105. What’s the point of tracking every penny?: Ramit’s 3 Lessons from Ep 104
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Before we start today's show, I have a really exciting announcement that I've been wanting to share for a long time. On January 1st, 2025, I'm releasing a new book called Money for Couples. For the last three years, you've heard me on this podcast speaking to different couples every single Tuesday. I've spoken to over 170 couples on this show about their money psychology, the money messages they heard from their family, the peculiar dynamics that they have around money and where they get stuck.

and how they can get on the same page. Well, behind the scenes, I've been working on the definitive book to help couples get on the same page with money, and that's what I wrote for you. It's coming out January 1st, and in the book, I'm going to share how to talk about money, including the exact words to use, when to talk about it, how to teach your kids about money, even the exact agenda and account setup that my wife and I use in our finances.

I'm going to show the tactics to make instant improvements, like how to set up your accounts to automatically work together and how to assess your financial health.

And finally, you're going to get a deeper understanding of money psychology in your relationship. And you're going to discover why you and your partner see money differently and how to get on the same page. Now, it's one thing to listen to couples or watch couples every single week. I love doing that for you. But it's a whole different thing to be able to have the book and to be able to work through it with your partner. Okay?

I'm so excited to get this book in your hands. You can pre-order it using the link IWT.com slash money for couples and stay tuned for a lot more on this book this year. Again, go to IWT.com slash money for couples to pre-order my new book about getting on the same financial page as your partner.

Um, what the hell is going on on this podcast that like 80% of the people who come on here go through massive screening, fill out applications, they never actually read my book. Is anyone else puzzled by this? Look, a lot of the questions that you ask me about money are answered directly in I Will Teach You To Be Rich. How do you pay off your student loans? How do you automate your finances? Where do you start investing and how do you handle big purchases?

I wrote this book as a six-week program so you can follow along on your own or with a partner. If you want to improve your finances, I recommend you get the I Will Teach You To Be Rich book. It has over 18,000 reviews on Amazon. Get it at iwt.com book.

How are you both feeling about today's conversation? I'm feeling hopeful, excited. We were never really good at talking finances. I feel like I'm getting better. I'm definitely the problem. She wants me to communicate better, but it's become habitual for her to almost gatekeep. This conversation is going to be most helpful for us to continue in the right direction. I'm excited. Jesse and I talked last night to say like,

You know, are we on the same page before we jump on this call? Like what are our goals and our expectations? I think I'm just excited. See if you hear something that we can't see or hear ourselves.

A couple days ago, we heard episode 104 with Stacey and Jesse. And I want to share a few key lessons from that episode. Recall that Stacey makes a lot more money than her partner, Jesse. And she desperately wants for him to be engaged. But she's also set up a system where she controls everything financially related in their relationship.

I was struck by how complicated of a financial system Stacey has built. She's got 32 categories. They've tracked everything for over 10 years. And I'm just thinking to myself, what's the point of all this? What does it get you? Because their system is actually more complicated than my system.

You know how many people's conscious spending plans I see every week? What's fascinating is the categories of spending, especially the ones where people spend way more than they think they do. For example, subscriptions. Let's take a look at some recent numbers on how much people spend on subscriptions. $100 a month on subscriptions. $205 a month. That's from someone spending 76% of their take home each month on fixed costs.

$211 a month, $147 a month, and $487 a month. This is literally thousands of dollars a year, and most of us have forgotten about all the subscriptions we are actually paying for.

and

and Rocket Money takes care of the rest. They'll even deal with customer service for you. Rocket Money has over 5 million users and has saved a total of $500 million in canceled subscriptions, saving members up to $740 a year when using all of the app's features. Stop wasting money on things you don't use. Cancel your unwanted subscriptions by going to rocketmoney.com slash Ramit. Give it a shot at rocketmoney.com slash Ramit. That's rocketmoney.com slash Ramit.

My team and I create tons of material every single day. Scripts, voiceovers, emails, all kinds of material that we need to be good and we need it to happen fast. And one of the things we use is Grammarly, especially their new AI tool. For example, every Saturday, we send out my podcast newsletter. I break down an anonymous person's conscious spending plan. And I like going really deep to break down the numbers and show you things you might have missed in your own finances.

