em save aggressively, so

32:41 Sorry. They for investing they might have fifteen percent of take home pay. If they're in the fire community or they're very aggressive, they might go twenty, twenty five percent of net pay. I like to see that number around twenty percent as your income gets up because you when you have that kind of money.

32:57 Take it. Make it work for you. Um you have the earlier you can do that, you can really let it ride and grow. Savings five to ten percent. Sometimes they go a little bit higher.

33:07 You know what I often find with guilt free spending, they can certainly be spending at the higher end of that. Thirty-five percent of five hundred K is a lot of money, or thirty five percent of the take home. Oh, these are all post tax. Correct. Post tax. Um

33:21 Sometimes I will see people who are Інвестін лайк кразі They're doing Forty percent or Thirty percent of take home pay.

33:30 And I'm like There's a lot of money. Your savings is really high. And then I get down to the bottom of the conscious spending plan and they're spending like eight percent on guilt free spending. And I'm like, What do you guys do for fun? And they're like They always say the same thing. Well, you know, we like to go, we go to the park, we actually have money set aside. And then I go like this.

33:48 Do you actually spend it? And then they both look down because They wait till the end of the year. They don't spend their money and then you know what they do with the money that's left over from guilt free spending? They sweep it right into their investing.

34:00 And they go, We're so good. We don't spend money. We invest it. That's a big mistake. You need to learn the skill of earning money, y you need to learn the skill of managing money. But you also need to learn the skill of spending money meaningfully. So if you're making five hundred K, you should be learning how to spend that on the things that are meaningful to you. How do you get someone who's a warrior to start spending?

34:22 It's very difficult. Let me tell you why it's so hard. I I have frequently have multi millionaires who come on my show. And You know

34:30 Sometimes one or both of them's like, We want to learn how to spend more. And people listening are like, What kind of freaks don't know how to spend money? That doesn't make any sense. I'm one of them. Yes, it's a very common. Affliction. And it is an affliction. Because

34:43 There there are a lot of reasons for it. Often people grew up financially insecure, family only said we can't afford it. The only way they've related to money is scarcity. But when the numbers change. They change faster than the psychology changes. The problem is that you can get to a point where you have

35:00 More than enough. but you're unable to actually spend. And I see several things happening. Um, one I see people who realize at a certain point. Like this isn't Something's wrong.

35:12 We have these numbers on a spreadsheet, but it doesn't feel real. I went through this where it was like as an entrepreneur who sold so My business. I sold it and made uh I had a windfall. Leading up to that.

35:24 It was like a Like I think I think I uh ran the company for Four years. Something like the first three years. Well the first two years I paid myself

35:34 Roughly twenty four thousand dollars a year. Which was so stupid. People should not do that because my business was doing fine. I could have paid myself more. Um, and so the third year was more, but it was like a hundred thousand dollars a year, which in San Francisco is not like crazy amounts of money. So but so there was like A long period of like Not a lot, not a lot, not a lot. A lot. And then it took like another three years to acclimate to the reality.

36:00 I love that reality. It's pretty unusual. Most people don't get the windfall like you did. But it may as well be the same thing. Because They look at the numbers and they're still feeling the way they felt when they were seven years old sitting around the dining table and their mom or dad said

36:16 How dare you ask for that? We can't afford that. And so I know you've been on a journey. To spend more money. It's awesome to see talking about Um menswear now. Talking about taking your family travelling, like that's not easy.

36:29 That is really not easy. What what I find is the ultimate um Thing that happens with folks. is they start to ask for help. And they look around.

36:39 And they make two mistakes. One is they ask for help. Among a bunch of other frugal people. So I see this in the fire community every day. Hey everybody.

36:48 I I realize I've crossed my fire number. But I can't seem to know like I can't seem to bring myself to spend money. And then within three comments people like You don't actually need to spend money. It's actually better to save. You should save it because who knows what healthcare is gonna cost in two thousand sixty five. I'm like you're asking a bunch of frugalistas. How to spend money. You're asking the wrong community. Well, it's like asking me how to go camping.

