January 18, 2024

Episode 288 - Scott Rick: Navigating the Money Minefield in Real Relationships

January 18, 2024

Scott Rick is a marketing professor at the University of Michigan’s Ross School of Business. He holds a PhD in Behavioral Decision Research from Carnegie Mellon University, where he was a National Science Foundation graduate research fellow. Before joining Michigan Ross, he spent two years as a postdoctoral fellow at The Wharton School of the University of Pennsylvania. Rick routinely teaches courses on consumer behavior, judgment and decision making, and marketing management. His research is interdisciplinary by nature, and he has published in premier journals spanning marketing, psychology, economics, and neuroscience. At the University of Michigan, he has won awards for both research and teaching. Rick's research has been covered extensively in outlets such as The New York Times, The Wall Street Journal, The Washington Post, and NPR.

Tightwads are more likely to hold onto their money even when there is more than enough to spend, whilst spendthrifts will drain their bank account of its very last cent. So, which one are you, and how does that impact your relationships? Joining us today is the remarkable Marketing Professor and Author, Scott Rick. Scott has just penned a new book, Tightwads and Spendthrifts: Navigating the Money Minefield in Real Relationships, which serves as a guide for finding happiness while steering through money and love. To kick-start our conversation, Scott summarizes the relationship that people generally have with money, followed by a deeper exploration of the terms “tightwad” and “spendthrift”. We break down the psychology of tightwad and spendthrift behaviours, how these two personality types interact with one another in relationships, the myths of financial infidelity and transparency, and how bank account structures (joint and individual accounts) dictate how money flows in a relationship. We also assess the roles of financial advisors and gift-giving within relationships before Scott shares his thoughts on marrying for money versus marrying for love, how to give your kids the best financial education, and what he hopes every reader will gain from the truly fascinating and informative, Tightwads and Spendthrifts!

Key Points From This Episode:

(0:00:33) Introducing the incredible Marketing Professor and Author, Scott Rick.

(0:03:08) Scott’s summation of the relationship that people have with money.

(0:04:47) Diving into his latest book: Tightwads and Spendthrifts, and exploring each term.

(0:13:16) Assessing the psychology behind tightwad and spendthrift behaviours.

(0:18:58) The role of financial advisors.

(0:21:15) What spendthrifts and tightwads can do to balance their money scales.

(0:23:34) How tightwads and spendthrifts interact in romantic relationships.

(0:32:10) The way bank account structures affect how money flows in a relationship.

(0:35:39) Debunking financial infidelity and the downsides of total financial transparency.

(0:41:04) The ins and outs of joint bank accounts versus individual accounts in relationships.

(0:42:20) Gift-giving and relationships.

(0:47:08) How kids can learn about money from their parents.

(0:52:15) Scott shares his thoughts on marrying for love versus marrying for money.

(0:55:09) What he hopes people will learn from reading Tightwads and Spendthrifts.

Read The Transcript:

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix and Cameron Passmore, portfolio managers at PWL Capital.

Cameron Passmore: Welcome to episode 288. This one, Ben, as I just said to you before we started recording, we can make this the shortest intro ever and it could simply be, you've got to listen to it and you have to share it with anybody who's in a relationship. This is absolute gold, in my opinion. We welcomed Scott Rick, who is the author of the just-released book, Tightwads and Spendthrifts: Navigating the Money Minefield in Real Relationships. Scott is incredible. His research is incredible and it applies to all of us, I would argue.

Ben Felix: I would agree. It's a really important topic. How do you navigate money in a relationship and how important should your financial tendencies be in selecting a partner? There's a lot of common wisdom around that and I think Scott adds a lot of evidence and nuance to what people may have heard on things like, should you choose a partner for money, or for their financial habits, or for love, which we talk about at the end of the episode. Scott's book and this conversation are meticulously evidence-based takes on navigating money in a relationship and including with kids. We covered gift-giving as well, which I thought his insights on were incredible.

Like you said, it's a very, very valuable episode with the right combination of evidence and practical tools based on that evidence for actions that people can actually be taking in their relationships.

