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Ramit Sethi: Investing Shouldn’t Be Your Identity

The author and personal finance expert discusses his new Netflix show, what it means to have a ‘rich life,’ and why he’s not a fan of budgeting.

The Long View podcast with hosts Christine Benz and Jeff Ptak.

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Today we’re welcoming back Ramit Sethi. Ramit is a personal finance expert and author. And this year, he added a new line item to his resume: TV host. His series How to Get Rich debuted on Netflix in April. It features in-depth conversations with individuals about their financial lives. Ramit’s first book, I Will Teach You to Be Rich, published in 2009, was a bestseller; a second edition of the book came out in 2019. Ramit is the founder of, and he’s also the host of a podcast called I Will Teach You To Be Rich, which features in-depth conversations with couples about money.



I Will Teach You To Be Rich, by Ramit Sethi

I Will Teach You To Be Rich podcast

How To Get Rich, Netflix series

Twitter: @ramit

Ramit Sethi: ‘What Is Your Rich Life?’” The Long View podcast,, Nov. 10, 2020.

Ramit Sethi: How Can Couples Make Peace Over Money?The Long View podcast,, Nov. 30, 2021.

Rich Lives

10 Easy-to-Follow Money Rules to Improve Your Financial Health,” by Ramit Sethi,, Nov. 23, 2020.

“‘I Will Teach You to Be Rich’ Author: 3 Money Rules I Follow to Build Wealth and Enjoy Life—and How to Create Your Own,” by Kamaron McNair,, April 14, 2023.

How to Live a Rich Life (+Rules That Will Help You ACHIEVE It!),” by Ramit Sethi,, Feb. 27, 2023.

Ramit Sethi—How to Play Offense With Money, Plan Bucket Lists, Build a Rich Life With Your Partner, and Take a Powerful $100 Challenge (#524),” The Tim Ferriss Show podcast,, July 26, 2021.

Budgeting and Conscious Spending

Ramit’s Conscious Spending Plan

Conscious Spending Plan: How to Budget by Looking Into the Future,” by Ramit Sethi,, Feb. 27, 2023.

How to Find all my Debts (& Pay Them Off),” by Ramit Sethi,, Oct. 3, 2022.

4 Ways to Get Out of Debt Fast (+Mistakes to Avoid),” by Ramit Sethi,, Aug. 10, 2021.

Jobs and Income

Finding the Right Money-Making Ideas (That Anyone Can Do),” by Ramit Sethi,, March 28, 2023.


3 Practical Things Every First-Time Homebuyer Should Know, According to the Star of Netflix’s ‘How To Get Rich,’” by Lee Aquino,, April 25, 2023.

Buying a House in Recession: Pros, Cons, and Expert Advice,” by Ramit Sethi,, March 20, 2023.

Should I Buy a House Now? (5 Guidelines and Perfect Timing Tips),” by Ramit Sethi,, Sept. 15, 2021.


How to Trade Stocks (and Find Out if Trading Is Right for You),” by Ramit Sethi,, Feb. 27, 2023.

Here’s Our Take on Day Trading in 2023,” by Ramit Sethi,, March 3, 2020.

How to Invest in Index Funds (Get Invested in 5 Min),” by Ramit Sethi,, Feb. 27, 2023.

Diversified Investment Portfolios: How to Build One (+ Examples),” by Ramit Sethi,, Oct. 27, 2021.

High Risk vs. Low Risk Investing (The Reality),” by Ramit Sethi,, Dec. 16, 2022.


Love and Money: Combining Finances After Marriage,” by Ramit Sethi,, Feb. 27, 2023.

I’ve Been Writing About Money for 15 Years, and I Can Tell You Too Many Couples Talk About Money All Wrong,” by Ramit Sethi,, Feb. 27, 2019.

Episode 65. I Make $200k/Month. He Makes $2k. Who Pays for Dates? (Part 2),” I Will Teach You To Be Rich podcast,, October 2022.

Financial Advice

Do I Need a Financial Advisor? (The ONLY Guide You Need!),” by Ramit Sethi,, July 7, 2021.

(Please stay tuned for important disclosure information at the conclusion of this episode.)

Christine Benz: Hi, and welcome to The Long View. I’m Christine Benz, director of personal finance and retirement planning for Morningstar.

Jeff Ptak: And I’m Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Today we’re welcoming back Ramit Sethi. Ramit is a personal finance expert and author. And this year, he added a new line item to his resume: TV host. His series How to Get Rich debuted on Netflix in April. It features in-depth conversations with individuals about their financial lives. Ramit’s first book, I Will Teach You to Be Rich, published in 2009, was a bestseller; a second edition of the book came out in 2019. Ramit is the founder of and he’s also the host of a podcast called I Will Teach You To Be Rich, which features in-depth conversations with couples about money. Ramit, welcome back to The Long View.

Ramit Sethi: Thanks for having me again.

Benz: Well, thanks for being here. I think you’re our only three-repeat guest so far, so this is terrific.

Sethi: I’m flattered.

Benz: We want to talk about your new Netflix show How To Get Rich. You manage to find people who are super relatable and you do a great job of working with them. I guess the question is, is it hard to find people who are willing to open up that completely about their money situations? Or do you think it’s getting less taboo to talk about money?

Sethi: It is hard. It is hard to find and I’ve experienced it in two different ways. One on the show, and one on my own podcast where I interview couples. When we first started, we were not sure how open people would be with their finances because really, especially in America, sharing your finances is the most intimate thing you can do. Far more intimate than talking even about your sex life. There’s actually research indicating that people would be more likely to discuss that versus their credit card debt. But what we discovered is that some people are actually quite willing to share everything—all their financials, all their documents—if they believe that there is help at the end of the tunnel. And I really think that that speaks to how much people feel alone when it comes to money, that they’re actually willing to share anything and everything, if someone can actually help them.