Well, guess what? That is a lot of copy. Before, it would take my team a ton of time to work through everything I had written and edit it and make it right for email. Now, Grammarly does it for us in seconds. Grammarly Premium actually gives us suggestions on how to make our writing more impactful for you. It identifies gaps in the writing and shows personalized suggestions to improve the whole thing. And it can even add images like that.

Save time with one click and go from editing drafts in hours to seconds. Get AI writing support that works where you work. Sign up and download for free at grammarly.com slash podcast. That's G-R-A-M-M-A-R-L-Y dot com slash podcast. Easier said, done. So you decided to take control of your money, you're on top of it. How many different Excel spreadsheets and...

budgets do you have? Tell the truth.

One, Google's spreadsheet, but it probably has 20 hidden tabs over the last 10 years. How did I know that? And how diligent have you been in tracking your spending? Let me guess, extremely. Go ahead. Correct. We both have used an app that I love for the last 10 years to track every expense. Anytime we swipe our credit card, it goes in. And I trained Jesse to do the same.

Jesse, you do that? Yep. I am not as diligent as her, but yeah, it will track down to the penny, even on cash. And what does that get both of you? It's very satisfying for me to have the data to tell me what we're spending on. It actually helped us when we were filling in the conscious spending plan.

So you track everything. You're tracking like the price of Brussels sprouts over time. So you can trend that for, from 2010. But like how much we spend on groceries per month, um, you know, clothing, transportation, how many categories do you have?

More than we should. How many? Tell me. Tell me. Hang on. She's going to pull it up right now. This is amazing. Oh, my God. Look at that. She's like, finally. It's been 13 years and finally someone asked me a question about my app. Okay. Tell me how many categories. Do you want some categories too as well? Eight high level categories? No, I want all of them. Don't BS me.

Oh, wow. She just took like a deep swallow. Probably. Everybody watch. However long this takes, I'm going to run completely dead air. I will burn literally gigabytes right now just watching them. Look, he's still counting. This is unbelievable.

32. 32? Wow. So simple. You ever hear me say that phrase, fight for simplicity in your finances? You ever heard me? Yeah. She's going, yeah. She goes, yeah, that's a great phrase. I chose not to adopt that. That's great for other people, not for us. I'm learning. I'm learning. Okay. What kind of emotions you get when you log in and you track stuff and you change the category? What do you get? I feel satisfied or I feel...

I feel better that I just played around in the spreadsheet because it feels like work and the work is never done. It feels like work because what is it that you're actually doing? Working to not a lot of outcome or results. Total $3 questions. Tracking a budget for what?

Tweaking a spreadsheet for what? I've said it before. I'm going to say it again. The more successful you get with money, the more you have to fight for simplicity.

Fight for it. It's got to be a key priority. It's so easy to get a 401k from that old job and another one over here, a credit card you open up at Express because you literally want to save 10% off of a shirt. Don't ever do that. And all kinds of assorted bullshit in your system. And suddenly one day you wake up, you don't know what flows where, you don't even know how much money you have because it's all in a million different places. Fight for simplicity.

And you know what else? I have to say so many people are obsessed with this idea of precision rather than getting the broad strokes right. You know, recently I posted on social media about the conscious spending plan, the four categories, the four numbers you really need to know in your spending. Fixed costs, savings, investments, and guilt-free spending. I had like 3,000 questions about categories. Ramit, where do car parts go? Ramit, what about cavities? I was like, who cares?

Seriously, these are minute questions. Use the system, adapt it to what you need, and then move on. The goal here is not to get everything absolutely precisely right. That's not the point. The point is that it's simple enough so that you can deeply understand it and move on.

Now, there are a couple ways that I account for little details. I add 15% to fixed costs because everybody forgets about stuff. I always am conservative with my numbers. But if you want to put cavities under fixed costs because you get one every year, or you want to put on your guilt-free spending because you love candy, it doesn't really matter. Get 85% of the way there and then move on with your life. A simple financial system is one where you track a few key numbers,

you have room to account for mistakes, late fees, overspending because your college roommate came in from town, all of that stuff. You build a healthy buffer. You have a couple credit cards, a few bank accounts, an investment account, and then you get on with your life. You know, I don't have any problem talking about death. I really don't. I think sometimes we avoid talking about it as if it's not going to happen, but this is a sure thing. It's going to happen to us. My feeling is we might as well talk about it.

