Financial author and media personality Ramit Sethi is committed to helping people improve their finances. As such, he recently divulged on X the seven different problems he regularly sees people make with their money, while also giving hope that falling into such patterns doesn’t mean you aren’t capable of turning your financial life around.
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Here are the troublesome money patterns Sethi has noticed in his podcast guests, and the one financial habit that can improve all of them.
Sethi wrote that 50% of people don’t know their household income. They might not know what their partner earns in a year, or what their expenses even are. Sethi recommended setting up automatic payments into different accounts. That way, you automatically save, invest and have money for your bills.
As Sethi explained on his website, “On a daily basis, we face too many choices.” Because of that, it can be hard to manage finances in addition to other adult responsibilities. Knowing your income and expenses, and then automating them can create the rich life Sethi believes anyone can achieve.
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Sethi said people on his podcast often find money they didn’t realize they had, whether it’s in an old bank account, a 401(k) they forgot to roll over or somewhere else. In order to avoid this, consolidate your investments, do regular money audits and use a tool like MissingMoney.com, which can help you find old accounts or money owed to you.
Sethi explained many couples that come on the show bring up stereotypes such as, “He makes money, and she spends it.” However, he noted that these types of comments are outdated, and can create resentment and relationship issues. Instead, work together with your partner to set up money dates and speak regularly about finances as though you’re a team.
Sethi is well known for talking about building a “rich life.” To him, doing so means spending on things that you value and enjoy. That might mean driving an old car in order to take a nice vacation each year. If you have a partner, Sethi said it’s important to have a shared vision of a rich life, too.
Sethi said over 90% of people make big purchases without running the numbers. This includes buying a house. Unfortunately, many people purchase homes only to realize they’ve purchased a larger one than they can afford.