Ptak: In one of the episodes, one of the people you were working with said that she was expecting to work with you on spreadsheets and net worth statements and so on, and she was surprised when you wanted to delve into relationships and other more personal aspects of financial decision-making. Was that type of reservation common in your interactions that people wanted to stay on a surface level, but you wanted to dig deeper in order to find out what was really going on?

Sethi: Always. People always think that I’m going to walk in and hand them some magical budget that’s going to solve all their financial problems. I go, “Do you even want that?” They go, “Yes!” I go, “Really? When was the last time you used a budget?” They go, “In 1998 we used it for three months.” I go, “You don’t even like budgets. So why do you want me to come in and give you a budget? That sucks!” But, it’s interesting where this idea comes from. The financial industry talks like this. They’ll say phrases: “Let’s give people the tools and the information to make the right decisions.” People aren’t robots. They don’t use information alone to make decisions. Most people are buying the things they want and then finding a way to logically justify it later. So, this whole myth that people sit down and rationally weigh out all the different decision-making principles, it’s a total myth. People buy what they want. They do not use ratios, almost ever when it comes to making huge financial decisions. And so yeah, I want to know how did they grow up with money? What phrases were said around the dinner table? How do they feel about money? And we can get to the numbers and we can talk ratios, but most people are quite surprised because they really think that I’m going to walk in with some calculator in my pocket and whip out some calculation. That’s not going to happen.

Benz: You’ve been having these conversations with people about their finances for a while. You referenced your podcast that you do with couples, and now the Netflix show. Have you gotten better at warming people up and getting them more comfortable with sharing some of the deeper details about how they got to the place that they’re at with their finances?

Sethi: Gosh, I sure hope so. I’ve been doing it a lot. So, if I haven’t, then there’s a real problem. I’ll leave it to you to judge. I’ve done about 100 episodes of my podcast. I think that there’s quite a marked difference between episode one and the most recent episode. I will share a couple of insights that I’ve had along the way. In order to get people to share this information, part of it is simply screening. It’s just making it very clear that we require you to share everything: income, debt, everything. And so, some people are not comfortable with that and that’s perfectly fine. But we don’t want any secrets. We want to know everything because that enables me to help you.

The other thing is I have been given the luxury of time. When I speak to people on my podcast, I block out three hours, but I always leave an extra hour just in case it runs long and it has run long. With the Netflix show, I had the opportunity to spend weeks with people. That meant I got to see them in person, I got to see them in their home, in their hometown. I also stayed in touch. I would text them when I was on a different coast, “Hey, what’s going on? Fill me in, let’s talk.” And I think people were surprised that I really cared—but I get invested. I’m eating lunch with them. I’m meeting their family. Their success becomes my success. So, the rapport-building with people is so important. I would argue it is at least as important as running any type of analysis. If people don’t like you and they don’t believe that you understand them, that’s the end of the conversation.

Ptak: Does it ever happen that people aren’t being totally honest with you about their actual financial situations? There were several scenes in the show where people dragged out piles of unpaid bills even though they had supposedly already given you all the details of their financial situations. Is that commonplace?

Sethi: It’s interesting. I wouldn’t know if they lied to me. But it almost seems preposterous that people would tell me the exact amount of debt that they would be openly crying about, something their mom said when they were seven years old and then they would be hiding some DMV bill. I think what is more common is that people use mental bucketing quite effectively to tell themselves a story. You see this commonly with people who have large amounts of student loan debt, such as Frank on the Netflix show. People simply count that as something totally different. They’ll go, “Well I make $70,000, and I have $10,000 in credit card debt, so I’m doing all right.” I go, “What about that $212,000 in student loan debt?” And they just look up they go, “Oh, I don’t really think about that.” I go, “Well, it’s debt, right?” They go, “Yeah, but I’m going to die with that.” And it’s kind of a joke, but it’s also kind of not. Again, mental bucketing—it is so overwhelmingly large or so intractable from their perspective that they simply do not even count it. And part of what I get to do is to say even if you have $200,000 of debt, we can make a plan and we can get on top of this, but we’ve got to be honest with ourselves and honest with the people around us.

Benz: I want to follow up on this mental-bucketing idea. Do you think that it can be healthy sometimes for people to have buckets in place, different silos of money? Or do you think it’s generally not a good idea.

Sethi: I think it can actually be quite effective if you use it strategically, so I’ll give you an example. I have what I call Ramit’s 10 money rules—these are my rules, they’re not yours. They’re just the rules that I’ve developed and some of them are quite straightforward, like save 10%, invest 20% of gross—basic stuff. Again, adjust the numbers if you want to borrow my rule for your own situation. But I also have ones like never question spending money on books, appetizers, health, or donating to a friend’s charity fundraiser. So, if I see anything relating to health or a book, done. I don’t care how much it costs, it’s not a question; I’m going to spend on it. I think that it is important for us to come up with a few categories or even items in our life where we say, I’m giving myself the freedom to not even think twice about it. And intuitively every parent knows this because if you ever bought a certain brand of diapers, you don’t care how much it costs you go, that’s my diaper, and that’s what I’m going to get. So, we all know that we’ve got something in our life we will spend anything on. My request for everyone is to be strategic about that and to really say, whether it’s “I love this brand of tuna” or “I love this pack of gum.” Or it could be as extravagant as “I love this brand of cashmere coat.” It’s up to you—what is your rich life? But I want you to be strategic about it and you can use mental bucketing to help that.

Ptak: Do you plan to follow up with people who you featured on the show to see whether they were able to enact positive long-term changes in their financial lives?

