Ramit Sethi on Business, Life, and Money

Ramit Sethi: When I ask people, you know, “What's your rich life? What would you love?” And they go, “Well, you know, one day I'd love to have a beach house. It doesn't have to be big. It doesn't even have to have a door. It doesn't even have to have a roof. I'm not even saying it has to have a foundation.” I go, “What the fuck? I said, rich life, not dilapidated life. Why are you shrinking your dreams in front of me in a hypothetical example?” 

Katie: Welcome back to The Money with Katie Show, Rich Girls and Boys. I'm your host, Katie Gatti Tassin. And today I am frankly really excited to share a conversation that I had recently with Ramit Sethi, the author of I Will Teach You To Be Rich, which has sold millions of copies, and the star of the new Netflix show How To Get Rich.

This conversation flew by, and I got a chance to ask Ramit some questions that I've never heard anyone else ask him before. So first he's gonna tell you about a few of the behind-the-scenes stories from his new show. Then we'll talk about his personal finance philosophy, and dig a little deeper into the tactics he likes to use to help people use money to fuel joy in their lives. Next we get into his business success and what's been the most meaningful ingredient in his career. And finally, we're gonna finish with something I have been dying to talk to him about: Why he is so outspoken about his political beliefs and the fact that money is political.

I deeply admire Ramit. I was so excited to sit down with him for this conversation. And before we get into it, we will be right back after a message from the sponsors of today's episode.

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Katie: Well, Ramit, welcome to The Money with Katie Show. I really appreciate you taking the time to be here today.

Ramit Sethi: Oh, it's my pleasure. Thanks for having me. 

Katie: Absolutely. So I've been following your work for a pretty long time, but your Netflix show was really a cut above, and I think your ability to get people to come to their own conclusions about money is unlike anything that I've ever seen. So I'm curious: What is the method to your madness? Because I could see any of the tips or tactics that you are using as broadly applicable for people who maybe have this stuff pretty figured out for themselves, but are trying to help friends or family members financially. 

Ramit Sethi: Well, I can tell you what not to do, 'cause that's what I started off doing. I learned about money early on, and in college I was reading all the books about personal finance and watching all the shows, and I created this one-hour curriculum. I would teach my friends in the dining halls, and I'd hear people complaining about their fourth overdraft fee and I would say, “Hey, you should just come, I do this free talk; it's banking, budgeting, saving, and investing.” I still remember my four key categories printed on both sides of the page. And they were like, “Yeah, that sounds awesome.” And then they would never show up. And there's a lot of subtlety in that. Why would somebody get excited? Why would somebody say, “I know I need to do better,” and then not get help, especially when it's free?

I found that absolutely fascinating, and I remember, kind of like with the zeal of a new CrossFitter, I was like, “You really need a Roth IRA; after five years you can withdraw the principal,” and I could just see their eyes glazing over. But I wasn't socially aware enough to know what was happening. I didn't know. And in my view back then I was very linear. It was like, if you have a problem and you say you have a problem and somebody offers help, there you go. You have the three puzzle pieces; they fit together, done deal. The irony is I was studying human behavior psychology; I just hadn't quite put the pieces together.

And so I think that when people try to help friends, I see a couple of trends. Number one, I got this DM yesterday on Instagram. “Oh, my sister is terrible with money, et cetera. She makes a whole bunch, but she's always in debt.” They write me five paragraphs. I go, “Does she actually want help?” And they're startled. If they don't want help, there's no magic incantation you can say that's gonna change it. I can't, even. If they come to me and they don't want help, there's nothing I can do. 

Second, what are the stakes? If the stakes are low, like a couple will write me, “Oh, you know, we're both Google employees, we make $450,000 a year, and we really wanna optimize the amount we make on our interest in our checking account.” I go, who really gives a shit, honestly? You don't. I don't. The stakes are low; you're not even gonna really want to make a change 'cause there's no real point to it. 

So do they want to change? What are the stakes? Those two things are, in my opinion, a prerequisite for any real, substantial change when it comes to money. And that's what I look for. 

Katie: I love that you qualified that if somebody comes to you and they don't want help, that there is no magic phrase or tactic that's gonna work. Were there moments in the show, in the filming of the show, where you realized that someone was not going to improve their situation, and how do you handle that? 

Ramit Sethi: I have hints, but you never know. You never know until the very end. You have to remember that I didn't know anything about the cast of the show except for their names and their financials. I had access to that. I was looking through all their bank statements, et cetera, but I didn't know what they looked like. I didn't know what the problem was until I met them. And so I think that's part of the magic of the show on Netflix, is you the viewer along with me have to figure out what's actually going on here. And you would think that if somebody signs up to be on a show and goes through extensive screening, gives their financials, that they would come ready and prepared. And I think what I love is that that's not true for everybody. Some people do not want to change. And to me that's real. That's life. I have stuff in my life that I know I should be doing better at, and I'm not. And that's life. That's the beautiful tapestry of the fact that some of us want to change, some of us are ready to change, some of us will change, and some of us won't. And that's okay. 

Katie: What do you think it says about the cultural moment that we're in that a show about money was number six on all of Netflix? 

Ramit Sethi: Honestly, it's mind-blowing to me. I thought we made a good show and a season one, you know, everyone in TV will tell you it's, it's always tough 'cause you're kind of figuring out the format. And I was really excited by the cast of the show, and the crew was absolutely amazing. But the fact that that show skyrocketed up, I mean number six on all of Netflix is insane. I think it says a lot. I think it says that there's a deep craving to learn about money. Number one, I think that we desperately want to talk about money, but not in the way that it's been talked about historically. The way that it's some old guy coming in and berating you for spending money on asparagus and making you feel stupid 'cause you don't know what a SEP IRA is. Those times are over. 