Cameron Passmore: The question we get so often for years, the joint bank account question, how should we manage our day-to-day banking? He has evidence behind this. How should you behave in front of your kids? That leads back to a conversation late last year with James Grubman. So fascinating.

Ben Felix: Yeah, it's a great episode. Big fan of the book and Scott's approach. I think he delivered the same in this conversation.

Cameron Passmore: Here's a bit of his bio. Scott's a Marketing Professor at the University of Michigan's Ross School of Business. He holds a PhD in behavioural decision research from Carnegie Mellon University. Then he spent two years as a post-doctoral fellow at Wharton. Also, wanted to give a shout-out to our very good friend, Hal Hershfield, for making the introduction to Scott. We're super grateful to Hal and Scott's just terrific. Really great. We got through lots of questions, lots of content and very, very pragmatic science, evidence-based advice. Ben, anything to add?

Ben Felix: Nope. That’s a good introduction. Let's go ahead to our episode with Scott Rick.

***

Cameron Passmore: Scott Rick, welcome to the Rational Reminder Podcast.

Scott Rick: Thank you so much for having me.

Cameron Passmore: Happy New Year and congratulations on your phenomenal book.

Scott Rick: I really appreciate it. Happy New Year.

Cameron Passmore: Thank you. Off the top, in general, how would you describe the relationship that people have with money?

Scott Rick: It's very fraught. It's a necessary relationship. You can't get around it, so it's worth investigating and reflecting on. It's very anxiety-provoking for a lot of us. For some of us, that happens more before we make decisions with money, and some of us it's after we're reflecting on the decisions we have made and maybe we might wish we had some of that anxiety before we made the decision to put the brakes on some overspending, perhaps. It's hard to find a ton of people who are super comfortable around this topic.

Ben Felix: How important is the topic of money to the quality of romantic relationships?

Scott Rick: I mean, it's right up there in terms of where a marriage can go wrong. It's right around arguments over in-laws in terms of the most draining, jarring aspect of a relationship and it's just a leading cause of divorce and it's not surprising. Again, it's one of these unavoidable things. There are works that you might encounter when dating someone that you can brush off and the stakes are low. But once you get into a relationship, my goodness, you are just overwhelmed with all these important money-related decisions. It's so easy to get some wrong, or at least wrong in your partner's eyes. There's just so many opportunities for friction there.

Cameron Passmore: Let's dive into the book and cover off two of the terms in the title. What are the terms tightwad and spendthrift mean?

Scott Rick: These are old-timey terms with non-obvious definitions. A tightwad to me is someone who - they want to spend money. There are things that they want to buy, but they just can't bring themselves to buy those things that they think they should be buying. They feel anxious when thinking about a lot of optional purchases, and that anxiety or distress prevents them from buying things they think they should. They suffer as a result. The people around them suffer as a result. That's very different from a spendthrift.

A spendthrift is someone who they don't experience enough anxiety, or distress when thinking about spending money. They end up buying things that they don't really need right now. They might need it one day. They're shopping for a lot of potential needs, but they come to regret a lot of those purchases. Tightwads and spendthrifts, they're both conflicted in a sense. They look very different on paper. A tightwad looks good financially, usually, but they both have a very conflicted relationship with how they use money.

Ben Felix: How can someone, also, how do you and the research assess where someone falls on that tightwad-spendthrift scale?

Scott Rick: We developed a little four-question measure. It's in the book, and I'm happy to share a link to it. It asks people to reflect on different approaches to shopping and which approach historically resembles what they do. In general, for example, are you like this shopper who sees items they know they need, that're on sale, but you can't bring yourself to spend the money? That's the tightwad. Or even more like someone who sees a sale and you know you don't really need anything, but you can't resist. You end up spending a bunch of money. That's a spendthrift. Where on this continuum do you fall? Responses to this scale are pretty stable over time. We've revisited participants over the years, and it's pretty stable where you fall in this dimension.

Cameron Passmore: How do demographic characteristics affect the likelihood of being either a tightwad or a spendthrift?