Sethi: Oh yes, in fact I have. I reached out to them and I have started sharing their recent stories, which are a year past when we filmed, on my podcast. And so most recently I have shared Matt and Amani’s story. They are the first couple that you see in episode one. And I’ve shared Natalie story, who you see also in episode one. I met her on Rodeo Drive. And I will be featuring as much of the cast as possible. So, you can actually see them on my YouTube videos and hear them and we go over all their numbers, what’s changed, and in some cases, what has not changed.

Benz: Well, that’s what I wanted to ask about. Thinking about those episode-one people especially, those were the ones I left a little bit worried about. But I’ll see where they went; I’ll follow up with you on that. I wanted to get back to your thesis, something that you talk a lot about, which is this idea of envisioning our what you call rich lives, and this is something we’ve talked about before. You’ve noted that when people talk about their rich lives they often talk about that in terms of what they don’t want to do versus something that they do want to do. Why do you think that is and what kinds of questions do you ask to get them to view their rich lives in a more positive light and to characterize them in a more positive light?

Sethi: It’s such a peculiar thing that we all do when asked what is your rich life? We will often respond by articulating a list of things we don’t want to do: “Well I don’t need to eat at the fanciest restaurants; it’s not like I need to fly on a private jet.” And we just start reciting this litany of phrases and I can see people, I can see their eyes and I watch them, and I bet you if I asked them 10 minutes later, do you remember what you told me? They would have no idea. It’s almost this automatic set of phrases of things they don’t want to do, and I believe that comes from the deep cultural, invisible scripts that we have around the puritanical nature of money in this country. That if we are actually able to forthrightly acknowledge what we want to do, what we would love to do, that we will be seen as frivolous or several other negative phrases that you can associate with the rich. And so, I want to take that idea of almost turning the word “rich” from an epithet to something that is aspirational. And again, your rich life can be yours. Your rich life is quite different than mine.

So, I do a few things; I use some techniques. I’ll ask them, “What does your rich life look like?” Almost everyone tells me the same answer: “I want to do what I want, when I want.” I go, “OK, what do you want?” They just stare at me with their mouth open. That really is a remarkable finding that most of us have never thought about our rich life. We go to work, we come home, we invest, we save. We agonize over the price of cereal, but we never actually thought about what it’s for. So, I’ll ask them another question: “What do you love spending money on? Not like, but love?” And everybody knows this intuitively. The most common answer is food, the next one is travel. The third one is health and wellness, and the fourth is convenience, and there’s a whole bunch of others. I call them money dials. I then follow up with a second question, I say “I love that. What if you could quadruple the amount that you spent on that? What would it look like and feel like?”

And this is such a beautiful moment because most of us have never actually envisioned spending more on the things we love. We’ve only been told by everyone around us and every financial expert out there that you got to cut back on everything: 5% on asparagus, 5% on housing, 5% on buses. So, somebody comes in here and goes “Wow, I love that you like to travel. What if you could quadruple it? Where would you go? Who would you take with you? What seat on the airline would you fly on?” So, those are a couple of techniques that I use. I go deeper—I’ll do a 10-year bucket list; I’ll talk about the perfect day. I’ll point out that in their perfect day, they certainly did not discuss spending an hour and a half on laundry. So might it be possible for us to use a little money to solve that problem? But overall, what I want to do is shift the conversation from one of negativity and restriction to one that’s actually fun and inspiring and your rich life fits you like a handmade glove.

Ptak: What do you think about bucket lists? It seems like they could be very polarizing. Some people like having a list of experiences they’re striving for while others think that people should work to make every day special, not just the African safari, so to speak. Where do you come down on that?

Sethi: I remember when I was applying to colleges and there was this FAQ from one very selective college and it said: Should students try to take an easier class and get an A or should they try to take a more difficult class and get a B? And the college was actually quite direct. They said we always encourage our prospects to take a more challenging class, but in our experience, our students take the more challenging class and they get an A. And I just love that. That lesson there is something I call yes and yes. Should you live a rich life today? Yes. And should you live an even richer life tomorrow? Yes. So, our rich life today might mean buying an extra charger for your phone, so you’ve got one in the kitchen and one in the bedroom. What is that, $29? Fantastic. A richer life down the road could be at the end of this year you take a beautiful holiday and you spend an extra two days just the two of you. Or it might be three years from now where you celebrate your anniversary abroad, or a fantastic restaurant. So, I believe you can do both. Of course, you need to know your numbers, but beyond knowing your numbers, you’ve also got to create a vision, and that vision starts today and it can expand tomorrow.

Benz: Wanted to ask if it’s hard to set aside your own notions about financial management when working with people? On the show you featured a couple who are planning a wedding and finding that it was more expensive than they anticipated. And as I was watching that, my reaction was like, of course, they should shrink it! They should not have that expensive wedding. And yet they went and with your urging, they talked to their parents, and the parents agreed to kick in some funds for the wedding. So, I’m wondering how you deal with your own thoughts about prudent financial management when you are working with people who have a different world view?

Sethi: I’d love to answer that, but first I have a question for you, Christine. You said that you naturally thought that they should shrink their wedding. Why did you think that?

Benz: Well, I think there’s an elegance in doing what you can afford, and I think cheaper things can be done really elegantly. So, I guess that was what I was thinking like, oh, this could be so beautiful if it were a little smaller and just within your budget.

Sethi: Fantastic. OK, so this is beautiful. This really unearths some of our deeply held views about money. I come from an Indian background. If you know anything about Indian weddings, you know that they are extravagant, maximalist. They are cultural and family celebrations. In my culture, it is expected that you’re going to invite everybody in your community and in fact, that’s exactly what I did. I combined it with financial planning—I was saving for my wedding before I even met my wife because I knew one day I’m going to get married and I want to have an amazing wedding and I don’t even want money to be one of the top five concerns. So, I was putting money away diligently well in my 20s.