You like to worry? Less so than Stacey, but yes, still. What do you get out of it? Out of worrying? Yeah. I worry a lot that if she suddenly is out of the picture for whatever reason, I am in a lot of trouble. Because if she were hit by a bus...

By the way, I love this morbid conversation where we're talking about one person's premature death who just happens to be sitting right in front of us. We're okay. We're both European. We talk about death a lot. Fantastic. All right, great. So if she were to get hit by a bus, you still have $1.2 million and you're a young, able-bodied guy.

It's not the number that concerns me. It's that everything beneath it, which is you would have no idea how to manage it on a day-to-day basis. No idea how life insurance works. No idea what investments are or how they interact with your savings. None of it. Would you agree? I would agree. See the issue? You have no fingerprints on your finances at all. You're merely a passive observer in your financial life. And she doesn't like it.

And if she gets hit by a bus tomorrow, you're fucked. Actually, he's not. That is a conversation we've had. What do you mean? He can get a big old life insurance check. That doesn't mean he's going to know how to use it. That's true. I'm serious. You know that I had the same conversation with my wife, right? It's like, look, I could be the money manager in our relationship, but I'm not going to be. We got to both do it in case I get hit by a bus because I need a second set of eyes and because it's just more fun.

You know, I remember talking to my parents about setting up a will. And I was encouraging them saying, look, we might as well talk about this now. You don't want to leave your family with a bunch of accounts where we don't even have login information. You want to come up with your decisions now. Let's just do it. Get it out on paper. Be clear about it. There's no problem talking about this stuff. I think a lot of us are afraid to talk about money and death because we are afraid of money

We're also afraid of death. And putting those together is absolutely terrifying for a lot of people. I think a lot of you actually believe that if you have some life insurance policy...

you're good. Wrong. Handing over money to a grieving family without the wisdom to go along with it is actually doing a disservice to your living family members. Talk about money now. Get good at money. Build habits and rituals together with your family. That is how you create a rich life for multiple generations.

You know, when I was studying persuasion in college, we studied a lot of health psychology. And health psychology has this concept of adherence. How many people actually take the medication that's prescribed to them? You would think that if it's a life or death situation, 100% of people take their medication. Wrong. The adherence numbers would shock you. Sometimes they're 30 to 40% of people actually taking their medications. Some of it has to do with cost, convenience. Some people forget. Some people just don't want to take it.

But when I understood this, I became a lot more compassionate. Because if people aren't even willing to take life or death medication, then we realize how hard it is to stick with a gym routine. And that's why my entire life's work has been focused on simplicity and focusing on the high leverage areas, not 300 categories of budgets. One of the worst feelings in life is feeling stuck.

You hear it sometimes with podcast couples here. They feel stuck around their money. I felt stuck in my business. I had made a bunch of decisions years ago and I woke up feeling trapped. So after thinking about it, feeling stuck, not sure what to do, I went to a CEO council that I'm a part of and I just laid it out. And after listening to me, they were like, oh, it's so obvious. You need to change this, move this person over here, change this resource allocation. Boom.

I wish I had done it years earlier. If you feel stuck in your career and you also wish you had a group of peers who could help you get unstuck,

help you accelerate your career, then I'd like to invite you to check out this episode's sponsor, Sidebar. Sidebar is an exclusive, highly curated leadership program where you can tap into a group of supportive peers, including Fortune 500 executives and innovative startup CEOs. You can get expert advice, new perspectives, and most importantly, raw feedback, which is so rare on how you can get unstuck.