And you know, honestly I think that we all wanna be entertained as well. And I love that. I love a little drama. I love some crazy stories. I said bring it—I watch reality TV myself. So I'm at home, when I hear a couple that's arguing over money, I go, “Cool, gimme some popcorn. I'm gonna sit back and watch.” And I think there's entertainment in that, and I think money is deeply and inherently entertaining, and we should embrace that. 

Katie: I agree. Well, it seems like your philosophy is now really resonating in the mainstream, which is exciting for someone that has found it very resonant in the niche of personal finance. 

Ramit Sethi: Thank you. 

Katie: So I wanna switch gears a little bit and talk about your philosophy about personal finance. So let's start broad. What do you wish more people understood about money?

Ramit Sethi: I think I wish that more people understood that money is an important but small part of a rich life. Important because we don't often take it seriously. We go to work, we come home, we get our paycheck, we pay our bills. We think that managing money means paying bills on time. That's not true. A robot can do that. You don't need to be doing that. And we don't take it seriously. Like when I ask couples or individuals, “What is your rich life?” And they give me the same old trite answer: “I wanna do what I want, when I want.” I go, “Wow, that's so clever. Never heard that before.” And then I go, “Okay, that's interesting. What do you want?” And they just stare at me. That's not taking your rich life seriously. If you can't even articulate what you want beyond the word “freedom” or “travel,” that's not taking it seriously. If you don't know your numbers and you can't tell me what percentage of your gross income you spend on housing, that's not taking it seriously. If you don't know exact month and year your debt is gonna be paid off. A lot of us take the food that we eat from Trader Joe's more seriously than we take our personal finances. 

All right, so money is an important part, but it's also a small part of a rich life. And I wish people knew that when you see money, many people see spreadsheets and confusing terms and despair. And when I see money, I see a beautiful picnic dinner outside with your family on Saturday, where you were able to splurge and get a nice basket so you could carry things. I see a trip to Disneyland with your family. I see a beautiful cashmere coat. I see whatever your rich life is and can be. And so money matters. Absolutely, it matters. It informs where you live, what you eat, even to some extent who you are. But it's also a small part of a rich life 'cause there's more than just a spreadsheet. 

Katie: I love the way you focus on opportunity and what something can be. 'Cause to your earlier point about, no one's getting amped up about attending a seminar about banking on a Saturday morning.

Ramit Sethi: Oh god. 

Katie: But these things are real. It is real life. And one thing that I think has been really prevalent in the conversation over the last 18 to 24 months is this looming talk of recession. And there's inflation, in all of these very negative and fearful headlines hitting hard. Everyone's asking suddenly, “What can I do to protect myself?” And I got the sense from an interview that you did with Farnoosh that some of these economic concerns are a little bit of a distraction, that the economy should not really be dictating your financial moves or strategy. So tell me more about that. 

Ramit Sethi: That's correct. First of all, ever since I went on book tour in 2009, I have been getting the same questions from news directors and folks all over the country and all over the world. They start off by saying, “Times are really tough—what do you suggest we do right now?” I go, “Okay, you say that when the economy's bad; you say that when the economy's good, maybe it's actually not about the economy, maybe it's more about you. And maybe it's more about the headlines that wanna sell ads. So I simply just reject the premise entirely. I go, “Who says the economy's bad?” In fact, for a lot of people the economy's phenomenal. But you wouldn't know it if you listened to the same old type of framing.

Think about it: When gas prices were extremely high, people were freaking out—I know, 'cause I live in California; it was very expensive—and rightfully so. People were going, “Oh my gosh, this is actually affecting my bottom line.” It's funny, though, when gas prices went down, you never heard another article about it. You never heard people going, “Ahhh, finally I can take all that extra money now and redirect it accordingly.” No, we simply jumped from one item that we've been stressed out about or even radicalized about to another topic. And that's the way most of us live with our money. We simply jump from one transactional topic feeling bad about it to the next. We can't even imagine what it's like to feel good. 

Sometimes I'll ask people on my podcast, “Do you like money?” And sometimes they'll just point blank go, “No.” I go, “Okay, that's honest.” I go, “Have you ever felt good about money?” I'll say over 50% of people say no. And that makes a lot of sense. Think about it: Since childhood, a lot of us have heard the phrase, “We can't afford it. Money doesn't grow on trees. We don't talk about money in this family.” You hear that 10,000 times, you start to believe it. And so even the folks I speak to who have millions of dollars, they still feel guilt and anxiety and overwhelmed when it comes to getting an extra cheesecake. And that really explains some of the contradictions we have with money. 

So when it comes to things like inflation, is inflation real? Yes. Is the fact that broccoli has gone up 26% really affecting the bottom line of most people? No. In fact, stop talking about broccoli. If you're focused on the price of broccoli, you've taken a wrong turn somewhere in life. There are much bigger issues. You know, I rarely hear people saying, “Oh my gosh, my asset allocation is totally out of whack.” That's gonna cost you $450,000. But the price of coffee, we love to talk about. Why? Because we love to dumb it down for the masses, thinking that they're not smart. And I find that offensive. I actually think people are really smart and people really want to know the truth. And if you explain to them that there are five to 10 big wins in life, like getting your asset allocation right, getting your savings rate right and increasing it by 1% every year, and if you do those things, you never have to worry about inflation on almonds, you don't even need to talk about the price of coffee and that your investment plan already accounts for inflation, that is very reassuring to people. 

Katie: It gets to the heart of this “$3 questions versus $30,000 questions” philosophy, which is everywhere now. And I love that. How do you think about the balance between just getting the big stuff right and the little things add up? Are there times in someone's life where you think the small things might matter, too? 

Ramit Sethi: The concept of $3 questions, first I want to talk about it. I emphasize to people that I want you to stop asking $3 questions and start asking $30,000 questions. We are obsessed with $3 questions in this country. Can I afford that morning coffee? Oh my gosh, the price of Reese’s Pieces went up 13 cents! We're obsessed, but we totally ignore the $30,000 or even $300,000 questions. Things like asset allocation, things like negotiating our salary. Those things make way bigger of an impact than the price of coffee. And candidly, buying a morning coffee is not gonna affect your finances over the course of your life. But not investing absolutely is. 