When I met Sarah and Reggie, who on the show were discussing a wedding, I asked them, “Is this important to you?” They said, “Yes.” I said, “Is it part of your rich life?” They said, “Yes.” I got curious. I said, “Tell me why.” And I know their background. They have a cultural background, which also encourages family bonding over weddings. I said, “OK great. We need to find a way to make sure that you can afford this. But if you want to spend a lot of money on this, let’s find a way to do it.” And so, my approach when it comes to working with people, whether on the show, my podcast, or through my newsletter, is not to tell people that’s a bad decision, because first of all I think a big wedding is awesome as long as you can afford it. I also think if you want to buy a dirt bike—I’m not into dirt bikes. I don’t ride on dirt bikes, but if you want to buy a dirt bike and it’s your rich life, I go, “Fantastic, let’s figure out how to use your money to do it.” So, often I have to put aside my own personal views. Like someone tells me, “Ramit, we retired in our 30s using your book and we drive around the country in an RV.” Personally, I don’t want to get an RV, but they love it. I go, “Fantastic. That’s your rich life; it’s totally different than mine.” That’s the beauty of intentionally designing your rich life.

Ptak: Wanted to shift and talk a bit about budgeting and conscious spending. You often talk about a conscious spending plan and you have a free spreadsheet that people can download. Can you talk about what that consists of?

Sethi: I’m not a fan of budgets. I don’t know anyone who effectively maintains a budget long term. And also, my worst hell on this planet is sitting and being 58 years old and tracking the price of asparagus at Safeway. I don’t want to live that life, ever. Furthermore, I actually find it very uninteresting. I spent this much last month—what does that tell me about going forward? And when you apply psychology to budgets, you recognize quickly why it does not stick. Here’s the basic message of budgets: “OK, everyday person on the street who doesn’t really pay attention to their money, I want you to open up a spreadsheet—again most people don’t even use Excel—I want you to open up a spreadsheet, I want you to find all the spending that you spent in the last 12 months. The spending that you don’t track at all and that you feel really guilty about. Go ahead and spend the next two months trying to gather all that information and type it in or integrate it somehow. And then you see a bunch of numbers and I want you to magically make sense of it and then use that to decide what to do next. By the way, you have to do this for the rest of your life.” Is it any surprise that no one actually keeps a budget for the long term.

The fact that this has not been discovered in the financial industry absolutely blows my mind, and I credit a lot of this to my studying psychology at Stanford when I realized certain things about how we are cognitive misers, how we carefully ration out our attention on the things that matter. And so, for me, I want to simplify and I want to focus on the high-leverage items in personal finance. I call them “the big wins.” And with a conscious spending plan—I think I have one at my website, There’s four numbers that I track—I track these myself personally as well. The first one is fixed costs. And I give people an actual percentage. I find that specificity is really helpful. Fixed costs, 50% to 60% of take-home pay—that includes your rent or mortgage, utilities, any debt payments, cable, groceries, all the fixed stuff. Next category I track is savings, 5% to 10% of take home, although of course I’d love to see more. Next is investments, 5% to 10% of take home—of course I’d love to see more because that’s where real wealth is generated.

And then my last category is my favorite one: guilt-free spending, that’s 20% to 35% of take-home pay. So, you have those four numbers, you can actually sit down solo or with a partner. And you can say, “OK, let’s map it out—this takes us 15 minutes to get 85% of the way there. Let’s decide what do we want to do this year. Do we want to go to this great restaurant? Do we want to take a trip with our family? Do we care about a nice hotel? Oops, that doesn’t fit into our numbers. All right, let’s save a little bit more this year and we can do it next year.”

Benz: One thing that you talk a lot about is the role of time. So, how time relates to money and how people sometimes go through these steps to save money that ends up costing them a lot of time. Can you talk about how you approach that and how you want people to factor their own time into the financial decisions that they might make?

Sethi: I would love it if people stayed awake on a Saturday night researching different savings accounts like I do, but most people actually have a life, so they’re not going to do that. That’s life. That’s why they turn to people like me. And that’s why they come to you for advice as well. The fact of the matter is that I want people to spend less than an hour a month on their personal finances, not just because they’re ignoring it, that would be ineffective. But rather because they have systems set up that are automatically handling their savings, automatically handling their investments, and they even built in a little buffer in case their tire goes flat on their car.

When it comes to making big financial decisions, we are super irrational. I kind of love it honestly. It’s just the human condition. We’ll spend more time looking up what cool restaurant opened up to go out on a Saturday night, than we will researching the actual cost of buying a house. It’s absolutely bonkers. You have people who literally keep a massive Yelp page, or wherever they’re tracking their restaurants, and then you ask them what percentage of gross income is going toward housing. They’re like, what does gross mean? I go, OK, cool. Let’s start at the beginning.

The fact is, I can’t berate people for that because there’s a lot of stuff I don’t know. If you ask me how my car works, I have no idea, I just put the key in and it turns, great, let’s go. So, what I often do is say, let’s get the big things right. Let’s make sure that by default your money is being saved, it’s being invested, and also you feel guilt-free when you go out to eat at a restaurant, you can order dessert. You don’t have to spend a ton of time, but you do have to get the high-leverage items right. Those would be things like buying a house, buying a car, any type of debt that you might be taking out. Get those right and then the price of coffee does not really matter.

Ptak: Some of the people you feature in the show are shouldering heavy levels of debt. How can people in that situation find a rich life even as the process of debt paydown can be kind of a slog. Do you have any hacks that you can share?