When you become a member, you get matched with a group of eight to 10 peers. Then you meet with your group twice a month for 90 minute facilitated sessions and have real time messaging access to the entire community. Learn more at sidebar.com slash Ramit.

and join thousands of top senior leaders from companies like Microsoft, Amazon, and Meta who have taken the first step towards accelerating their careers. That's sidebar.com, S-I-D-E-B-A-R.com slash R-A-M-I-T. When I was in my early 20s, I was not into clothes. I wore free t-shirts from tech companies, and I really did not want to seem like I tried too hard.

But I started to realize that clothing is the first thing people see about you. They don't see how nice I am or how much I know about personal finance. They see what I'm wearing. And like it or not, that shapes a lot of how people perceive you.

Now, I take a lot of pride in the clothes I wear, and I love knowing that when I buy something, I'm going to keep it for years, and I know that the people who made it were paid well. I actually hired my wife, who runs Next Level Wardrobe, a luxury personal styling company, to style me for my Netflix show and all of my events, including what I wear day to day for more casual outfits. If

If you're a professional who wants to dress better, maybe you recently got a promotion, maybe you've gone through body changes, or maybe you're just tired of wearing the same clothes you wore in your 20s, I recommend you check them out. When you hire them to work with you virtually or in person in New York, they'll help you clean your closet, buy the right items with the perfect fit, and they'll help you put together polished outfits you can wear to work.

You'll be able to open your closet every single day and know exactly what to wear for every single event. They'll help you look like an elevated version of you. And they work with professionals of all ages and sizes. I love the convenience. Next Level Wardrobe has over 125 star reviews from happy clients and they've been featured in the Wall Street Journal. Take their free styling quiz at nextlevelwardrobe.com slash Ramit.

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He was debating to get a gym membership. So he's had some physical ailments in the last couple of years. His physiotherapist recommended a gym or rather a treadmill. We don't want to buy a treadmill to fit in the house. There's a gym near our house and near Jesse's business that he can easily go to. It's like 15 bucks a month. And he hemmed and hawed about like whether we could afford it. And I was like, we're not poor anymore. Yeah.

we can afford that. It made me realize, A, he doesn't understand that and B, that such an insignificant amount of money per month, you're not really going to find a cheaper gym. It's already a discount gym. He felt like he had to figure a way around not spending it instead of just talking to me about the expense.

We had like a discussion about it. And I was like, we're not poor anymore. You can get this. And I think it still took him two weeks to actually buy the gym membership. I dragged my feet on a lot of like random expenses because I'm always trying to save money. Why?

Uh, I just have it in my head that, well, I mean, I don't personally make a whole lot. So I feel like the household doesn't initially make a whole lot, which is not really the case. About a week later, I did finally pull the trigger, got the membership. And, uh, I've been trying to do as much stepping or walking, sorry, as, uh, as I can, uh, to heal my ankles. Cool. I'm glad you got the membership. Thank you. Would you consider that discussion or series of discussions a success?

Yes. Oh, 100%. But I want Jesse to be like, I'm getting this gym membership. It's $15. This is the decision I'm making and just buy it. What you want to do.

is not depend on willpower because that fades away. You want to build systems so that by waking up, breathing oxygen and drinking water, you are basically doing the right things. For example, if you don't want to worry about tiny little questions, then use my concept of a worry-free number. Anything below 20 bucks, you don't even think twice about or 50 or 100 or 5,000 depending on your level of net worth.

You want to build systems so that if you claim health is important to you, that you actually pick a number and you say, okay, every year I'm going to spend 3% of my gross income on health or 10%, whatever your number is. And suddenly it's not, should I go to the gym or not? It's, I need to spend $300 a month on health. Where am I going to allocate that money?

If you are interested in health, by the way, we've got two sponsors I want to draw your attention to. Methodology is this amazing meal delivery service with Michelin quality ingredients. The food comes to you. It's absolutely beautiful and delicious. The second one is Ness, a credit card where you can be rewarded for spending on your health and wellness. You can get access and special deals to these programs at iwt.com slash sponsors.

Thanks for tuning into this Thursday episode of Lessons Learned. Don't forget to go back and listen to the full episode with Stacey and Jesse on any podcast player or, of course, on YouTube. I'll see you next week, and I will also see you on my podcast newsletter this Saturday, where I share material that is never shared publicly at iwt.com slash podcast newsletter.

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