So is there a time where it makes sense to focus on smaller numbers? Of course. There are seasons of life. So I know this very well because I grew up son of immigrant parents. My mom stayed home with us, my dad worked, and we had to be frugal by nature. We had to. It wasn't a FIRE choice, it was, this is how much money we have and that's that. And I remember this hilarious moment where my parents went into a bank; they had to get  one of those bank orders or you know, where they certify it. And they came out laughing and I was like, why are you laughing? And they were like, the bank told us that they'll waive the fee if we have $10,000 in our accounts. And they were laughing because it was so inconceivable that they would have $10,000 in their accounts. And you know, I know what it's like to not eat out that often, only eat out with a coupon. I get that. And we needed to do that at that point in our lives. 

I have no issue with people being strategic about their spending, about being highly decisive and selective about where they spend money and where they don't. And early on, you do need to build up a skill of knowing, “Hey, where's my money going? I need to track it for a month.” Okay. All of that I agree with. I think the problem is that people get stuck doing that. It would be like getting stuck as an adult waddling around like a little toddler. Of course you don't waddle around. You know how to walk. In fact, you know how to run. That's life. We move to different phases of life.

So how come so many of us are still stuck tracking the price of every little thing? How come so many of us are stuck saying we can't afford it? When if we looked at your income and your expenses and net worth, you could afford that. How come? And that is because often what got us here is not gonna get us there. We need to be able to turn the page on our chapter of life and recognize “It might not be serving me anymore to actually add up 50 cent expenditures, because I make too much for that to be important.” That's really hard for people, and honestly that's what I find extremely enlightening to be able to help people do that. 

Katie: We'll get right back to this conversation after a message from the sponsors of today's episode.

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Katie: I was listening to your interview with Chris Hutchins on all the hacks, and something you said really struck me because I think it encapsulates this concept so well, which is that you kind of need to be authentic to the spot that you are in life. And the problem is that we don't elevate our approach to money with where we are in our lives. And so to your point, if you're making hundreds of thousands of dollars a year, you need to level up your approach to your finances accordingly. You're not gonna be approaching it the way that you did when you were 22 and maybe that $50 savings was actually quite impactful. So on that note, on the frugality note, why do you think the field, I don't know if we can even call it a field, of personal finance, but why do you think in general we hit the frugality language so hard? What is the sticking power there, and why has it been so deeply ingrained in the culture of money management and money experts? 

Ramit Sethi: Well, frugality is deeply embedded in our culture. I mean, we have a history of being puritanical. The idea of working harder and providing your value on this planet by working, all those things can be positive, but they can also be taken too far and become negative. This idea of being thrifty, all of it can be good. But we have a very interesting dichotomy in this country as well. We love being puritanical. We love frugality. As you and I have noted, this country loves wealthy people who pretend to be poor. “Oh, Bill Gates, he wears Dockers just like you and me. 

Katie: So quirky. 

Ramit Sethi: “So adorable. Oh, Warren Buffett. Oh, he has such an old house.” Warren Buffet has a jet company, okay? Warren Buffett is not like you and me just 'cause he eats hash browns from McDonald's. Please. Give me a break. That's part one.

We hate money in this country, but we also love it, and we aspire to it, and we obsess with it. We look at pictures of beautiful people in Santorini and Bora Bora. We see our friends from high school. We go, wow, how did they get that house? What are they doing that we don't know? So we have this dichotomy. And you know, the fascinating part is that when faced with that choice, most of us, we simply go with the Bora Bora choice and then feel guilty about it. It's like the worst of all worlds. We go somewhere which we likely cannot afford 'cause we haven't actually planned for it. And then we go, “Oh, I feel so bad about money.” 

And my philosophy is, look, if you wanna go to Bora Bora or you wanna go to Italy or whatever, fantastic, let's make a plan for it. That way, when you go, you don't have to worry about the price of a drink at a restaurant. You don't have to feel guilty, but you gotta make a plan for it. And I will share, that's the philosophy that I used in my own life. So I try to walk the walk. I started saving for my wedding before I ever met my wife, because I knew, coming from my cultural background, Indian, I knew I was gonna have a big wedding. I love big weddings and I wanted, this was important in my life. It was part of my rich life even before I met my wife. And I said, I want the wedding that I'm gonna have someday in the future to not be primarily focused on money. And I think that there are priceless questions we have in our life. Every one of us intuitively knows it. If you're a parent, you probably choose the diaper based on what's best for your baby, not based on price. We all know what it's like to intuitively say, you know what? That's worth it. And so as we get to different phases of our life, what I want for people is to get honest about, what are those important parts of your life. Is it a vacation? Is it a house? Is it traveling? Whatever, doesn't even matter. It could be going to this pizza place every Saturday. Get honest about it and then use your money to live that rich life. 

Katie: You're a really big proponent of learning how to spend. And I think it sounds counterintuitive at first to people who are very well versed in the personal finance world, because personal finance is really good at teaching us how to save. But nobody teaches us how to spend. You'd think that this part would come easily, as you've highlighted. It really doesn't for most. And since I have you here, I wanna get your professional take on something. So my parents, they retired in their fifties. 

Ramit Sethi: Ooh, this already sounds juicy. Okay, I’m in. 

Katie: I'm sure you already know where I'm going with this, because apple, meet tree. Okay. But they worked and saved diligently for 30 years. So they have these robust retirement accounts. They also have a pension, and they did something interesting when they retired. They made two budgets: their baseline budget, and their “living large” budget. Okay, now they're four years into retirement. I bet you can guess where that living large budget is. It's still an unopened document on the desktop. In fact, not only are they not drawing down on their assets, they are still saving some of the pension money every month. They're still saving. Now, I am thrilled if they are totally satisfied with only spending that pension. But the fact that this living large budget exists tells me that there is a part of them that wants to dream bigger, that is capable of dreaming bigger. And they have all the projections. They have the Monte Carlos, they're locked in. But I know that the answer for them is not gonna be found in those spreadsheets. So I'm curious: What types of questions would you ask them to help them start to unpack that reticence to shift gears? And how do you coach people who want to start using their money to create more joy in their lives? 