Sethi: Jeff, a lot of it is psychological. It’s this idea that it’s overwhelming and I’m never even going to get out from under this. And sometimes just talking to somebody like me, who comes along and says, look you’re going to be OK. I’ve talked to people with $50,000 of debt, I’ve talked to people with $800,000 of debt and we can make a plan. We can get this going. It might take some time, but we can do it. And just hearing somebody say that you’re going to be OK, goes a long way. Interestingly, 90% of the people I talk to who have debt do not know how much debt they owe. Why would they? They don’t want to open those envelopes and those emails, it’s just bad news. And 95% of people with debt who I speak to do not know their debt-payoff date. To me, that’s actually a huge opportunity.

It’s kind of like when I’ve waited in line for In-N-Out, that burger place in California, and it always has a long line, especially if you’re outside in the drive-through. And what they do is something very clever—they have somebody standing outside who takes your order and the minute you give your order you’re still waiting in line for another 20 minutes. But you just feel, they know my order, they’re making it. There’s just this sense of relief. There’s a light at the end of the tunnel. So, I’ll talk to people like Frank on the show, or like others on my podcast, who have $50,000, $100,000, $300,000 even more debt, and we will work through it together. They don’t even know how much they owe. We’ll pull out the papers, we’ll plug them into a calculator and they will see, oh my gosh, in 2041, December, my debt will be paid off. OK, that’s a long time away, but at least they know.

And once we get that win, I give them a high five through the screen or in person. I go, “Great, we know! OK, it’s 20 years. But we know!” Then I go, “Just do me a favor, add $50 a month to that debt, just see. Let’s just see what happens.” And that often shrinks that debt by years, and you can see their eyes go wide. That is the moment they’ve made the connection. The fact that they can take control. They don’t yet understand interest rates and time, value of money. They don’t understand that, nor do they need to at this point—all they need to know is they can see their future on-screen and they can affect it. And that is a powerful moment.

Benz: On the show, you talk about jobs and income in addition to just spending, which I appreciated. Several of the people you featured on the show earned their income in nontraditional ways. A couple of the people were influencer types and another was involved in multilevel marketing, which I learned a little bit about during the show. How do you go about getting people in such roles to be realistic about their earnings potential while not quashing their dreams to pursue whatever sort of career trajectory they’re interested in?

Sethi: Christine, that’s why I get paid the big bucks. You’re right. How do I help them be realistic—because frankly, if you’re going to be an influencer, your kind of delusional anyway—and then also encourage them? That is a very fine line to do. So, there’s a lot of different techniques that I use. Sometimes I’ll say, “How’s it going?” A lot of times they’re just like, “Oh, it’s not going well.” I go, “OK, how long has it not been going well for?” They’re like, “Four years.” I’m like, “Is anything going to change in the next four years?” And no one has really asked them that, and I’m doing it in a nice way. Yes, we’re talking about something kind of depressing, but I’m smiling. I’m like, “You think anything’s going to change? Come on, tell me the truth.” And I think that rapport goes a long way.

Sometimes I will share views that they never actually thought about. For example, if somebody is going to go full time as an influencer, they may not realize that they’re now responsible for certain taxes and withholding, and so on. And they’re going to have variable incomes where they make $20,000 in one month and then nothing for six months. And I might just ask them, “Hey, how would you handle that?” And they their eyes go wide because they realize they never thought about that. Sometimes I have to be extremely straightforward and honest. In the case of the MLM … I really hate MLMs. I just hate them. They are predatory, almost no one who participates in them is successful, and they use a variety of psychological techniques that I find highly unethical. So, I had the opportunity—I was actually shocked, I did not know this before I met her. But I had the opportunity to speak to someone who’s involved in MLM. In fact, I went to an MLM conference.

Benz: Ramit, can you explain what that is, because I had to Google it while I was watching it.

Sethi: Multilevel marketing.

Benz: Yeah.

Sethi: Well, many of us confuse multilevel marketing. There’s a sort of a relation, although we confuse it with a pyramid scheme. But some of us have heard some of these MLM companies, and there’s a variety of different characteristics that MLMs have. Often you will know about them because they are encouraging their friends and family to join and to sell as well. There’s a variety of these things we all probably grew up hearing about these. It’s very tricky because they are right on the border of being illegal, but they’re not, and they have a very strong legal background in my opinion, a lot of these should just be completely outlawed. If you look at the statistics, people involved in MLMs almost never make money, but they are conveniently portrayed as a way to make passive income while working from home, and so on, American dream, blah blah blah.

I had the chance to talk about this on camera with someone who’s involved in an MLM and what was really interesting was that she had actually made quite a bit of money one month and then she had not made that much in a long time. And I know from my background in psychology, same dynamics used in slot machines. That if you win once, you tend to want to go back for variable reinforcement. You love the idea that you might just be winning just that one more slot-pull. And a lot of that is quite unethical. So, it’s my job to help people gently see it, but it’s also my job to recognize that they are going to do what they are going to do. It’s not my life, it’s theirs. I can share my perspective. Sometimes I can tell them point blank, “I would never do this, I think you should stop.” But ultimately I have to do it in a way that allows me to be honest but let them make the decision.

Ptak: Wanted to shift gears and talk about homeownership. You’re sometimes characterized as anti-homeownership. Your position seems more nuanced than that. Can you share your thoughts on homeownership more broadly?

Sethi: The fact that I am considered anti-homeownership because I encourage people to run the numbers on the biggest purchase of their lives, shows you how far the pro-homeownership propaganda runs in this country. It is totally absurd. Let me make my position very clear: I believe that you should run the numbers when you go to buy a house, because sometimes buying a house can be a great financial decision, sometimes renting can be a great financial decision, and sometimes renting can actually be a better financial decision than buying a house. I have rented by choice for about 20 years. I’ve lived in San Francisco, New York, LA. I could buy a house today. And I choose to rent, for a variety of reasons, including lifestyle and financial, and I have made more money renting than I would have owning—a lot more. Why?