37:11 Don't ask me, I have no idea. Okay, that's the first. Second is they come around and they start to actually try something, maybe they eat out at a restaurant, whatever. And the first time they do it it's It's not particularly great. Maybe they picked a bad restaurant. Maybe they don't have the palate for it. Maybe they hired somebody to come clean their apartment or house and they don't like how the person folds their clothes. Okay, that happens. So then they go.

37:33 Ha. This shit doesn't work. I actually I'm a good person'cause I don't spend money. I don't need to do all this.

37:40 Frivolous stuff that other people do. So they've created this self contained tautology. Which ensures that they're never gonna change. There's a much better way to do it. It's to build the skills now. It's to start spending on little things, discover what you like, what you don't, become clear with your money dials.

37:57 Enjoy it. Do with a partner. And over time you learn that Spending money as a skill is qu often as important as earning and managing it too. And I think that like the important thing is um

38:10 figuring out what makes you happy because Ye like There's been times where I'll talk to you or me to you. And we force what makes our us joyful onto the other person. Like, for example, you like fancy hotels and you're like, You should go see at this hotel. It's like That's just not

38:27 Yeah. I'm kinda uh this is a fake story a little bit because you don't do this too much, but uh or or maybe even ever, but it's like go stay at this like fancy hotel. You're gonna love it. It's like That's not my I don't I don't get joy out of that. But what I love is like services. Like uh monthly services, like Uh so for for you, for example, you don't own a house'cause you're like, I just don't get joy from that. Um and I don't I don't know what your apartment looks like there, but like if for all I know, it could be just like a very, very modest apartment because you get joy spending elsewhere. And I think that that's like a really That's a really challenging thing for people to get over because, for example, they'll say, like, here's a really easy one. They'll say, like, buy a home, it's a great investment.

39:09 And I'll say um Well it's typically not a great investment. Or or like that's not the reason to buy it. And they're like, Well you're gonna throw away money on rent? And I'm like, Well You're not throwing money away, I'm acquiring a service and it makes me happy. And I'm also like buying

39:24 I'm like I'm my money is now in uh in the index fund that's growing. So like that's a good investment. And they'll be like so you shouldn't buy a home? And it's like well, no, no, definitely. Buy a house. Just like I bought a steak last night. I bought this steak last night because it brought me joy. And if like owning your home makes you happy And by the way, it

39:43 oftentimes could be a good store of value. Uh but like which is a which is just a cherry on top. But do it because You work and this makes you happy, and that's a good reason to do it. It's hard for people to understand just doing something because it brings you joy. And and I've been there too. Yes, I love what you're saying and I love watching you on Twitter'cause you're one of the only people who Actually understands

40:10 Buying a primary residence is is sometimes but often not a great investment. Here's what I think. I think that people use the word Investing Way too much.

40:21 Like I have a personal trainer. That's not an investment. That's a luxury. Um, if I if I were to buy a house today, that would not be an investment. That would be The most expensive luxury

40:34 I have ever bought I will lose millions. One day when I buy a house, I guarantee it. I'm going to lose mil and I'm going to do it with a big smile. And you're going to be ridiculed on the internet because people know you as the guy who is has They they they say, but Remit, you said never buy a home. Well, illiterate people who don't actually read what I've said. I never said don't buy a house. I said run the numbers. Then consider the non financial and then but yes, you're right, there's gonna be a big

40:59 problem when uh I buy a house. Uh Anyway, we use the word investing a lot. Like I've had people who literally said buying A mattress.

41:10 A two thousand dollar mattress is an investment. That's not an investment. That's a luxury. So

41:17 I this got me very obsessed. How do you know if you can afford it? And you know what people said to me? They were like Your back is the most important investment you can make.

41:27 I was like, hey When I ask a question about affordability, your answer better have a number in it. Affordability is a number, not a feeling. And what I've realized is so many of us use Investment.