Ramit Sethi: This is a very common problem and it has really not been talked about. And over the last few years it's become, in my opinion, one of the most interesting topics in personal finance. And that is learning the skill of spending money. I personally love this because I grew up very frugal, very frugal 'cause of my family. And I went to school, I was surrounded by people of different socioeconomic backgrounds, and I started hearing things. You know, I had friends who went to work in investment banking in New York, and they would tell me their company would send a black car to take them home every night. And I was fascinated by that. Like wow, that's not a part of my reality. And so over the course of my twenties and thirties, I learned the skills of spending painstakingly. I'm gonna give you an example, then I'll talk to you about your parents. 

When I graduated from college, I wanted to dress better. And I had a friend of mine who's really good at clothes and I said, “Will you take me shopping?” And she goes, “Yeah.” So she took me and I had shopped at, you know, like Macy's and Ross and Marshalls growing up, stuff like that. And she goes, “All right, try this, try this, try…oh, this looks so cool.” And she goes, “Try it on.” First thing I did was I looked at the tag. Classic frugal kid. She goes, “Don't look at the tag.” I go, “What? That's like someone saying, go to a restaurant and close your eyes. Don't even look at the food.” She goes, “Don't look at the tag” I said, “Why?” She goes, “First, try it on and see if you love it. Then we'll talk about the money.” That blew me away. But I put myself in her hands. So I was coachable, I was ready to be a good student. So I go and try it on. And when I came out, sometimes she would get really excited. “Oh my god, that looks amazing. You definitely should get that.” And then sometimes she would be honest with me: “I don't love that. Put that back.”

Wow. She was a great teacher, and she taught me that there's a different way to look at money, a different set of lenses. So if we imagine money lenses, most of us use the same lens in America: cost. We are obsessed with this lens. But gosh, there's so many other lenses, aren't there? There are lenses of delight, there are lenses of results, like what you might hire a personal trainer for. Lenses of comfort, like why you might hire an Uber or even an Uber Black in certain situations, lens of security, safety. Just, there's so many. Luxury. And so she taught me that I could take off one set of lenses and use the other. Now of course I needed to be able to afford it, et cetera. But I could.

Now, to your parents, your parents have been using the same lens for 40 plus years. It's like a river going through a rock bed. It's become grooves. Deep, deep grooves. And it's really hard for people to change that. You know, even though the math says they've got the pension and their advisor's like “You can de-accumulate.” It doesn't feel right. So I'll tell you the good news and the bad news. The good news is they can change. The bad news is it's hard. It's really hard. And they may not change in the way you want them to. What do you imagine, in your view, what do you imagine for their retirement? 

Katie: My dream for them is that they get to spend all of their time and mental energy on things that excite and energize them. I know for them, that is golfing a lot. That is, they want to have a boat so that they can go. Right now they're the classic, you know, “We're gonna use our friends’ boat and we're waiting for that text invite.” They want their own so they can take it out whenever they want. They want to be able to travel and come visit us because we live across the country from them. That is obviously an expense. And I think really it's the nuance of right now, I know that I've been grocery shopping with my mom since I was little. Every Saturday we'd go together and I know that self-talk, she talks out loud to herself, and…

Ramit Sethi: What does she say? 

Katie: She passed that trait on to me. She's “Okay, so all right, this is 13 cents an ounce. This one's 17 cents an ounce. So if I get two of these…” So there's this constant, you can just see the wheels turning all the time. And I know she still does it, and for me that would be a little tweak. But I would love for her to be able to go shopping at a nice specialty food store—she loves to cook—and to not be paying attention to the price per ounce. I think there's a lot of mental energy that they're spending on these, frankly, they're probably more like $300 decisions, but in the scale of their nest egg, it's insignificant. 

Another example, they're trying to decide, “Should we pay for golf by the round or should we get the membership? Okay, let's build out a spreadsheet and…” I'm like, guys, you can afford them. If that's gonna help you golf more, if it's gonna be a more seamless choice, you can afford to make it. And so I think it's that shift in those moments where they're trying to decide what they can or want to do, that money is not the number one consideration on their checklist. 

Ramit Sethi: Love that. Beautiful. Okay. I love your vision for them, and I love that it's personal for them. And I also love that it's quite realistic. I didn't hear you saying you want them flying around the world on a private jet. You know, you want them to golf a little bit more. You want them to travel and visit you a little bit more and maybe not worry about the price of cereal. Okay, we could do some of that. So I have a few techniques that I would suggest, and you and your parents could certainly use this. And anyone who struggles to feel comfortable spending on the things they love can use this. 

So first off, I would ask them, “Do you understand your numbers? Do you think you will have enough?” And this is what they're gonna do: They're gonna talk, talk, talk. They're gonna just throw a lot of words at you and it's not really gonna mean anything. Okay, let 'em talk. Because people feel very anxious about money. Even if, like your parents, they've done very well. And so you go, “I totally get that. Do you think you'll have enough?” Keep 'em focused on that question. And when I had this conversation, series of conversations, with my parents, I actually created a single document in almost crayon, simplistic numbers. And my dad is quite sophisticated with money. He has an MBA from University of Chicago. He knows this stuff. But there's a difference between knowing it and feeling it. 

So first I made sure to get my mom and dad involved in this conversation, and I made sure that it wasn't the typical thing of dad handling the money or mom handling the money. Both talked about it. And they both talked with each other with me facilitating. That was number one. Number two, I said, “What are you gonna do with this money?” And one of the answers that my parents gave was, “I don't know, give it to the kids.” We go, “We don't want the money. We have enough money. You taught us how to make money. You taught us everything we know. We want you to spend every last cent, and maybe even more.” So again, just articulating that we don't want the money, it's not for us, it's for you. That was another technique. And you can do that lovingly, right? You can tease, you can joke, but you can also say, “You taught us and we have what we need. You've really given us that wealth.” 