Because most of us simply take the bigger number and we subtract the other number and we go, “Granny bought a house in Austin, Texas, in 1970 for $100,000 and Granny just sold it for $1 million, Granny made $900,000.” I go, “Have you ever heard the word inflation? Do you know what that is? How many times did Granny replace her washer and dryer? And how about that concrete in the back? And also, what about the opportunity cost of that down payment? And also, what about her labor time going to Home Depot? You ever considered that?” They go, “No, no, no, but it’s $900,000.” I go, “Pick up a calculator and don’t talk to me until you run the numbers.”

We are blind to running the numbers because in this country we have propaganda: “Owning a home is the best investment you’ll ever make. You’re throwing money away on rent.” Funny, nobody ever said you’re throwing money away at a restaurant. “You’re paying your landlord’s mortgage.” Funny, you never seem to be concerned about paying your sushi restaurant owner’s mortgage. But suddenly we use these almost-religious phrases when it comes to buying a house. Buying a house can be good—you might make money, you might not. You probably are not going to get the numbers right unless you actually run them. Renting can be fine as well. So, I particularly hate when I hear young people feeling guilty and feeling ashamed that they are renting. Never feel guilty for renting it can actually be a fantastic financial decision, but you need to run the numbers.

Benz: One of your rules for homeownership is that people should have a 10-year time horizon in mind for living in the house. Can you walk us through how you arrive at that?

Sethi: If you look at an amortization table, well, first of all, let me just say that I just lost like 98% of people listening right now because the word amortization doesn’t even sound good. No one even knows what that is. They spend more time picking their tile than they do actually typing out the word amortization calculator. So let me just establish, I’m sure everyone just dropped off this podcast. When we go to buy a house, a lot of people, they start throwing around all these words really fervently: “Well I’m building equity.” OK, how much equity are you building? “Well, it’s equity; I’m throwing money away on my rent.” I go, “Have you ever looked at amortization table? Do you know that in the first 10 years you’re basically paying majority interest?” They don’t even know what is interest, what is principal. Again, I’m not blaming anyone, these are complex concepts, but if you’re going to buy a house. You better understand this.

So, in the first 10 years of homeownership—again, depending on location, cost, and so on—you will often find that you are spending more simply paying interest than you are putting toward the principal. And I show this. I posted a video with a calculator and I show people the calculations on my social media. If you leave in the first 10 years and you factor in all the closing costs, all the transaction costs, all the maintenance and new furniture costs, it’s often common that you’ll find you actually lost money. Now this is shocking to people. They go, “What are you talking about? I bought it for $360,000, I sold it for $400,000. I made $40,000.” I go, “OK, show me the $40,000.” “Well, there’s this thing and then we got recurring, I don’t …” You did not make that much when you subtract out all the fees. So, it’s important as some general guidelines to, for example, plan to stay for at least 10 years. If you leave after 9.5, OK fine I’m not going to do anything to you. But the longer you stay, the more that you’ll be able to spread those costs like peanut butter. Spread them out over many years, which starts to make equity buildup actually possible.

Ptak: We wanted to ask you maybe a question or two about investing. You don’t go too deep on investing in the show except to tout index funds and give the basics on asset allocation. But one of the people you profiled had gone down the rabbit hole of trading and was trying to claw his way back to break even. How did you convince him to give up that pursuit?

Sethi: This is a great question because traders are very difficult to persuade to stop. The research shows that most of these traders will lose money over the long term. They hardly ever make money. I see them on Twitter, their username on Twitter has the word trader in it. I’m already like, oh God. And then they start giving me advice on investing. I’m like, why would I take advice from a guy who has the word trader in his username and has a picture of a goat? Trust me, I’m not taking any type of financial or otherwise advice from Mr. Goat over here. The problem is that traders, like gamblers, really believe that success is just around the corner, and sometimes they even taste success. “Oh my God, I bought this one stock and it went up 200%. Oh, that’s so fantastic.” And sometimes they actually sold and made money from it. The problem is that as we know, you cannot do that consistently over the long term. You will lose—even fancy people wearing fancy suits in New York on Wall Street, they lose. So, the simplest thing to do is to accept the research that says low-cost passive investing is going to be the superior investing strategy over the long term.

Issues with that, as I already mentioned, they’ve got the gamblers fallacy. In America we don’t want to be average at anything, even though by definition, most of us are. And so, people go, “I don’t want average; 7% that’s so boring. It’s going to take me a long time to make money.” I go “Oh, God, whatever; I’m not trying to convince you anymore.” So, in Christian’s case on the show, he had actually done quite well through his diversified 401(k). He’d done really well, so I let it cook a little bit. Sometimes I don’t need to make the point right up front. I just let it cook. And we found out on camera that he had lost tens of thousands of dollars, even his wife didn’t know. That was a great moment, by the way. I was like go ahead, talk amongst yourselves. And at the same time, I also asked both of them—they’re a fantastic couple—I said, “What is your rich life? What do you want to do together?” And they told me this beautiful vision—they wanted to build an empire together. They want to retire Christian’s mom. They want to do all these beautiful things. I said, “Great, you can do this. Let’s make it happen. But let’s take a look at what’s going on here.”

And when I raised the stakes for them and I helped them cocreate a vision, then it became clear that some of the dysfunctional financial behaviors they were using were not serving them. But if I had just come in and kicked down the door and said, “Stop picking stocks!” They would have taken one look and said thank you very much, but no thanks. So, my job involves helping people create a vision of a rich life and then often they realize that their own behaviors are not serving them.

