Ramit Sethi: Never Split The Bill, It's A Red Flag & Renting Isn't Wasting Money!

1. Create a Shared Rich Life Vision

Work with your partner to define what a ‘rich life’ means for both of you, including what you want to spend extravagantly on and what you’ll cut mercilessly. This vision guides financial decisions and prevents arguments over small expenses.

2. Prioritize Open Money Conversations

Make talking about money a regular, positive, and proactive habit in your relationship, treating it like ongoing discussions about parenting rather than a single, dreaded event. Unwillingness to discuss money is the biggest red flag.

3. Master Money Psychology and Numbers

Develop a healthy relationship with money by understanding both your financial figures (income, debt) and your emotional/behavioral patterns (money psychology). The way you feel about money is often uncorrelated to the amount you have.

4. Implement a Conscious Spending Plan

Allocate your post-tax take-home pay into four categories: 50-60% for fixed costs, 5-10% for savings, 5-10% for investments, and 20-35% for guilt-free spending. This forward-looking plan helps you align spending with your rich life vision.

5. Automate Savings and Investments

Set up automatic transfers for your savings and investments each month to ensure consistent financial growth without manual effort. Consider increasing your investment rate by 1% every December for significant long-term gains.

6. Focus on High-Impact Financial Decisions

Stop agonizing over ’three-dollar questions’ like daily coffee or appetizers, and instead prioritize ’thirty-thousand-dollar questions’ such as your investment rate and financial alignment with your partner, which yield far greater returns.

7. Be Transparent About Your Finances

Initiate conversations about your financial situation with your partner, even if you feel shame or embarrassment. Acknowledging past mistakes and presenting a plan for improvement can be a significant turn-on and builds trust.

8. Understand Your Money Type

Identify if you or your partner are an Avoider, Optimizer, Worrier, or Dreamer to understand underlying behaviors and work towards changing them. All money types can be changed with self-awareness and communication.

9. Re-evaluate Homeownership as Investment

Do not automatically consider your primary residence a great investment due to massive phantom costs (maintenance, taxes, opportunity cost, interest). Run the numbers and factor in non-financial reasons before making such a significant purchase.

10. Teach Children About Money Proactively

Involve kids in money discussions and tasks from a young age (e.g., paying bills, grocery shopping, planning trips) to foster a healthy relationship with money and prevent them from developing negative financial habits.

11. Maintain Individual and Joint Accounts

Merge all income into a joint checking account, which then automatically pays joint expenses and allocates ’no questions asked’ money to individual checking and savings accounts for personal spending without scrutiny.

12. Consider a Prenup for Substantial Assets

If one or both partners bring substantial premarital assets (e.g., large investment portfolios, businesses, property) to the marriage, consider a prenup to protect those assets. Manage lawyers to keep the focus on agreement with your partner.

13. Beware of Percentage-Based Financial Advisors

Be cautious of financial advisors who charge a percentage of your assets under management (AUM), as these fees can amount to tens or hundreds of thousands of dollars over a lifetime. Prefer hourly or project-based fees instead.

14. Invest Unexpected Income Wisely

When you receive unexpected income, invest 70-90% of it and use the remaining 10% for guilt-free enjoyment. This strategy systematically grows your wealth from windfalls.

15. Use Credit Cards Responsibly

Get a credit card when the time is right, always pay it off in full every month, and consider a rewards card once you spend enough to benefit from free trips or cash back.