201. “I make $40k… but I own 100+ suits”
In this episode of the I Will Teach You To Be Rich podcast, Ramit Sethi explores the financial dynamics of young and older couples in New York City. He examines how the city's high cost of living shapes perceptions of wealth, leading outsiders to misunderstand local financial realities.
Sethi delves into the financial challenges faced by couples with varying income levels and offers insights on communication, collaboration, and empowerment in financial decision-making. He shares strategies for addressing issues like disproportionate incomes, debt management, and setting shared financial goals while maintaining balanced partnerships.
This is a preview of the Shortform summary of the Mar 25, 2025 episode of the I Will Teach You To Be Rich
Sign up for Shortform to access the whole episode summary along with additional materials like counterarguments and context.
1-Page Summary
Cost of Living and Wealth Perceptions in NYC
Ramit Sethi humorously explores NYC's wealth indicators - like elevators and dishwashers - revealing the city's high cost of living shapes what symbolizes affluence. He explains how outsiders often misinterpret symbols of wealth in NYC, whereas residents understand the cultural and financial context.
Financial Dynamics of Young Low-income Couples
Antonio, a nurse, and Devante, a student/business owner, discuss their financial challenges. Antonio's higher earnings shifted him to the provider role, previously held by Devante who managed bills and savings. Tension arose over Devante's suit spending, seen by Antonio as hindering shared financial goals.
Financial Challenges of Older, Higher-Income Couples
Nick has $228K in student debt, while Pam earns over $600K. Pam proposed covering expenses proportionally, but Nick fears this disempowers him. Ramit suggests Nick reframe his debt perspective. The couple now conducts money reviews for joint decision-making on finances, legal protection, and future plans. Ramit urges Nick to actively manage his debt.
Communication and Collaboration in Financial Decisions
Ramit praises the couple's proactive work on finances while advising more decisive, future-focused planning. He encourages empowering both partners in financial roles, regardless of income differences. Through dialogue, the couple develops collaborative financial habits and mutual spending limits, reflecting balanced partnership.
1-Page Summary
Additional Materials
Actionables
- You can create a "wealth perception map" of your own city by listing amenities and services considered luxurious and researching their actual cost and prevalence. This activity will help you understand the local indicators of wealth and how they might differ from the general perception. For example, you might find that in your area, a private garage is a status symbol, so you could investigate how many homes have them and what they cost to understand the true indicator of wealth in your community.
- Develop a "financial role playbook" with your partner or housemate, where each person outlines their preferred financial responsibilities and goals. This playbook should include scenarios and strategies for handling shifts in financial dynamics, such as one person getting a raise or the other facing unexpected expenses. For instance, if one of you gets a promotion, the playbook could guide you on how to adjust your savings contributions or spending habits to maintain a balanced partnership.
- Initiate a monthly "spending reflection session" where you review your purchases and categorize them as either aligned or misaligned with your financial goals. This practice encourages you to think critically about your spending habits and make adjustments where necessary. For example, if you notice a recurring expense on luxury items that don't contribute to your long-term goals, you can decide to redirect that money towards savings or investments in the following month.
Get access to the context and additional materials
Cost of Living and Wealth Perceptions in NYC
Ramit Sethi humorously explores the nuances of wealth perception in New York City, delineating how basic commodities and apartment features are seen as symbols of wealth due to the city's exorbitant cost of living.
Ramit Discusses NYC's High Living Costs Compared To Other Cities
Ramit Sethi spotlights the significant financial differences between living in New York City and other locations. Life in New York City comes with unique financial experiences, such as the surprising daily expenses that can rapidly add up.
New Yorkers Value Elevators, Dishwashers, and Central Air, Marking Wealth
Ramit humorously identifies what New Yorkers consider as markers of financial success. For instance, having an elevator in an apartment building can signify a certain level of success in the city. Sethi elaborates that other home amenities, such as owning a dishwasher or having central air conditioning, are also seen as indicators of higher wealth status.
Ramit Humorously Defines NYC Wealth "Levels" From Elevators to In-sink Garbage Disposals
With tongue-in-cheek, Ramit claims that a New York City resident with central air in their apartment must be worth at least $10 million. He encapsulates the peculiarity of wealth levels in the city, noting that what is considere ...
Here’s what you’ll find in our full summary
Cost of Living and Wealth Perceptions in NYC
Additional Materials
Counterarguments
- The association of certain amenities with wealth may be oversimplified and not take into account the diversity of income levels and living situations in NYC.
- The implication that having central air in an NYC apartment suggests a $10 million net worth could be an exaggeration and not reflective of actual real estate and wealth statistics.