Next, I do this technique I love; I did this with my wife during Covid, the 10-year bucket list strategy. And you can do this at any age. Sit down solo or with a partner and you say, “What should we do over the next 10 years, where if we do it, it would mean that we lived a rich and meaningful life?” And if you're younger, we picked things like, one of us was “learning Spanish in Mexico;” another was, I was writing a book in a hotel, 'cause I love hotels, et cetera, et cetera. And we just kinda went back and forth like, “Oh my gosh, what hotel? Wow. Skydiving? That's crazy.” You know, et cetera. Like having fun, getting amped up about it. And then we picked one that was most meaningful to us and we said, all right, the one for us is a 10-year wedding anniversary in a location we know it's meaningful to us. And we said, all right, we know exactly when it's gonna be. Let's ballpark how much it's gonna cost. So we did a fun little thing; we just guessed and then we took our number. Our numbers were totally different. My number was way bigger. I was like, “We're going with my number.” 'Cause if you have two numbers, just go with the bigger one. It forces you to dream big. And then we automated it. We said, okay, we know the month and year, so let's just reverse-engineer it. And now automatically we're putting money aside every single month. That is the beginning of living your rich life. 

In your parents' case, they're gonna struggle with that because they're just gonna go back to doing what they've done. “Oh, I guess we could golf on Thursdays.” And honestly I've learned, encourage and accept it. If they want to golf on Thursdays, fantastic. Then you can gently say, “Gosh, wouldn't it be nice to have a drink at the golf place?” I don't know, I don't golf, but whatever it is to edge that up a little bit. 

Katie: Whatever golfers are doing after they golf. 

Ramit Sethi: Yeah, whatever they're doing. “Wouldn't it be nice to get those cool shoes? I love the polos.” Whatever golfers do. And they might not, they're not gonna take well to that. But it's just planting the idea. 

Final technique for your mom, in particular, is this concept I have called a “worry-free number.” So many of us, like when we were in college or graduating from college, maybe if you go to the grocery store and you see a pack of gum, you just get the gum. You're like, all right, 59 cents, 99 cents, whatever, worry-free. The challenge is that as we make more money, we don't adjust our worry-free number up, which we should. I talk to people who make $100,000 dollars a year and they are agonizing over a $20 purchase on Amazon. They're literally creating pivot tables and spreadsheets. I go “Get a life, okay? This is a waste of time; you're wasting my time, worst of all, talking about this.” And so we pick a worry-free number, and you can choose, but it could be 20 bucks, anything below 20 bucks, we're not even gonna think about it, worry-free, or I'm not gonna talk to my partner about it; we both agree. The more you make, the higher your worry-free number should be. Why? This really trips people out. They go, “Well, Ramit, if my worry-free number is 500 bucks, are you saying I'm gonna spend 500 bucks every single day?” No! Why is it that we instinctively go to the worst possible case? You think you're gonna go from optimizing the price of soup to spending $500 a day at Michelin-starred restaurants? No, that's ridiculous. Be real. You're not gonna trip and fall and drop $75,000. Okay, it's ridiculous. But instead what you might do is stop agonizing over the price of bread rolls, and you might actually elevate yourself to focusing on stuff that's more meaningful. 

All of that, and then I'm gonna share one thing I did with my parents. I actually put 'em on a travel budget, but not the kind you think. I said, “This is how much you have to spend every single month.” 

Katie: I love that. 

Ramit Sethi: And they were like, “Uh, what?” Like it was unfathomable. I go, here it is. Now, did they follow my exact instructions? No, but I will say this: They are currently abroad on a tour of a country they love, and they're sending pictures to all of us and we are loving it. And that really is a rich life. It's their rich life and it starts, it's enabled by the money that they have and the vision that they've put together. 

Katie: I love it. Yeah, people can change. I think it took a couple years of making more money for me not to see everything through the lens of the Chipotle burrito bowl. That used to be my metric, of how many burrito burrito bowls could I get for this amount of money? And it takes time. It really does. 

Ramit Sethi: It does. And I've loved your journey, watching you as you reflect on everything from, you know, gender, class, earnings... 

Katie: Thank you.

Ramit Sethi: I really have thoroughly enjoyed it. And the Chipotle bowl is so subtle and so meaningful. So many of us joke, “Oh, if I got more I'd probably get guac at Chipotle, hahaha.” And I go, “Okay, that's funny. But it's actually not that funny, because you're shrinking your dreams down to a Chipotle bowl.” And I don't mind the jokes. I love money. It's funny. But I also don't love that we shrink ourselves, that we tell ourselves managing money is making sure things are paid on time. That we say…when I ask people, you know, “What's your rich life? What would you love?” And they go, “Well, you know, one day I'd love to have a beach house. It doesn't have to be big. It doesn't even have to have a door. It doesn't even have to have a roof. I'm not even saying it has to have a foundation.” I go, “What the fuck? I said, rich life, not dilapidated life. Why are you shrinking your dreams in front of me in a hypothetical example? What is that?” And so I simply don't allow it. And I love that you've elevated yourself beyond the Chipotle bowl. I think it's amazing and I'm so happy you share that with other people, too. 

Katie: Thank you so much. Well, and it's all enabled by, frankly, earning more and finding success. And I think that that was a huge unlock for me, which was that, okay, I can take my Tupperware to work every day and scavenge from the lunch meetings so I don't have to buy dinner, or I can spend an hour after work every day working on this business that might actually become something. And now here I am, talking to you. So proof in the pudding. 

And that's something that really interests me about you, is your success in business. And I know Rich Girl Nation, very entrepreneurial, quite ambitious. I am interested, I think they would be too, in the growth of your company, how large is it now, 20 years in? 