41:38 to justify purchases. But what's the the reme approved answer to that? My so My answer for an investment I narrowly define it as something that can provide a financial return. Simple. Otherwise here I am justifying a three thousand dollar an eight hotel

41:54 Oh, their air conditioning is triple filter. Therefore the hair on my arm doesn't stand up. Therefore I can write a new book that makes me A hundred thousand dollars. It's BS. Same for the face cream I use. It's not an investment. It's a It's okay to see.

42:08 I like this. And I'm going to buy it because I like it. That's totally fine. Now the affordability question becomes more complicated. You have to know your numbers and you have to have your percentages dialed in. But affordability is a Financial question.

42:22 It is not about feelings. And for the optimizers listing, I will say Sometimes when you're talking to a partner who's not an optimizer. They want to talk about feelings. And in the book

42:35 I emphasize how important feelings are. You've got to meet your partner where they are. You can't just talk about numbers alone, but Sometimes you need to actually engage with the numbers. Feelings are good, you should spend a lot of time on them, but at a certain point you're running a business, the business of a household, and you need to look at the numbers. How do you get over disagreements like if you or your wife is complaining to each other?

43:03 The most common reason for these disagreements is there is no sharion of a rich life. It's literally one Episode after another of nitpicking. And the perfect example I have is a uh

43:18 A person who wrote me on Instagram DM And said, Can you convince my husband to stop buying iced tea every day? I said, Okay, how much does it cost? She goes, It's five dollars every single day, we can make it at home. I said okay. Interesting.

43:30 Hey, out of curiosity, what's your household income? And she became very cagey, but I gently asked her to share it. She lives in New York, she and her husband. You want to guess what they make? I don't know what, two hundred thousand dollars a year? Six hundred thousand dollars a year.

43:44 So What you could see is that it's really not about the five dollars. To him, it was like Hey, we work hard. This is just a little treat that I enjoy every day. It's great. To her it was values based on how she was raised and why would you spend money outside.

43:59 Couple of thoughts. When Couples have disagreements whatever the scale. The first is I I always ask him, What is your rich life? Couples don't know. They never talked about it.

44:09 They've only talked about why'd you spend that much on a drink. So what do we want in our life? What's important to us? Do we want to travel? Do we want to send our kids to this Activity. get into all that which I go into detail on. The next is to have

44:23 Your accounts set up. So that you don't have to have Three dollar conversations. Stan, you said that the audience we're talking about today makes two hundred or so plus K per year.

44:34 You should not be talking about three dollar purchases. If you're making two hundred thousand dollars a year. If you are talking about three dollar purchases You have mis aligned

44:45 Your money Uh systems. And you probably don't have a rich life. So the way that you set up your accounts To be united.

44:53 In a marriage. I highly recommend All the money goes into a Joint the count. And from there you each have some of the money flow.

45:03 To a separate individual акаунт, но кінс ас ака. Which both of you know about, but each of you only has access to your own. And if that person wants to buy the five dollar lemonade Or the twenty dollar Uh tip.

45:18 It's totally up to them. That's their money, no questions asked. That is how you unify your financial relationship and also give each other a little bit of flexibility. Yeah, I did that this year. I have like My own little my own account. Uh how did it change things? You know

45:34 I think that even though you called me an optimizer, I'm a little I'm more of a worrier. And I I I st I definitely feel I feel guilt. oftentimes buying things um if they're above a certain amount, maybe in the thousands of dollars range. And so I put

45:50 twenty grand into a an account because I was like here I I'm newly into Somewhat newly into clothing and I got interested in like the the the craftsmanship. And a lot of like this Japanese shit that I love. It's like

46:05 Pretty expensive. Like it's like um six hundred dollars for like a button up shirt, but like it I'm just like deeply fascinated by what I'm reading and I just want to like feel and touch it. And it's interesting to me. But I would feel a sense of guilt around it. So I was like, look, I've allocated twenty thousand dollars I could spend this guilt free. And so I will spend it. I still s feel guilt, but it's it's definitely less guilt. But now at least I know that like I I used to feel a little sense of I'm disappointing Sarah because even though she's like on board with it, I'm like I'm taking money away from