Benz: I’d like to get your take on crypto. You had this great metaphor about how the parts of our portfolios are like the different pieces in a wardrobe and you compared the crypto piece to Crocs, quite disparagingly—sort of suggesting you do not need this, this is not going to look good on you. Can you walk us through your thoughts on crypto?

Sethi: Well, I think crypto is a great way if you want to speculate; it’s fantastic, it’s quite volatile. I think that if you have a fully diversified portfolio and you’ve handled everything, it’s all automated and you go, “You know what, I want to take 1% to 5% of my portfolio and have some fun with it.” Fantastic. The problem is that when I talk to these crypto zealots—who, by the way, have all disappeared in the last year and a half—they would go, “I’m all in on crypto.” I go, “Do you have a diversified portfolio?” And they look at me like I’m some old dude and they go, “Diversification, that’s for like boomers.” And I just go, “You are doomed, there’s nothing I can do to help you.” The idea that your investments should become your identity is the beginning of the end. And you see that when you have these jokers with laser eyes on Twitter going around posting all these meme stocks and saying cryptos about fiats over blah blah blah, all these arguments hold no water whatsoever.

Not surprisingly, exhibiting many cult dynamics that I studied in college—inner language, in group, out group, all kinds of stuff. Well, guess what, most of these folks lost a lot of money and they all seemed to vanish. A lot of people who message me, because I’m very open about crypto and the dynamics around it, they all delete their accounts, they’re gone. The ones that stay though, fascinatingly, continue to post about crypto. I’m like, wow, you’ve lost 70% of your money, you just keep posting, like that’s going to work. Keep posting bro, I’m sure it’s all coming back. And again, I don’t mind if people have a little fun with money and investing, once you have a fully diversified portfolio. But what you often find if you really dig deep and I have, I’ve spoken to thousands of crypto—I’m not even calling them investors, they’re speculators—and really one of the chief arguments deep down that they admit is, “If I were to simply adopt a passive investing strategy, it would take me a long time to make money. I’m impatient, I don’t want to wait. Therefore, I’m going all in now, because this is my one chance.” And I simply just reject that premise.

Ptak: You’ve talked about couples and interactions that you’ve had with them about their financial lives at various points during our conversation. So, one perennial debate in the context of couples is whether they should combine everything, maintain separate accounts, or use kind of a hybrid system. The question is, which of those is favorable in your opinion?

Sethi: I’ll tell you my opinion, but I’ll also tell you what I see with couples. My opinion, what I would prefer, is that people use a hybrid system, which is a joint account that covers joint expenses and then separate individual accounts with money that has no questions asked, you like it for massage, you like it for golf, whatever. I don’t always see that, I don’t always see that, and here’s something really interesting I’ve learned about account structures in couples. Many people have joint accounts. Many people do not combine accounts. That alone is not indicative of whether they are going to be successful or not with money. What is much more indicative, is that couples who actually sit down and talk about how they want their money to work together, they tend to set up joint accounts. So, it’s not the joint accounts that make people in relationships successful, it’s the fact they actually sat down and talked about it. And I know this because I speak to couples who sat down, intentionally talked about it, and said, we want to keep separate accounts. And they’re doing great. So, it’s not the accounts per se that determine whether a couple is going to be successful or not; it’s that they are talking about it and talking about it regularly.

Benz: Do you think it’s generational? I remember encountering this separate account thing and I have to say it was kind of alien to me. I assumed everyone who is married did fully combine financials, but do you think it does vary by generation?

Sethi: I do, and I think there’s a variety of reasons for that. Historically, we may have seen, particularly in older couples, that one partner was the primary breadwinner or may have been the only earner in the relationship. Now you’ll see both members of a relationship tending to work. There’s also people are getting married later, which means they’ve become much more established with their accounts. So, there’s a variety of dynamics beyond simply, which bank account are people using. But absolutely, I agree with you, generationally, the younger couples I see are much more likely to have separate accounts or keep separate accounts than the older couples I speak to, who almost overwhelmingly have combined their accounts.

Ptak: You’re also not a big fan of couples fully delegating financial matters to just one partner. Why is that not a great idea? After all, couples delegate household jobs or chores all the time. Why is it not sensible when it comes to financial matters?

Sethi: We do. Every couple has one partner who tends to do certain tasks and another partner who tends to do others, and it might be you empty the dishwasher, I’m taking out the trash. But we don’t delegate certain things. It would be very rare these days to see one partner exclusively handling parenting. That’s just not really how things are done anymore and what that speaks to is that there are certain things in a relationship where one person can handle it. The stakes are relatively low. Oh, wow, you didn’t load the dishwasher correctly, all right, whatever. But when it comes to big, big, big things, like parenting and money, those cannot be delegated. And I’ll tell you in my relationship what happened.

So, if you think about delegation, technically I should probably be the one managing money in our relationship. When we met, I had already been running my business for about 15 years and I’m pretty good at money. I think about it every day because of my business, I know how to invest. But pretty early on, I told my now wife, I said I’d like for us to both be involved in our money and I’ll tell you why. First, I’m going to get hit by a bus one day, something’s going to happen. And the worst thing for me would be to leave you defenseless not knowing where the money is, how it works, or be able to protect you from the inevitable circling sharks. Second, I want us to have a second set of eyes. I don’t want to just be doing this myself. I want us to create a culture of stewardship in our family. We know that we’re going to use money strategically for our own life, for our family and certainly for charity. We got to do this together. And then finally, it’s just a lot more fun. It’s a lot more fun to have a partner, doing it together, especially when you can dream together and that is really the crux of it. When we think of money, we often think of obligations and debt payoffs and bill pay. All that stuff, that’s 1% of it. When I think of money, I think of taking a trip to India to see my family. I think of tipping huge when I go out. I think of a beautiful coat that I can buy. I think of the things that make me happy and will make us happy and that is why delegating just to one person in a relationship, is in my opinion, a very, very unhealthy behavior.