Ramit Sethi: We have about 15 full-time employees and quite a few contractors. I love what we have been able to accomplish, because I always wanted to run a boutique business that I do it my way, and I wanted that. At the same time, we spread the word about my philosophy on money, that we remain incredibly intimate with our students, and I think we've accomplished that.

I'll give you an example. Okay, we have this Netflix show. Wow, that's amazing. We have this podcast which now reaches millions of people. But on a personal level, I get to talk to you, I get to talk to couples, I get to talk to individuals in my coaching programs. And so while I am remaining incredibly intimate with the people, the ability to talk to you and hear the story about your parents, I love that. And at the same time, the message goes out to millions and millions of people. To me that feels like that is success to me. 

Katie: When did you feel like you had made it, and did it feel the way you thought it would? Was it a number in the bank? Was it a revenue number? Was it a growth milestone in the business? 

Ramit Sethi: No, I don't really think like that. Because sometimes I think…I've gotten a lot of questions after Netflix, you know, like “What does it feel like?” And of course it feels different. This is something I never predicted. I never started my blog to be on TV. I'm an internet guy. But for me there are some things that felt really good. You know those badges—you ever work at a company where you have a badge on your belt and you have to swipe in? I'm like, I don't want a badge. It feels like handcuffs to me. I just don't like 'em. And I don't know why I have this irrational hatred of badges, but it's like, I don't want that.

I love, like 10 out of 10, being able to meet a friend on a weekday for a leisurely lunch, like 10 out of 10. Some people would say, you know, like a vacation abroad or seeing a concert, that might be a 10 outta 10. For me, I truly, absolutely love, I'm obsessed with the idea of sitting on a rooftop with one of my friends having a leisurely lunch. And again, what do both of those things tell you? I love freedom, but in very specific, particular ways. And so those feel amazing to me. To be able to go to lunch, to be able to pick up the tab, to be able to tip really big and not have to think about it. Awesome. But the dollars in the bank…the fact that I love hotels so I can stay at any hotel I like, that's amazing. But the money itself and looking at the numbers becomes quite uninteresting, in my opinion. 

Katie: I love that. I think someone listening to this might be like, “Oh yeah, I also would love to be able to take a leisurely lunch. I also would love to be able to pick up the tab or take my friends on a vacation.” And you don't have to have an eight-figure business to do that. You can achieve that much earlier in life. And I think that that's really cool. 

Ramit Sethi: I agree. And thank you for saying that, 'cause you can scale it, right? So like lunch, that could happen quite easily. Maybe you take a half day at work and make it up later, whatever. There's so many ways you could do that, and maybe you're like, okay, lunch sounds okay, but it's not my 10 outta 10. And so starting off with, what is my 10 outta 10, what is important to me? And then second, it's working your way up to it. I like to travel, and my wife and I travel for a long time, and I post these videos of like, why do I love these certain places and details and hotels? And we eat at whatever place in Tokyo. And sometimes it's expensive and sometimes it's just like a random place we walked into, like a sushi boat type of conveyor belt sushi, and I just love it all. 

Now if you're watching that, I think the wrong takeaway is, “Oh my gosh, I wanna stay at that exact hotel, but it's so expensive, I'm never gonna be able to do it. Now I'm depressed.” I didn't stay at those places when I was starting out; I backpacked across Europe with my high school buddies. But I think it's saying, “Oh my gosh, I love the inspiration of the fact that Ramit loves stationery, and so he found a notebook master in Kyoto whose family's been doing this for generations, and he created something meaningful for himself.” Maybe you don't love stationery—you probably don't unless you're a weird person. But what is the thing you love? And then how could you find it? That to me is the essence of a rich life, is that it should fit you like a handmade glove. 

Katie: And you've been doing this for 20 years now. Is there anything that you used to believe really strongly when you started—business, money, otherwise—that you have since done a 180 on, having seen everything that you've seen?

Ramit Sethi: Definitely. Most of the things involve, I didn't understand human psychology to the level I understand it now. Like when I was starting out, showing people a compound interest chart and saying the word “seriously.” If you ever use the word “seriously” when you're talking about money, you've already lost. “Hey, you really need to start investing. Look at this 7% rule of 72, seriously,” you're screwed. Nobody wants to hear it. And frankly, do you really think another compound interest chart is gonna change anyone's feelings about money? They already know they should be investing. That changed for me because I realized that information alone is not going to persuade behavioral change. 

I also have come to realize much more deeply in the effects of how we were raised. And this was a surprise to me, because in general I had pretty healthy money messages from my family growing up. But we all have different ones, and the two most common ones that I hear: “We can't afford it” and “We don't talk about money in this family.” Again, if you hear that 10,000 times, you really start to believe it. And a lot of folks that I speak to, simply no one talked about money at all. My dad helped me open up a custodial Roth IRA at 14. So that gives me a massive leg up. Even though we didn't have a lot of money, there was education in my family. It was okay to talk about money and it was even in my figment of reality that somebody like me can start investing.

There's a podcast couple that I have, I think it's episode 50 or something like that. They're dating for a year. She said, “I want him to pay for dinner when we go out once in a while.” And he said, “Yeah, I want to as well. But when I try to put the credit card down, she hands it back and says, ‘I want you to put that money in your Roth IRA.’” I said, “Okay, that's interesting. By the way, how much do the two of you make?” He has a business; he just started paying himself $2,000 a month. She makes $200,000 per month. He makes $2,000 a month, she makes $200,000 per month. She makes a hundred times what he makes. Now to me, this is absolutely fascinating, because we have gender issues, we have socioeconomic issues. And as I started talking to them, discovered her parents told her about investing at age five. 

Katie: Oh my gosh.

Ramit Sethi: His parents never did. He only started learning on his own about a few years ago in his thirties. That to me really tells us that we all start from different levels in life. And do I remember that you were an athlete in college? 