- The cost of living in NYC, while high, is not uniformly exorbitant across all neighborhoods, and there are areas with more affordable living options.
- Daily expenses in NYC can vary widely depending on lifestyle choices and budgeting, and not all residents experience the same financial strain.
- The idea that outsiders uniformly misunderstand wealth symbols in NYC may not account for the varied experiences and knowledge of those who visit or study the city.
- New Yorkers' understanding of wealth symbols is not monolithic, and there can be significant differences in perception based on fact ...
Actionables
- You can create a personalized wealth perception index by listing amenities and features that signify wealth in your own city or community. Start by researching local real estate listings and noting which features are highlighted in the most expensive properties. Then, talk to locals and real estate agents to understand what is considered a luxury in your area. This will help you gauge your own wealth perception against the local standards.
- Develop a budgeting app or spreadsheet template that includes categories unique to your city's cost of living. For example, if you live in a city where parking is a significant expense, have a dedicated category for parking fees. This tailored budgeting tool will help you track and manage your expenses more effectively, considering the unique costs of your location.
- Engage in a social experiment where you spend a week living like a local in a different economic bracket within your ...
Related Shortform Content
Get access to the context and additional materials
Financial Dynamics of Young Low-income Couples
In a candid conversation with Ramit, Antonio and Devante, a young couple grappling with savings struggles, discuss the financial dynamics of buying a house and planning a wedding amid varying income levels and spending habits.
Antonio and Devante: Buying a House and Planning a Wedding Amid Savings Struggles
Antonio, a registered nurse with an annual salary of $65,000, and Devante, a full-time college student, part-time worker, and owner of a residential cleaning business earning $40,000 annually, are a couple facing financial challenges. With the help of Ramit, they recently re-evaluated their financial situation, resulting in a significant reduction of their suit collection from 100 down to 10. By selling some suits, Antonio could pay off some debt, turning their financial outlook positive.
The couple experienced a reversal of roles; while previously Devante was the main provider managing bills and costs with some assistance from their granny for rent, Antonio is now the primary earner and provider as he steps into full-time work and tackling their new house payments.
Antonio's Higher Earnings Brought New Challenges After Devante's Support
When they shifted from an apartment to a house, Antonio began to adjust to the role of being a provider for the first time while Devante had previously been managing their finances. Devante looked after the bills and savings, and although Antonio was aware of the expenses, he had a more passive approach to the couple's finances, trusting in Devante's management.
Devante Managed Bills and Savings; Antonio Was Hands-Off With Finances
In the past, Devante held the responsibility of handling all bills and savings accounts, while Antonio remained hands-off, only having a general sense of the financial situation and trusting Devante to take care of the specifics. This dynamic has continued with Antonio and Devante owning both individual and joint high-yield savings accounts and a joint checking account for fixed ...
Here’s what you’ll find in our full summary
Financial Dynamics of Young Low-income Couples
Additional Materials
Actionables
- You can create a visual financial goals board to align spending habits with long-term objectives. Start by gathering images and phrases that represent your financial goals, such as a retirement beach house or a debt-free life. Place these visuals on a board where you'll see them daily. This constant reminder can help you and your partner stay focused on shared goals, making it easier to discuss and adjust spending habits that may not align with these objectives.
- Establish a 'fun money' allowance within your budget to balance financial discipline with personal enjoyment. Decide on an amount that each person can spend each month without needing to consult the other. This approach respects individual desires, like wearing nice suits, while maintaining a clear boundary to ensure it doesn't interfere with joint financial goals.
- Try a monthly 'financial date night' to ...
Get access to the context and additional materials
Financial Challenges and Dynamics of Older, Higher-Income Couples
Nick and Pam, an older couple with a significant income disparity, confront the complexities of merging their finances and planning for their future together.
Pam Earns $600,000+; Nick Has Student Loan Debt
Nick Feels Ashamed of His Debt and Fears Pam's Help Would Be Disempowering
Nick carries a substantial student loan debt of approximately $228,000, whereas Pam enjoys a gross annual income of $633,000. Despite this discrepancy, the couple has plans to merge their finances. Nick has openly expressed his shame regarding the debt, which is compounded by the fact that his income is much lower than Pam's. He also fears that accepting financial help from Pam would be disempowering, a sentiment understood and acknowledged by Ramit, who spoke with Nick about the emotional and psychological implications of such disparities in a relationship. Ramit suggests that Nick should work on reframing how he views his debt and shake off the unnecessary shame, considering that the debt was incurred as an investment in a valuable career.