Scott Rick: Tightwads tend to be a little older. We don't know if that's an effect of aging, or if it's a generational thing. We would need to follow people for much longer periods of time. But it's there. It's a small correlation. Spendthrifts are a little more likely than tightwads to be women. It's small. It depends on when you ask the question. It's a sensitive relationship, but it tends to be there. Tightwads tend to be more mathematical. They major in more mathematical majors in college. There is that component. I think that for better or worse, helps them think about opportunity costs and what I'm giving up later by spending now, which can be good or bad, depending on how much you ruminate on that. There are these small demographic correlates, but nothing gigantic. You couldn't tell just by looking at someone, “Oh, that's obviously a tightwad or a spendthrift.”

Ben Felix: I'm asking this because someone commented on one of our YouTube videos a while ago. Are there any, and I guess, part of that answer to that question just now, are there gender differences?

Scott Rick: The spendthrifts tend to be more likely to be female than tightwads. Again, it's a small relationship. It depends on when you ask the questions and how you order the questions in the survey, but it tends to be there. We do tend to find it. It's not huge. There are plenty of women who are tightwads.

Ben Felix: Interesting. I saw that comment and my knee-jerk reaction was, that seems like a bias, but maybe not.

Scott Rick: I think it's a smaller relationship than a lot of people do expect.

Ben Felix: How is being a tightwad different from being frugal?

Scott Rick: They look very similar on paper in terms of if you just looked at their bank accounts or their credit score. A frugal person, the psychology is very different. The frugal people enjoy to save. They enjoy saving. They believe in it. They think it's the right thing to do. It's not a struggle for them. They believe in reusing household items and like, “Oh, I can find a different use for that baggie here. Let me do something different with this hanger to hang something else up the sock clothes.” They really like to wear things out. They're not buying replacements so easily. It's just a value for them. It's a belief that this is the right thing to do and they're happy with it.

I mean, a true tightwad is someone who - they have money to spend, they recognize that they would be happier, or at least the people around them would be happier if they bought this thing, but they just can't get there. They just can't do it. It's a frustrating experience and it does harm them, really.

Cameron Passmore: Absolutely fascinating. How does objective financial status affect where people fall on that scale?

Scott Rick: In terms of current objective financial status, if you're looking at income, that was something we were very interested in at the start, is someone a tightwad because they can't afford to spend does not seem to be the case. Income is not a predictor of whether you're a tightwad or a spendthrift. Certainly, tightwads look better in terms of savings and debt than spendthrifts, but it's not about income.

Now it might be about past income. A lot of tightwads seem to have had a period earlier in life where money was tight, or at least they felt money was tight and they developed a protective shell, a gut response of making spending painful to protect them from going broke. Then for a lot of tightwads, their circumstances improve and you just can't change these well-learned responses over time. I quote a character from Love in the Time of Cholera. It was this man who grew up poor and then over time became this rich industrialist and someone called him rich and he said, “No, no, no. I'm not rich. I am a poor man with money. That is very different.” The mindset, the reactions were developed early and they can be very hard to shake when your circumstances change.

Ben Felix: That's really interesting. We did an episode recently with Dr. James Grubman, who's got research on, he calls it cultural migration from being not wealthy to wealthy and how a lot of this stuff can affect your ability to act wealthy even if you are.

Scott Rick: Absolutely. As another writer, I quote, he had a New York Times column recently. He talked about post-brokenness stress disorder. Again, looks fine on paper. Everything's good, but he hears a beeping outside, he's like, “I remember when I was young, cars getting repossessed and I just immediately think, I got to go check the window. Is someone taking my car?” It's hard to shake that stuff.

Ben Felix: Who is that writer?

Scott Rick: I believe his name is Damon Young. A few years ago in The Times.

Ben Felix: Yeah. Okay, cool. I think I know exactly who you're talking about. How does where people fall on this scale, on the tightwad-spendthrift scale, how does it relate to their happiness and their regret?

