Ramit Sethi: 7 Money Patterns Hurting Your Wallet — and One That Fixes Them All
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Catherine Collins
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Cory Dudak
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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.
Here are the troublesome money patterns Sethi has noticed in his podcast guests, and the one financial habit that can improve all of them.
1. Not Knowing Your Household Income
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.
2. Finding Hidden Money
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.
3. Believing Gender Stereotypes
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 However, he noted that these types of comments are outdated, and can create resentment and relationship issues.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.
4. No Vision of a Rich Life
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.
5. Big-Ticket Purchases Without Running the Numbers
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.
Sethi recommended taking a step back before making big purchases. Do your research, understand how much the purchase will cost over time and negotiate. Always make sure you have breathing room in your budget and that you can afford it comfortably when purchasing, rather than scraping by.
6. Not Knowing What Enough Looks Like
It’s hard to be happy with your life when you’re not sure what “enough” is for you. Many people chase promotions and more money without really knowing why. It’s a good idea to know how much money you need to live comfortably, then work to be satisfied with that. Chasing more can lead to burnout. Sometimes, believing what you have is enough can create satisfaction and gratitude in your life.
7. Minimizing Financial Problems
Sethi explained that, often, people go through months of screening to be on his show, but then can’t face their money problems. They come on asking for help, yet when Sethi gives advice, they minimize their problems. When it comes to being wise with your finances, taking radical responsibility for your actions and your success goes a long way.
The Best Money Habit Is the Ability To Change
Even though Sethi listed the seven most common negative money patterns he comes across as a podcast host, he did end his message on X on a positive note. Sethi reminded his audience that we all have the power to change our circumstances regarding money. We can all create new money habits, and one step at a time, work to be a better example to others — especially our children.
Implementing Sethi’s advice and teaching kids about money early on can not only improve their habits, but change the trajectory of a family. Once kids understand money, they likely won’t make the same mistakes their parents did.
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