46:38 from the shit that she could use for something else. And I was like and I'm also like I'm embarrassed to spend six hundred dollars on like a a shirt and I don't want her to know. It it came from all these just being raised poor uh shit that like you you know it It never goes away. You just like it's just like any other like daddy issues anyone ever has. You it never goes away. You just try to manage it. Yep. I like what you said about I used to feel that I was taking away from her. Yeah. And what I see in the way you talk about it and how curious you are, because we text about this stuff a lot. Is

47:12 It feels to me now you are actually Adding to your own curiosity. Of course. Y your family finances should be dialed in. Of course you should have all your ratios working and your money flowing. Of course.

47:26 But We should remember that. Two partners. Have got to be intellectually, financially fulfilled. It makes them better partners. And as long as you're managing your joint money.

47:36 You should. Be spending on your own. One of the one of the worst things I see, this happens a lot with men. Is men become

47:45 Shells of who they used to be. So you talk to a guy in their twenties, they have all these hobbies and interests. You talk to them by their fifties and I go, What do you like to spend money on? They go, Whatever my wife does. I go. We're not doing that here.

47:57 Answer my question. What do you like to spend money on? And a lot of times they've lost all hobbies. I see that in myself. I have to Fight. Two to try to find some new hobbies because if it were just up to me

48:10 I would Simply Shrink myself. And so this happens to Happens to a lot of people, but especially men and

48:17 I I want to encourage us to try to fight against that. When I was kinda up and coming in my like entrepreneurial journey, I used to make fun of like Um like self development people. What you you fall in that category and so do I. I'm gonna stop playing where I know.

48:30 Well no, but like I wouldn't make fun of you, but like just the idea of like People would be like I'm hiring like an executive coach or I'm hiring a coach. I'm like What? Oh like Man up. What are you doing?

48:41 And that I um And then I started like Hiring um A fitness coach and then a nutrition, a nutritionist. And by the way, a fitness coach could be like as cheap as like fifty or a hundred dollars a month with like future or one of these things. But basically just someone to like answer questions.

48:57 And then also just tell me what to do. And I started doing that for so many different things. So I did for it starts with fitness,'cause that's the easiest application, but then you're like Uh we we actually hired a a home organization expert to come in and like teach us. And I'm like Dude, this is so much better way of learning.

49:13 To like read a book and also uh like you know the book, YouTube, whatever, all that stuff to get the general knowledge, but then have an expert come in and pay them money. It could be a small sum. Like you could you could do a lot of this shit for a hundred bucks, like a cooking class or something like really simple in Groupon if you really wanted to. But like simple coaches to come in to teach you, but then the best situation is like some type of ongoing like class. Do you know what I mean? It's like the greatest way to learn. I love that you said that. I also love that

49:39 You said I used to say man up. Because just think about what's embedded in that phrase, right? That suffering is masculine. And that Mm. If something is hard.

49:51 It is therefore more valuable. I think there's some truth to some of that, but I also think that Yeah. Yeah, like there's grit grit's real. Yeah. Uh agree. And I think that sometimes we make things too easy for ourselves. And there is value in

50:04 A challenge. But I also think that There's no prize given for living a smaller life. Then you have to. So

50:12 I really want to inspire people to think About the things that you are interested in. There's probably somebody who can help you enjoy it more. I talked to a guy in the fire community and he was like, I just don't really like to spend money. Like I'm good. So I asked him, like, what do you like? And he gave me these generic answers. So I probe. I really like to ask. Tell me more. He goes, I love coffee. And he goes, I buy these beans.

50:32 Okay. And he's like That's that was the limit of what he thought. He could do. I said hey. What if you hired a barista to come to your house and teach you how to Make your coffee in

50:42 Even better. It never occurred to him, and I love that he was receptive. He later went on to do that. Imagine that. That's a hundred bucks, two hundred bucks. Incredible. I had a a book

50:53 That I read about posture. I was like, I don't understand these freaking diagrams. How am I supposed I don't get it. So I hired them to come to my apartment and teach me how to improve my posture. That posture coach was trans Formative formula. Did it work?