Scott Rick: In this scale, I probably should have mentioned by now, we tend to break it up into three types of people. You have the tightwads, the spendthrifts and then in the middle, we have what we call the unconflicted consumers, the Goldilocks zone. They have some distress when thinking about spending money, but not too little, not too much, and they're more or less at peace with how much they're spending. When you ask different measures of happiness or overall well-being, it's the unconflicted consumers who tend to be happiest.

Again, they look worse on paper than tightwads. They're spending more than tightwads, so it's not just about the numbers. It's about using the money you have in the right way. The people in the middle, the unconflicted consumers tend to be happiest, and the people at the extremes, the tightwads and spendthrifts, they tend to be saddled with the most regret and second-guessing, and what-ifs.

Cameron Passmore: Can you talk about the underlying psychological mechanisms behind spendthrift and tightwad behaviours? What's going on?

Scott Rick: I think for tightwads, part of it is reactions that were once helpful that are no longer helpful, that you develop early in life and you can't shake. Part of it is an obsession with opportunity cost, what I'm giving up later by spending today. Again, tightwads are more mathematical, and they are very willing to look at a price tag and think of it in terms of what I'm giving up later. Spendthrifts are fascinating. It's a little self-serving, I'm a spendthrift. I love my spendthrifts. But again, we're not just shopping for things we need, but we're shopping for potential needs. I'm going to quote another podcast here, it's called Ask Rana, it's like an advice podcast, but the character Rana, she says, “I'd rather be looking at it than looking for it,” and that is really the spendthrift mentality.

I might go to the store to buy work clothes. While I'm there, I see like, oh, a lovely velvet jacket. I might think, “Oh, that would be so fun to wear it to a fancy holiday party, or some other event like that.” Now, that event is not at all on the calendar, and I am not the type of person to be invited to such events, but my goodness, what if I were? I would love to have that jacket, so I'll go ahead and pick up the jacket, and I'll see it in the closet, and I'll think, “Oh, that'll be fun someday.” There are all these maybe, what if potential needs we're shopping for. We’re a very hopeful bunch, I would say.

Ben Felix: I see so much of the opposite of myself. I won't buy clothes until the absolute last minute when I need them.

Scott Rick: We see all kinds of stories like that. As a spendthrift, it just bends my mind. I have the money, and I'm miserable every time I put on these shoes, but I'm going to wait till they go on and say like, “I have the shoes. You're hurting. Why?” Yes, there are vast differences.

Cameron Passmore: I had lunch with a good friend a few weeks ago before Christmas, and he talked about how we will often do a net present value on things he spends. Well, this will cost X, but over time, that will compound to X to whatever. Where he'll do a discount the other way on a large purchase. Well, that could be this amount of cash for life, instead of buying a car, or something large, and saying, he can't help it.

Scott Rick: Yes. I mean, it's a blessing and a curse that informs a mathematical approach.

Ben Felix: It's definitely a curse. I needed basketball shoes, and I just kept putting it off. I finally had to go and buy new ones, because both my big toenails turned completely black, and I was like, “Okay, it's probably time.” I probably should have done it sooner.

Scott Rick: Well, you have to protect your basketball reputation. Paramount.

Ben Felix: What can tightwads do to loosen up their spending behaviour?

Scott Rick: There's a few things. One approach that I like is reserving space for indulgence. We often think of budgeting as a way to restrict spending, but budgeting can be a way to loosen up also. A tightwad needs a budget, or you can call it a spending plan. But left to their own devices, in the moment, if they encounter something that they're thinking about indulging on, they might say, “Well, I can't afford it.” If they're able to pre-commit to some amount of fun, or indulgence and set a plan for it, “I have X dollars this month to spend on fun things.”

When they encounter the fun thing three weeks later, the money's there. That can loosen them up to go for it. But they're not going to find the money in the moment. In the moment, they're just going to be like, “I can't afford this.” It takes some planning, which tightwads can be good at. You have to be forward-looking and pre-plan for it.