Benz: I want to address couples with varying incomes, unequal levels of income, where one person’s earning a lot more. That happened on a few occasions on the show. So that can create a power imbalance in the relationship. There was one stay-at-home dad, I think you picked up on the fact that there was sort of a power imbalance going on there. Do you have any strategies for resolving the tensions that can arise in that sort of situation?

Sethi: It’s so interesting to watch the power dynamics emerge when it comes to money, and in the case on episode one, you met Matt and Amani. And Matt stayed home, and Amani is quite a high earner. And that’s quite fascinating for a variety of reasons, including that it sort of bends our cultural understanding that for so long in America, people have simply accepted that in a heterosexual relationship he might earn more than she does. But that’s changing. In fact, in major cities, young women in their 20s earn more than young men. And this is something that needs to be talked about because it’s very, very taboo to talk about money and power, money and gender. And I actually love shining a light on these topics. I have an episode 65 on my podcast. There’s a young woman, she has been dating this guy for about a year. And she says to me, “I want him to pick up the check at dinner.” He says, “OK I try to. But when I slide my credit card across the table, she slides it back and says ‘I want you to invest in your Roth IRA.’” OK, interesting.

Then I find out that he recently started a business—he makes $2,000 a month and she makes $200,000 per month. She’s making 100 times what he makes, so here we have power. We have class, we have gender all coming together on episode 64 and 65 of the podcast. And with couples with big divergent incomes, the best thing I do is simply shine a light on this elephant in the room. I say, “How does it feel to earn more?” And you’ll discover some really peculiar things. The lower earner almost always is obsessed with the C word, contributing—”I want to contribute.” If someone’s making 2 times, 3 times, 5 times, 100 times more, it’s probably unlikely that you can financially contribute to the same level. And one of the things I share very candidly with people is that in a relationship, yeah, money is important, but it’s just one small part of a rich life. There are so many other ways that partners can contribute, and so we open that discussion up. We talk about what would it look like, what would make you feel happy, do you feel worried, do you feel ashamed? And what would it take for you both to feel good about money? That’s the starting point.

Ptak: One of the people you work with was paying a financial advisor a percentage of assets every year, in this case 1%. You suggested that she look for an hourly advisor. Why do you think that’s a better model for financial advice?

Sethi: The vast majority of people who are paying 1% have no idea what that means, and that’s exactly how Wall Street has designed it. One percent seems so innocent—oh 1%, no big deal. Little do people know that that will be approximately 28% of their lifetime returns and paying 1% is not the same as hiring somebody to mow your lawn. You would never pay that person a percentage of your portfolio. I got a lot of heat from financial advisors who predictably do not like Ramit Sethi out there saying you shouldn’t pay 1% AUM. And I want to be really clear: I have no problem, paying an advisor an hourly fee, even a hefty hourly fee. I think you should pay for premium advice. I myself have hired a financial advisor to give me a second set of eyes on my own asset allocation. But never AUM—that you do not get better performance, your incentives are not aligned, and worst of all, people genuinely have no idea how much 1% actually cost them.

Benz: Well, Ramit this has been such a terrific discussion. We really appreciate you taking the time out to be with us today.

Sethi: Thank you for having me back. I always enjoy our conversations.

Ptak: Oh, likewise. Thanks again.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. While this guest may license or offer products and services of Morningstar and its affiliates, unless otherwise stated, he/she is not affiliated with Morningstar and its affiliates. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Authors

Christine Benz

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Christine Benz is director of personal finance and retirement planning for Morningstar, Inc. She is also the author of a new book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement (Sept. 2024, Harriman House). She co-hosts a podcast for Morningstar, The Long View, which features in-depth interviews with thought leaders in investing and personal finance.

Benz joined Morningstar in 1993. Before assuming her current role she served as a mutual fund analyst and headed up Morningstar’s team of fund researchers in the U.S. She also served as editor of Morningstar Mutual Funds and Morningstar FundInvestor.

She is a frequent public speaker and is widely quoted in the media, including The New York Times, The Wall Street Journal, Barron’s, CNBC, and PBS. In 2020, Barron’s named her to its inaugural list of the 100 most influential women in finance; she appeared on the 2021 list as well. In 2021, Barron’s named her as one of the 10 most influential women in wealth management.

She holds a bachelor’s degree in political science and Russian language from the University of Illinois at Urbana-Champaign.

Jeffrey Ptak, CFA

Chief Ratings Officer, Research
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Jeffrey Ptak, CFA, is chief ratings officer for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Before assuming his current role, Ptak was head of global manager research. Previously, he was president and chief investment officer of Morningstar Investment Services, Inc., an investment unit that provides managed portfolio services through fee-based, independent financial advisors, for six years. Ptak joined Morningstar in 2002 as a senior mutual fund analyst and has also served as director of exchange-traded fund analysis, editor of Morningstar ETFInvestor, and an equity analyst. He briefly left Morningstar to become an investment products analyst for William Blair & Company, and earlier in his career, he was a manager for Arthur Andersen.

Ptak also co-hosts The Long View podcast with Morningstar's director of personal finance and retirement planning, Christine Benz. A full episode list is available here: You can find him on social media at syouth1 (X/fka 'Twitter') and he's also active on LinkedIn.

Ptak holds a bachelor’s degree in accounting from the University of Wisconsin and the Chartered Financial Analyst® designation.

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