Pam and Nick Merging Finances and Future Plans
Pam's Expense-Covering Instinct May Disempower Nick, Emphasizing the Need for Improved Financial Communication and Collaboration
With the intention of merging their finances, Pam proposed that they cover expenses proportionally to their incomes, with her contributing roughly 75%. She has also suggested contributing more to Nick's loan payments. However, she recognized that her instinct to take on more expenses could unintentionally disempower Nick. To work towards a healthy financial dynamic, Nick and Pam began conducting monthly money reviews, resulting in improved financial decision-making and agreement on guilt-free spending amounts. These discussions have since expanded to cover future-focused topics like financial, legal, and healthcare protections for their relationship.
N ...
Here’s what you’ll find in our full summary
Financial Challenges and Dynamics of Older, Higher-Income Couples
Additional Materials
Clarifications
- Merging finances in a relationship with significant income disparity involves challenges like balancing financial contributions, addressing feelings of shame or disempowerment, and fostering open communication to ensure both partners feel involved and respected in financial decisions. It requires navigating emotions, such as guilt or discomfort, related to financial differences and finding ways to collaborate effectively to plan for the future together. Open discussions about financial goals, responsibilities, and decision-making processes are crucial to establishing a healthy and equitable financial dynamic in such relationships.
- Ramit is a financial expert who provided advice to Nick regarding the emotional and psychological aspects of handling financial disparities in a relationship. Ramit suggested that Nick reframe his perspective on his student loan debt and work on overcoming feelings of shame associated with it. Ramit's guidance aimed to help Nick navigate the complexities of merging finances with Pam and address the challenges arising from their significant income disparity.
- Guilt-free spending amounts refer to predetermined sums of money that individuals can spend without feeling guilty or anxious about their financial decisions. These amounts are agreed upon through open communication and mutual understanding between partners to promote financial well-being and reduce stress related to personal expenses. Setting guilt-free spending amounts helps establish boundaries and encourages responsible spending while allowing individuals to enjoy their money w ...
Get access to the context and additional materials
Communication, Collaboration, and Empowerment in Couples' Financial Decision-Making
Finance expert Ramit Sethi acknowledges the progress a couple, which includes Pam and Nick, has made in their financial decision-making, but he also identifies areas needing marked improvement in communication and shared responsibility.
Ramit Urges Pam and Nick to Discuss Finances and Goals Decisively and Future-Focused
The couple's proactive work on finances is praised by Ramit, including drafting documents for financial, legal, and health matters. However, Ramit questions how decisive they are with their money, suggesting they need clearer direction in their financial decision-making.
Nick Should Own His Debt, Not Rely On Pam
Ramit didn't directly tell Nick to own his debt and not rely on Pam, but he encourages Nick to take a more active role in managing it. He suggests Nick lead in suggesting solutions for his debt, advising against reliance on Pam and proposing engagement in lifestyle adjustments or dialogue with his employer. This approach would empower Nick to contribute to the partnership, despite earning less than Pam.
Empowering Both Partners In Financial Roles Despite Income Differences
The couple has reversed traditional financial roles, with Nick earning significantly less than Pam. There is an implicit requirement for both partners to feel empowered in their roles within the relationship.
Navigating Relationship Finances: Communication, Collaboration, Respect
The necessity for a collaborative plan and mutual decision-making is apparent as Pam acknowledges the need to share leadership in financial decisions, aiming for a more balanced approach. The couple discusses expenses and agrees on shared spending limits, promoting autonomy within a budget. Ramit also explores their savings goals and behaviors, with the couple expressing the desire for financial freedom and early retirement, indicating an ongoing commitment to collaboration.
An additional discussion highlights a disagreement over personal spending habits, revealing potential communi ...
Here’s what you’ll find in our full summary
Communication, Collaboration, and Empowerment in Couples' Financial Decision-Making
Additional Materials
Actionables
- Create a "financial date night" where you and your partner set aside time each week to discuss money matters, set goals, and review progress, making it a regular and enjoyable part of your routine.
- By scheduling a consistent time to talk about finances, you can ensure that both partners are involved and informed. During these sessions, you can use tools like budgeting apps to track your spending and savings goals, or even play financial literacy games to make the process more engaging.
- Develop a "financial responsibility chart" that outlines who handles which financial tasks in your relationship, ensuring shared involvement and clear communication.
- This chart can be as simple as a shared Google Doc or a physical board in your home. Assign tasks like bill payments, savings contributions, and debt management to each partner, rotating responsibilities periodically to foster empathy and understanding of the household's financial workings.
- Initiate a "spending values workshop" with your partner where you both write down ...
Get access to the context and additional materials
Create Summaries for anything on the web
Download the Shortform Chrome extension for your browser