I think, high-end purchases, tightwads are sometimes a little penny-wise, pound-foolish, going for cheap things that fall apart. It's good to find ways to look at expensive items as an investment if they're well-made. Some brands are trying to tell us, yes, you should buy fewer things. We make good stuff that lasts longer, and it's true. Usually, when a brand says that, the evidence backs them up. Brands are misleading about a lot of things, but those claims are usually pretty good. I say, give the brands credit there. Pay attention to those promises.

Cameron Passmore: I think the planning advice is good. How important is it for people to actually have an understanding of their overall financial position to actually being comfortable spending? Do a lot of people just don't know what their situation and what they could afford to spend?

Scott Rick: I think a lot of people have a good feeling about what their situation is, but it's an imperfect feeling, and it can help to get an outside perspective on how you're doing, where you stand. You really can relax someone when a professional looks over their paperwork and says, “Oh, you're doing pretty good here.” That can be very reassuring to some people. Now, of course, it depends. It's just like medicine. What's the bedside manner? The message can be delivered a thousand different ways. There are things that can throw you off. But in general, I do think it's good to get outside perspectives and not just leave it to yourself to figure out, “How am I doing?” It's good to get a sense of how other people think you're doing.

Ben Felix: What role do you think financial advisors who are maybe looking at the bigger, longer-term picture should play in helping people figure out how much they should be spending?

Scott Rick: They can play a very important role. The hard part is getting people to get in there in the first place. As spendthrift, they'll spend more on velvet jackets, but they also might be willing to spend more on financial advice. It's the tightwad who you might have a hard time getting them to get in there in the first place and be willing to hear this advice. Luckily, a lot of tightwads are married to spendthrifts and the spendthrift spouse can escort them in. But financial advisors can play a big role here, especially helping tightwads.

Ben Felix: What about, and I just thought of this, what about mediating the differences in spending between a tightwad and a spendthrift spouse? Can a financial advisor play that role?

Scott Rick: Sure. The advisor can help set up systems in the house. I think that's how you can manage, how you have to manage these vast differences between spouses. It's just, let's make sure we don't argue about certain things. I will say that in the moment, let's say, there was such a meeting between a mismatched couple and an advisor, I think the tightwad has the advantage in that meeting. But over time, the spendthrifts tend to win. The spendthrift just needs this one moment for the tightwad to say, “Okay, fine. Get the thing.” The tightwad can say, no, no, no, all they want, they're just delaying the inevitable. The spendthrift will eventually find their moment.

It's a disembalance because once the money is spent, it's spent, especially if it's on an experience, a vacation or something, or a hard-to-back out of contract. The spendthrifts have a built-in advantage there. Tightwads win a lot of battles, but spendthrifts win the war.

Ben Felix: When I was reading your book, that stuck out to me as the spendthrift's behaviour is much more final, irreversible. Whereas the tightwad, if the tightwad is miserly, the spendthrift can always spend more. But if the spendthrift is spending all the money, the tightwad can't get it back.

Scott Rick: That's right. It's built-in asymmetry.

Ben Felix: Super interesting.

Cameron Passmore: What can spendthrifts do to tighten up their spending?

Scott Rick: For them, it's about increasing the salience of payments and money leaving their possessions. For example, when I was in grad school, money was tight and I trained myself to be a temporary tightwad. I would just pay in cash as much as I could. If I was using a card, I would use debits and I would get the receipts and I would take it home and enter it into my Excel file and feel pain when I would watch my account balance go down. With cash, I would train myself to feel pain at the ATM when the balance was deducted and feel pain when spending at the store.

Just putting up all these stop signs and reflection points, creating all these psychological speed bumps to spending. It's not a recipe for a happy life. It was just a recipe for survival, just to get through this hard time. That is the general lesson that you have to find ways to put these speed bumps into your spending life.

You go to Amazon and you delete your credit card information, so you have to re-enter it. It just gives you this moment to slow down and reflect like, “Do I really want this right now? Do I want to get up and get my wallet?” Not that as a spendthrift need my wallet. I have all my cards memorized. But no, you want to just find ways to put some speed bumps in there.

Ben Felix: What are the risks, or downsides of trying to moderate spending behaviour using some of the tools that you just mentioned?

