On his “I Will Teach You To Be Rich” podcast, self-made millionaire Ramit Sethi helps numerous couples figure out how to jointly navigate money challenges that may arise within their relationships.
And when it comes to talking to your partner about money, there’s one major red flag you shouldn’t ignore.
“If one partner will not talk about money, that is the most dire of circumstances,” Sethi tells CNBC Make It.
That’s because money is often at the center of most major decisions you’ll make as a couple.
“Money determines many things, like where you’re going to live, what you’re going to eat, how often you’re going out or if you will have children,” he says. “Money cuts across everything.”
That’s why it was important for Sethi to make sure that he and his wife, Cassandra, were on the same page about managing their money together.
Sethi and his wife have been married since 2018. From the start of their relationship, he always insisted that they navigate their finances together, he says. He wanted the two of them to avoid a common, risky mistake he sees many couples make: allowing one partner to be “the money person.”
“I wanted us to both be empowered when it comes to money decisions and to be partners and teammates in this business of running a household together,” he says.
But whether you’re married, casually dating or somewhere in-between, discussing finances with your partner can be easier said than done. Here’s Sethi’s advice on how to get started.
Know your own money habits first
Before you can check your financial compatibility with a potential long-term partner, you need a solid understanding of your own relationship with money, says Sethi.
“Most people don’t have a strong personal vision about money,” he says. “How can you know if you’re financially compatible with someone else if you don’t even know yourself?”
Ask yourself questions like, “Do I want to be a millionaire by a specific age? How do I plan to get there?” or, “Do I have a ‘no debt’ policy, or am I comfortable with certain kinds of debt?” Sethi advises.
“Once you have that strong understanding of yourself, then you can work with your partner on how you two can align,” he says.
Say you’ve racked up a significant amount of credit card debt, and your significant other doesn’t have any. Rather than concealing your debt from them, you could be open about your debt and explain how you plan to pay it off. This approach also presents an opportunity to create a strategy to tackle the debt together, Sethi says.
“It’s so incredible when somebody says, ‘I’m working on being more responsible with my money and here’s my plan’,” he says. “You can’t help but respect that.”
How to talk about money with your partner
Although discussing money topics such as your income or credit card debt may not sound like the most romantic date night activity, it doesn’t have to feel like an interview either.
Rather than diving in with a list of questions about their spending habits or their credit score, which could make your partner defensive, start off simple, Sethi says.
“You’re just getting curious,” he says. “You can learn a lot about someone and how they treat money by simply observing them and [asking them] a few questions like, ‘Where did you grow up?’ and ‘What did you and your family do for fun?'”
Those conversations can help you understand the emotions that may be driving their money habits, he says. From there, you can work on tackling financial challenges together instead of playing the blame game.
“What couples don’t often realize is that you’re partnering up to run the business of a household together,” Sethi says. “So, reframe the idea of having ‘a conversation about money’ to ‘we get to talk about money together for the rest of our lives and use it to build our rich life.'”
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