51:08 Dude, it changed my life. When we think about Posture. I I had something that was going on. Like when I would stand, I would find myself crossing my legs. It became uncomfortable on my back. And I'm like, This is weird. I'm like a young guy. Why?

51:20 And I finally Going from problem orientation to solution orientation is like a major shift. We can complain about stuff all day long, but there's a certain point where some people go, I want to fix. I found her

51:33 She came to my house. The first thing that happened when I opened the door, she looked at me and she was like shocked. But she's like what? And I was like, hey. W why are you looking at me like that? And she she said something to the equivalent of her average client is like seventy five years old.

51:48 And I was in my late thirties at the time. And I said, look, I've got a little weird thing, but really this is preventive. I want to learn how to be better at this before I have problems. And that is the dream of any coach. Is for somebody to come to you before they have major problems.

52:03 Proactively. We worked together, I think, six or nine times. She taught me it's posture is not just about putting your shoulders back. It starts from your feet. And your knees. And your glutes the way I walk. She video taped me walking and changed that. And

52:17 The pain There's no pain there, but more importantly I can understand how the body works a little bit better than I used to. Um To ra to the last question I wanna w to wrap up, uh this is funny that you put this on this doc that we had, but Someone messaged me. He's a good friend of mine and I love him to death. So I'm making fun of him, but I I I I I love him.

52:35 Um, he was like I wanna come in and talk about credit card hacks. And I was like Uh you know, like ways that you could save, like get like five percent cash back and shit like that. And I'm like I get why you you like that. And like Sometimes that's always fun to geek out on like cool puzzles.

52:53 And whatever. But like that's not needle moving to me or to a lot of people. Like I don't give a shit about the like, you know two percent cash back because that means I gotta have like ten credit cards and that's like Fucking complicated and it's like Just to make a thousand dollars, it's like I'm gonna spend like

53:08 ten hours on this, I'm probably gonna forget the pay like it just this is a fucking nightmare. And um you have on here you're like Fight for simplicity. The more successful you get The more you have to fight for simplicity. I have found that to p to be true. And this is definitely a champagne problem, but I just like some things get as you get a little make a little bit more money, like you start thinking like, Well, everyone else has a wealth advisor or everyone else is doing this, or people everyone else is investing in PE. Should we like do these things? Should we do that?

53:38 And what's funny is like Maybe there's some other level. I'm sure there is like when you're worth hundreds or billions of dollars where it's like, Yeah, like you actually do need to be a little complicated, but For the most part, for most everyone listening, simplicity is the answer, I think. Is that right? I think so. I understand why when you're up and coming and young it

53:58 It's fun. to do credit card hacking. I get it. And it's fun to just learn new skills. I I get that. But I have found that Um

54:07 It's very difficult to turn off the grind mindset. And to become much more Calm. And run things like a CEO, not a hustler.

54:18 I find this is true a lot with personal finance people. I know people who are worth a lot of money and they still do credit card hacks. And if we look at How much They make It's a negligible amount. Like I do it because I cannot turn the page.

54:32 On What got me here. And I don't realize that what got me here won't get me to the next level. So part of Fighting for simplicity.

54:43 Is that as you advance up Whether it be financially, relationally, et cetera. There are things that you simply cannot afford to do anymore. So I can't I would not afford to be able to open up

54:55 Ten new credit cards. To save A total of one thousand eight hundred dollars per year. That does not compute

55:03 Yeah. What I'm Trying to save and invest. And my time. That's a

55:09 So that's very important to know as you advance, you've probably got to stop doing certain things that got you here. And think about what is the new chapter of my life. You're the man. Thank you for doing this. Thanks, Sam. Always a pleasure, Matt.

55:21 When's the book officially out? The book is officially out January first. Oh, sick. All right. Two day two or three days. Um Thank you for doing this, you're the man. We appreciate you. I feel like I can rule the world and no way Be what I want to

55:38 I put my law in it like my day song On a roadless travel never looking back

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