Scott Rick: There are risks for both tightwads and spendthrifts here. Sometimes we pre-commit to things that we think will be good for us in the future and then we just can't follow through with it. Some people pre-commit to exercising by buying an annual gym membership and then they don't end up using it. There are some regrets that can come with pre-committing to overly ambitious goals, whether that goal is to spend more or spend less. It takes some trial and error when we're thinking about how far to jump in and what we can pre-commit to. It's worth trying. It's worth experimenting with.

Cameron Passmore: How common is it for tightwads and spendthrifts to end up together in a relationship?

Scott Rick: Well, it's certainly more common for the opposites to attract than for tightwads to marry tightwads, or spendthrifts to marry spendthrifts. This is unusual. Usually, we go out and we marry ourselves. People who are politically conservative tend to marry people who are politically conservative and vice versa. We usually marry ourselves. If there's something we don't like about ourselves and we see someone else displaying that disliked attribute, it can really shine an uncomfortable spotlight on our own problem. It's like, “Ugh. Is that what I'm like?” That can be a real turnoff.

I think at first encountering someone who takes a totally different approach to money can be charming, interesting, fun, kind of a playful conversation topic. I think it's fun at first. For a little while, it's fun. Maybe not for a long while. For a little while.

Ben Felix: That insight from the book was mind-blowing.

Scott Rick: Thank you. There are these fatal attractions in life. I might be shy and then I go for the extroverts and it's so exciting at first. But I am shy. Over time, I might get tired of hosting parties and all these social obligations I'm thrust into. It might wear on me. There are things that are exciting at first that get less exciting over time.

Ben Felix: When you look at the data, how much more common is it for the mismatched couples to occur?

Scott Rick: I want to say, if you look at mismatched versus matched, it's around 57% versus 43%, something like that. It's not a huge difference. I mean, there are lots of reasons we get married, but it's consistently there. It's this modest effect, but we always see it.

Ben Felix: How do mismatch profiles affect marital satisfaction?

Scott Rick: Not good. We find, the more spouses differ on this dimension, the more they fight over money, the more they report marital dissatisfaction. It can be a volatile thing. There's lots of irritation to go around. The tightwads do tend to be more irritated with the spendthrifts than vice versa. Again, I think because the spendthrifts have this advantage that once the money is spent, it's spent. The spendthrift can go out and solve the problem. Well, if you're not going to buy it, I'm going to buy it. Without careful managing of these differences, it can really be not good.

Cameron Passmore: Are matched couples happier than mismatched couples?

Scott Rick: They are. That part is a standard psychological finding that the more similar spouses are, the happier they are. We certainly find that even two spendthrifts who might be in some financial peril, they might be happier than a tightwad and a spendthrift who are fighting all the time about money. Yes, those differences can be very draining on a marriage.

Ben Felix: Which couple type was the happiest couple in the samples that you looked at?

Scott Rick: Well, the single happiest couple had a gigantic difference in their tightwad-spendthrift score. I don't want to read too much into a single data point, but it does remind us that you can have a very happy relationship even with these vast differences. I can add a second data point. I am married to a tightwad. It can be done, but it must be managed mindfully, intentionally, carefully.

Cameron Passmore: How do the financial situations of matched and mismatched couples tend to compare?

Scott Rick: The more spendthrifts you have in the house, the more debt you'll have, the less savings. It's a linear thing, the more spendthriftiness you add to the home. There are matched couples, matched spendthrifts who don't look good on paper, but are happier than mismatched couples that look better on paper, but are fighting all the time. Of course, if you have two spendthrifts married, that's a high-risk situation, and it can go wrong. Let's say, they have good income. You can be two spendthrifts and not be in danger and just be living a fun, glitzy life. It can be done, but it is a dangerous thing.

Ben Felix: Do two tightwads together tend to be happy?

