184. “I survived a plane crash. Is stressing about money really worth it?”

Chloe and Ryan exemplify how differences in financial mindsets and behaviors can affect personal relationships. As they navigate their family's finances, tensions arise from their contrasting approaches to money management.

Chloe's "high life" aspirations versus Ryan's cautious conservatism

Chloe and Ryan's financial behaviors are notably different. Chloe enjoys living a 'high life' lifestyle with nice homes and private education for her children. She is content with this lifestyle, stemming from a vision she grew up with and is committed to maintaining it. Chloe, being an equal breadwinner who brings home about the same income as Ryan, feels she has the right to spend money to continue this lifestyle. She dreams of buying a new house and moving to different locations, eagerly exploring real estate possibilities. Chloe also holds the belief that to live this life, hard work is essential—which she models for their children.

Conversely, Ryan is the more cautious one who often serves as a reality check on their spending. He fears not being able to maintain their lifestyle, especially once he leaves the military and faces an uncertain income level. Throughout their relationship, from the early glimpse of Chloe's parents' luxurious house, Ryan has been concerned about matching that lifestyle yet appreciates Chloe's commitment to contributing equally to their financial goals.

Living with financial caution: Ryan's perspective

Ryan adopts a "Debbie Downer" role, often questioning Chloe about the necessity of her spending and whether the family is sticking to their budget. This leads to a cycle where Chloe defends her spending, seeing Ryan as the negative voice in discussions about money. Ryan, who describes himself as the one who sees where they are at financially with realism, admits he frequently asks Chloe if purchases are necessary and considers what could go wrong, which indicates his risk-averse nature. Despite liking their current lifestyle, he worries about future risks, such as a job loss or changes in military benefits that might impede their ability to sustain their current level of spending.

Trust and tension in financia ...

Chloe's and Ryan's stories illustrate how early life experiences and family backgrounds can deeply shape individuals' attitudes towards money and personal finance management.

Chloe's Affluent Background and Expectations

Chloe's upbringing in a wealthy household, where real estate investment and private education were norms, has greatly influenced her current expectations for maintaining a high standard of living. Her father, a contractor building houses for wealthy clients, enabled the family to live in very nice homes. Chloe's early exposure to financial strategies like real estate investing, a common conversation in her household, taught her about the profitability of buying, rebuilding, and selling homes.

Chloe's parents, who have three luxurious homes, advised her on the importance of studying hard and securing a great job to maintain a similar standard of living. The narrative instilled in Chloe from childhood seems to have shaped her current lifestyle aspirations. Chloe went to private schools, and her family valued global travel. This culminated in a viewpoint that other forms of investing, such as the stock market, were less favorable compared to real estate. Such opinions arose during Chloe's wedding and the purchase of their first home when a financial decision was influenced by her parents considering buying a condo in Mexico.

The norm of discussing real estate and Chloe's request for branded outfits like a Juicy Couture sweatsuit shows she was accustomed to a comfortable life early on. However, there were instances when her family's limitations became apparent, like when she couldn’t get the sweatsuit, making her feel left out among her wealthy school peers. This also impacted her education choices, where financial constraints led her to transfer to a more affordable state school.

Ryan's Frugal Upbringing and Its Impact

In stark contrast, Ryan grew up in a more frugal, savings-oriented household, focusing on needs rather than wants. The cautious approach to finances that prioritized saving over spending was deeply ingrained in him from a young age. This upbringing included being frugal, growing their vegetables, hunting for meat, and using coupons for essentials. Even holiday gifts were practical or savings-focused, like receiving savings bonds. His grandparents and parents managed to pass down wealth despite very humble beginnings.

Ryan recalls feeling guilty after making purchases cons ...

Chloe and Ryan are grappling with how to enjoy their substantial wealth without straying from their prudent saving habits, exhibiting the common dilemma of high earners who find it challenging to switch from saving to spending, even on things that can enhance their quality of life.

Despite their significant net worth and high income, Chloe and Ryan struggle to find the right balance between saving/investing and spending on experiences and lifestyle

Chloe and Ryan have a hard time allowing themselves to enjoy their wealth. While they are diligent about investing a whopping seven thousand dollars per month, ensuring a comfortable retirement with millions in the bank, they wrestle with the concept of spending on personal experiences. Chloe yearns to create more joy and quality time with the family, hoping for trips and date nights that are currently absent from their life. Ryan, on the other hand, clings to a frugality mindset, uncomfortable with "letting go" of the very behavior that amassed their wealth. This is despite not recalling when they last had a date night, and not having taken a trip since their honeymoon.

They have a large amount of money invested, but rarely spend on themselves or take trips as a couple

The couple’s large financial investments contrast sharply with their rare personal spending. They haven't easily solved issues like childcare due to their saving mentality, when in fact, their wealth could easily accommodate such expense. Chloe recognizes they've been skimping on childcare, suggesting it's worth investing more in it for their own well-being. Ryan shows a willingness to address the problem budget-consciously, offering solutions like having grandma look after the kids and compensating her for her time.

This suggests they have not fully connected with the purpose of their wealth and how to utilize it to live a "rich life"

Financial advisor Ramit Sethi points out that although Chloe and Ryan are managing their finances sustainably, they're not emotionally fulfilled. He encourages them to better utilize their wealth to build stronger relationships—with each other, their children, themselves, and their money. Sethi identifies that they're underinvesting in their relationship and enjoyment, despite having a conscious spending plan that allows for guilt-free spending.

Chloe expresses a desire to spend in ways that bring he ...

Ryan and Chloe are grappling with their relationship to money, particularly how to balance saving with spending in a way that allows them to enjoy their lives and provide for their family without guilt.

Ryan's upbringing has instilled a deep-seated fear and guilt around spending money, even on things that would improve his and his family's quality of life.

Caller #1 reveals that Ryan's narrative, which emphasized the need to "save, save, save at the expense of [his] own happiness," instilled a belief that spending equals irresponsibility. Ryan expresses a desire to change, triggered by surviving a plane crash, which underscored life's brevity and the importance of spending quality time with his family. After the crash, Ryan showed signs of shifting perspective, indulging in activities and purchases that he would typically avoid. However, this change was short-lived, and he soon reverted to his cautious approach with finances.

Chloe recognizes the need for Ryan to find joy in spending money, not just saving it, in order to create the life they both desire.

Ramit Sethi discusses Ryan's childhood teachings of "needs versus wants" that contribute to feelings of guilt and shame when spending money. Chloe sees Ryan's fear and guilt as barriers to fully enjoying the quality of life their wealth can support. She observes that if Ryan continues his current approach, they risk living a "kind of boring" life, merely leaving a fortune behind for their children.

Chloe suggests Ryan could be more generous with their spending, particularly regarding experiences and quality time with the family. Ryan acknowledges his restrictive mindset and fears of job instability but runs the numbers to show they would be fine even if he stopped working. He fears being like his parents, who waited until late in life to make their dream purchases, but realizes he might repeat their path if he doesn't adjust his mindset.

Ryan is open to spending more on his family and his partner, considering options like hiring a house cleaner to free up time with the kids, and acknowledging that it could lead to a more ful ...