Katie: No, I was not an athlete. I'm actually quite uncoordinated, so you must have confused me with another small blog. 

Ramit Sethi: Me too. Okay, we're the same. Okay, great. 

Katie: You know what I think you're thinking of is that I was a fitness instructor as a side hustle. So I've posted…

Ramit Sethi: That might have been it. 

Katie: That might be what you're thinking of. Definitely was not a college athlete. 

Ramit Sethi: Got it. Okay. Yes. So this actually makes it easier. Thank you. I'm sorry I got that wrong. 

Katie: No, that's fine. 

Ramit Sethi: So I didn't learn about, you know, fitness, protein was a word we never used in my family. I didn't know how to deadlift, none of that. And that's why I think it's easier for me to be compassionate about people who don't know much about money, because I feel the same way about fitness. It took me a long time and a lot of work to learn and unlearn stuff that I thought. If nobody talks to you about money, how are you supposed to know it? And so that's what I want to encourage people through the show, through the podcast, et cetera, is it's okay to talk about money. Money's not bad. It can be a great thing, even if you have debt, and you can take control of it. 

Katie: So you're at the top of your game; you're arguably top dog in the whole personal finance world. As you look back on the last 20 years from what I would consider to be the mountaintop, what do you attribute that outcome to? Someone like me or someone who's listening that's earlier in their career that's like, “Man, this guy, he's had so much success, he's so good at what he does.” What would you tell all of us a couple years into our careers? What do you attribute this success to? 

Ramit Sethi: Well, I appreciate you saying that. I don't think of it like a mountaintop, first off. And I think that's important, because if you think there's a mountaintop and you think there's somebody at the top of it, then that automatically sets you up to feel “not enough.” Like there's someone who already took that place, and I don't believe that. If anything, since I started my blog in 2004, there are literally hundreds of thousands of people talking about money and I love it. Some of them talk about stuff I would never talk about. They talk about it in ways I would never talk about it. And I think that's a good thing. 

So let's reframe. It's not a mountaintop, it's simply the right place for you and for your audience. I remember I had a friend who loves really nice face creams, like $500, and I don't use that, I use whatever. And I was like, “Which one's the best?” That's what I asked her, and she had a really good answer for me. She's like, “It's not really about the best. I have this really expensive one; I don't really like it. It's about what's right for me.” And so that's the first reframe I would make, is that it's not that there's one best. Some people don't like me. That's okay. There's, what's the best for your audience. 

If I had to attribute my success to anything, it would be understanding human psychology. I think that comes in so handy. I think it's having a technical skill in personal finance. I think that if you're gonna talk about money, you should get really good at money. You should understand the nuances of asset allocation. There's lots of things you can do that will make you stand out from anyone who can talk about money in general. But if you can be specific and if you know your numbers, you automatically stand out. 

And I guess the final thing would be, at this point in my career, I'm doing things that I'm gonna have fun with. And so yeah, business is hard and being a creator is hard, no doubt about that. But if you're not having fun, then your audience is probably not having fun. And when I have fun, people can tell. On my podcast, yeah, I'm cracking up. I'm joking. People love it. They know that. And I would challenge people, yes, you gotta have a business model. Yes, you've gotta make profit. It's a business, okay. But if you're not having fun, you're probably not gonna last. 

Katie: I could not agree more. I think even when I look back on the last 36 months of my life, yeah, I'm like, the reason this is working is 'cause I am obsessed with it and it's so enjoyable.

Ramit Sethi: I can tell. I watch your tweets. I go, yeah, this is fun. And you can tell when you're real, because you're like, “I don't understand why people are doing this.” Or like, “This is crazy to me.” I go, yes, that's real. When you have something that you just feel the world has to hear, and you start to refine your voice and you make it your own such that at a certain point it's undeniable that it's written by you, or it's a video by you, that's when you start to know you're coming into your own voice. So I admire what you've done and I love that it's an inspiration for so many other people as well. 

Katie: Thank you. Well, to close this out today, I wanna talk to you about how outspoken you are about the things that you believe in. And I heard you say on My First Million, when you were talking with Sam, that you didn't used to be that way. And I kind of wanna get into what changed, because I too now have experienced the smattering of “Don't be political.” And it's hard to communicate to people that money is inherently political, and policy is gonna impact your finances probably more than just about anything else is going to. So I wanna hear from you about that. 

Ramit Sethi: I didn't used to talk about politics, although I have always been politically interested, but I did a complete 180 on that around 2016, and I saw what happened in the presidential election. And I remember studying history, specifically in AP history. We studied, you know, a variety of different movements that came up. Then in college I studied cults in great detail. And at that time it was extremely intellectually interesting. But when I started to see cult dynamics happening in our country where we cannot agree on basic facts, I started to say, “No way. There's no way. Not in the country I live in.” That's why I started to speak out, and people got pissed. Well, let me tell you what happened. When I started speaking out about extremist politics, and I've always told people that I'm happy to pay my taxes, and they look at me like I'm a Martian because it doesn't compute.

First of all, they see a man, then they see a man who's made a lot of money, and then a man who says, “I'm actually happy to pay my taxes. And in fact, I've lived in New York City and California and it's great. And the more I pay, the more successful I've been.” They cannot fathom it. They also can't fathom that I rent by choice. I love all of that, because I don't need to fit anyone's stereotype. I'm me. It's my rich life, not yours. And so when I started speaking out, about 90% of my audience was surprised and supportive. 10% got extremely mad. And their arguments are, frankly, pathetic. I keep waiting: Is there gonna be a troll with some intelligence? Please. You know, I'm like eating popcorn with one hand and just responding. I go, “Why? Can’t we at least…you wanna debate? Let's debate.” And I have all these debates with trolls. I enjoy it because I don't get the chance to talk to people like that in my normal life. You know, my normal life has friends who are management consultants and internet people, not radicalized extremists. But I enjoy it.