Scott Rick: They look good. They look happy. They, certainly, financially are doing well. They're happy in the way that happiness is often measured on these scales. These scales, these measures often give a lot of weight, a lot of high scoring to, like a calm, conflict-free life. If you're someone who needs adventure to be happy, that would not show up on these measures. These measures really are very conservative, and I don't want to say puritanical, but if you and your partner are just eating TV dinners every night on the couch, it would say like, “Oh, you're doing great.” They're happy on those measures, but I think they're missing out on a lot of fun.

Ben Felix: That's a really interesting point. It's like the Cantril ladder doesn't measure, I don't know, being spontaneous. Given all that, how important do you think it is for couples to understand each other's spending tendencies?

Scott Rick: I think it's useful. One, it's useful as a conversation starter. But it's also useful just to know where they're coming from, that they might have developed some strange patterns based on how they grew up, and they have a hard time shaking it. Okay, you got me this awful gift. I might see that awful gift and think, “Wow, you don't love me, or you don't understand me,” and it could be that. But it could also be that you spend money in a very different way. You either couldn't bring yourself to buy me something good, or you're just someone who throws money at problems and you overspent and you got something that doesn't really match my interests. I would never carry that around or want that thing. It helps to see like, “Oh, okay. I can see why you did that.” It's not love. It's just a quirk of yours.

Ben Felix: We're going to ask more about gift-giving later. That was something that like, I don't do gifts for anybody, at all, ever. I don't know. Your book made me rethink that. But I want to ask it. Should people be bringing out the tightwad-spendthrift scale questions on the maybe second date?

Scott Rick: It’s interesting. Only if it's for funsies. I wouldn't use it as a screener, like if they get too high or low a score, you say, “Okay, I'm going to see my way out now.” The scale is one way to get a sense of this, but once you know about these tendencies, you can see it. If they're spelling out their reasoning about something, you can say, “Okay. Well, that's a hint of one type or the other.”

It's worth keeping in mind. One thing I say is, if there's something that irritates you during the dating period and you're like, “I don't know,” just know that it's not going to get better in marriage. It's not going to go away. It's going to accumulate and that irritation will grow. Think about, “Can I live with this and even more of this during the dating?”

Ben Felix: Was there data in the book on credit score, disparity and relationship duration?

Scott Rick: Yeah. Disparity is a predictor of marriages ending, which is supportive of this idea that when they are different, they're fighting and it's hard. The sum is also a predictor of it ending. If we both have really low scores, that's bad too, because we're struggling. That speaks to like, “Oh, there's this danger of the two spendthrifts.” That's bad, or it can be bad. If we have this difference, we're fighting about it and that's bad, too.

Cameron Passmore: I want to shift to one of the most frequent questions I've had in over 30 years of meeting clients, and it has to do with bank account structures. What effect does the structure of that bank account have on the way that money flows through a relationship?

Scott Rick: Bank accounts have a big effect. I think it's often an afterthought and there's a lot of status quo bias and people are coming into the marriage and they're not thinking carefully about how these things are set up. It can be so important. We've done a study where we took newlyweds. They had separate accounts. We told them to either keep it that way, or put their money into a joint account, or do whatever they want and we followed them for two years. We kept checking in with them. Are you happy? Are you talking with each other? Do you still like each other?

The couples who we prompted to go for it, to go for the joint account were happiest at the end of two years. The other couples in the other conditions, you got this normal decline in satisfaction, which is sadly, pretty standard. Your happiest day tends to be your wedding day and then there's a bit of a dip. We think the joint account is good. It turns your money and my money into our money. I think all incoming money should be laundered through a joint account. Psychological money laundering. I think that's good. I think it helps to take away attention from any differences in our income.

Those discrepancies can really be hard to cope with for a couple. This is advice for couples where things are generally going well. If things are on the rocks, I would not say, go all in on a joint account. You want to erase those differences in income and just put those in the background. It's all our money. I'm sure we'll get to this, but I don't think only joint is best, but I do think having a joint account that can launder all incoming money is a good thing.

Ben Felix: How does your view, or maybe the academic view more generally on bank account structure differ from popular personal finance advice?

