Knowing Financial Compatibility: The Self-Made Millionaire's Red Flag

Ramit Sethi assists couples in managing their financial issues together on his "I Will Teach You To Be Rich" podcast.

One crucial warning sign to heed when discussing money with your partner is.

Sethi tells CNBC Make It that the most dire of circumstances is when one partner refuses to discuss money.

Your major decisions as a couple are frequently influenced by money.

"Money influences various aspects of life, including housing, food, social activities, and family planning," he remarks. "Money has a significant impact on all aspects of life."

It was crucial for Sethi to ensure that he and his wife, Cassandra, were aligned on managing their finances together.

Since their marriage in 2018, Sethi and his wife have always managed their finances together, as he believed it was crucial to avoid a common mistake many couples make - allowing one partner to be "the money person."

He wanted us to be equally empowered in making financial decisions and to work together as partners and teammates in managing our household.

Discussing finances with your partner can be challenging, whether you're married, casually dating, or somewhere in-between. Sethi offers advice on how to initiate these conversations.

Know your own money habits first

To assess your financial compatibility with a potential long-term partner, it is essential to have a clear understanding of your own relationship with money, according to Sethi.

"If you don't have a strong personal vision about money, how can you determine if you're financially compatible with someone else?"

Sethi advises asking oneself questions like, "Do I want to be a millionaire by a specific age? How do I plan to get there?" or, "Do I have a 'no debt' policy, or am I comfortable with certain kinds of debt?"

After gaining a deep understanding of yourself, you can collaborate with your partner to achieve alignment.

Instead of hiding your credit card debt from your significant other, you could be transparent and discuss your plan to pay it off. This approach can lead to a collaborative effort to tackle the debt together, according to Sethi.

"When someone declares, 'I am working on being more responsible with my finances and here's my plan,' it's impossible not to admire their dedication."

How to talk about money with your partner

Discussing money matters on a date night doesn't have to be unromantic or like an interview.

Sethi advises starting with simple questions about spending habits and credit score to avoid making your partner defensive.

"By observing someone and asking a few questions like 'Where did you grow up?' and 'What did you and your family do for fun?', you can learn a lot about their financial habits and how they treat money."

By having conversations about their money habits, you can understand the emotions behind them and work together to tackle financial challenges instead of blaming each other.

"Sethi suggests reframing the idea of having a conversation about money in a household to "we get to talk about money together for the rest of our lives and use it to build our rich life.""

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