And what I wanna say for the folks who tell me, “Stick to money,” I go, “Listen, money is as inherently political as it gets. The reason your housing is so expensive is money. The reason people buy F-450s now and there's no small trucks is political. The reason that climate change is happening is in part political. Healthcare being expensive is political. So when you tell me stick to personal finance, first of all, fuck off, I write about what I want. I don't listen to some guy in Oakleys telling me what to write about. Why would I listen to you? And second, money is political, by definition. And so you’re over here agonizing about $3 coffees. Meanwhile, the price of housing exceeding the 28% ratio, way above it, families can't even afford housing, in zero cities across the country can someone earning minimum wage hit those numbers safely, which means it's unaffordable. And you're over here telling me, “Stick to personal finance.” Personal finance and money is inherently political. There's no denying that. And if you try, you are willfully ignoring reality. 

Katie: I wanna put that answer as the disclaimer at the beginning of every single episode that we do. The taxes thing kills me. 

Ramit Sethi: Oh yeah. They love it. 

Katie: Because you're a super rich guy who is super outspoken about, “You need to raise taxes on me. I should have to pay more.” And it's always funny 'cause you know who's in the comments being like, “I don't want my taxes raised”? How much do you make? “$75k.” We're not talking about you. Your taxes are not going up.

Ramit Sethi: We're not talking about you. They don’t want your taxes. They want mine. And really they want the ultra-rich, which is what they should do. So, you know, the responses to these are quite facile. You know, “If you wanna send more money to the government, you can feel free.” I go, “No amount of voluntary contributions by a few rich people is ever going to equal a well-enforced tax.” And “If you raise taxes, then the rich will just evade it.” I go, “If they were gonna do that, why would they be fighting so hard against tax increases?” Think about it. And the fact that taxes are historically low for the rich is simply just unaccounted for. They just simply refuse to look at it. 

So what I've discovered, you know, I enjoy the trolls. I like them in the sense that, you know, we all have our own entertainment, I guess, but they're not the ones who need to be convinced. That's not how it works. Voting matters. That's why when we had our last election, I funded over a hundred thousand dollars of my own money to get people to the polls. And I wanted people to have no reason to not have transportation. And that is an area where I can pull out my checkbook and write a fat check and support voting rights. That's what I want. And so that's my rich life. That's part of what I'm using my money for. And so yeah, politics matter to me and it matters to me that people can vote. It matters to me that people can get housing. That they can get healthcare. Yes. That matters to me. 

Katie: I don't even know what to say. I'm speechless. I love it. How do you think about, this is my last question. How do you think about the balance between individual solutions and systemic change in your work? You've kind of touched on this, but I'm curious if you have anything else that you wanna say about it. 

Ramit Sethi: I do. I think that part of my IWT philosophy is that you can simultaneously call for personal responsibility with your money and call for systemic change. I think this is really important. The personal finance world in general skews towards personal responsibility. And that is primarily because the people who are writing about personal finance tend to have become more responsible and then gone out and spread the quote “gospel” about “I did it; I paid off my debt. You can do it too.” And I think that part of that is very good. Personal finance folks have taken the mantle of responsibility and they've done great things. I love that. 

At the same time, you know who's absent in those conversations? People who have a sick child or parent they have to take care of; somebody who has to work three jobs and they live an hour and a half away 'cause they can't afford it, and it takes 'em three hours on the bus. They're not on Twitter posting about their FIRE strategy and their Monte Carlo analysis. They're working. 

And if we are real, you can't simply suggest that people have become less responsible in the last 30 years. That doesn't make any sense if you understand statistics. What has happened is the price of housing has gone up, primarily because of NIMBYs, and healthcare costs have gone way up. And there's a variety of other things. And when you look at those and you look at the primary drivers between why people are going bankrupt, et cetera, you see that it's structural. So yeah, when I talk to people on my podcast or on the show, I'm focused on what can we do in your personal life, right? We can't change healthcare policy right now, but when I'm speaking out, and what I want people to remember when they vote, is you can save an extra 3%, but that's not gonna prevent the price of houses from going way up in your neighborhood because your neighbors don't allow more housing to be built. In other words, we can acknowledge the need for personal responsibility as well as the need for structural reform.

Katie: Retweet. Oh, I love it. It's so refreshing, too, to hear somebody at your level talking so candidly about this. Because I think when I think about icons of the past, we'll say, they reached this level of business success, but then they really just doubled down on the individual responsibility language. 

Ramit Sethi: I hate it. 

Katie: And it's, “If I can do it, you can do it.” 

Ramit Sethi: I hate it!

Katie: It’s like, bro. You have a hundred million dollars. The change that you can make now from your purview is so much greater than doubling down on this idea that everything is your fault or your responsibility at the individual level. So to hear that you’re thinking that way is really incredible.

Ramit Sethi: Thank you. I appreciate that. And I think, I hope that it inspires other people as they become more successful, more outspoken. I hope that it inspires parents with their children to recognize that people who don't have money are not lazy or stupid. I was one unlucky decision away from being in a completely different scenario than I am, and so is any of us. I grew up with two loving parents in the United States. I was educated in public schools until I went to college, which I paid for through scholarships. So many lucky things had to happen in order for me to be here. Did I work? Yeah, I worked. I worked really hard. I still work hard, but I was also lucky.

And what I wish in this world is that life was just a little easier for us. That if one of us gets in a car accident, it doesn't destroy us financially. That if one of us gets in an accident walking somewhere, that it doesn't destroy us financially from a healthcare perspective. I'm not asking for everyone to have a private jet and to be a billionaire, but I wish it was just a little easier, especially for the most vulnerable people in our society. 

Katie: I think that's a perfect place to end. Ramit, thank you so, so much for your time, your candor. It was truly a joy. 

Ramit Sethi: Thank you so much.

Katie: All right y'all, that is all for this week. I'll see you next week, same time, same place, on The Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer and additional fact checking comes from Kate Brandt.