Scott Rick: Well, it's all over the place. It's certainly not informed by any science I've heard of or can recognize. Some very conservative people recommend the joint accounts. I was quite surprised when we had this paper come out on joint versus separate accounts. It was very popular among politically conservative people. I don't know that they would love my follow-up advice, which is you should have separate accounts on the back end of that joint account. But if you're just thinking about what should I do and you're just searching the internet for advice, you're not going to get a clear signal.

Cameron Passmore: How does bank account structure affect household spending?

Scott Rick: If you have someone looking over your shoulder, you spend differently. If it's only joint, it can discipline people and that can be a self-controlled device. We spend differently when we're being watched. It's like at Whole Foods. At the pizza counter, you used to have to ask for pizza and people would ask for one slice. Then they made it self-serve and they started taking two slices. When we're not being closely monitored, we can loosen up. If you're in a crunch and you really need to reel in spending, having everything out in the open is one way to do that.

Ben Felix: Can you talk about the behaviours that get classified as financial infidelity?

Scott Rick: From my view, pretty much everything. There's been a lot of stories over recent years about this plague of financial infidelity within marriage and its moral panic around it. Some of it seems quite innocent to me. I go to the store, I buy groceries, I use a debit card. Let's say, it's a $100 in groceries. I take out $20 in cash on top of that. I don't tell you that. If you happen to see the statement, the bank statement, you'll see, “Oh, Scott spent $120 on groceries.” But what you don't know is I had that $20 and I can do whatever I want with it. I had a little secret spending spree.

That to me seems unnecessarily harsh, that definition. Other definitions are like, well, you don't tell your spouse how much you're spending on a gift for your mom. I can confidently say, my wife doesn't care how much I spend on a gift for my mom, just as long as I get the gift. It's a really high standard that a lot of people have. They want complete, proactive, 100% transparency about what is being spent. Anything short of that high standard is called financial infidelity, which is a very tawdry term. Infidelity. I think it's a little too much.

Cameron Passmore: Give a sense of how big a problem this is.

Scott Rick: Again, if you look at surveys that have been done, you'll see these huge percentages of people who engage in this. Again, once you look at what do you mean by financial infidelity? It's harmless stuff. There are some true secretive spending activities that are super damaging. You have a secret gambling habit or a drug habit. That can happen and that can be devastating.

I think the data suggests that the most devastating purchases are those that are right out in the open. The mortgage that we can't afford, the car, we buy more cars than we need, that kind of thing. It's, I quit to pursue a passion project. If a family's going to spend themselves into trouble, it's usually spending that's right out in the open.

Ben Felix: You mentioned total financial transparency. What are the downsides of having that?

Scott Rick: I think there are a lot of downsides. The problem is you're going to get into unnecessary arguments over little things. Little purchases that if they weren't made, wouldn't have mattered anyway. You're not going to become rich by not buying yourself a treat, a latte, a muffin at work. Some people have been convinced that that is what's standing between you and being rich, the small indulgences of everyday life, the latte, the muffin. People are convinced that. If they see you spending on that, they're saying, “Oh, my gosh. We could have saved that. We could have invested it.”

They're going to pick on you for it. It might just be something you need for your mental health. I might need to get out of the office and go to Starbucks and get away from people for a little bit. It's important to me. It's not an indulgence, it's a necessity. There's that. There's also the reality that we have different interests and hobbies. I might not understand your passion. If I went line by line on what you're spending on your interest, it's going to seem like, “Oh, my God. It's so expensive.” My wife is a needle pointer. I have a guess, I had a guess on what thread costs and I happened to stumble across something that had a price tag on it. I had to update my thinking. It was quite shocking. But it's important to her and that's what is considered good and necessary material in her world. She's not spending us into the ground on that stuff, and so, I don't need to know the details. It's good to have a general sense of what everyone's doing. Like, oh, you're spending X per month, but the line-by-line stuff, I think that can get you into bad territory.

Cameron Passmore: Is that why you suggested earlier having individual accounts behind the joint account?

Scott Rick: Yes, exactly.

Cameron Passmore: The big amount just going there, but the details end up not fazing you.

Scott Rick: Exactly. The details are available upon request and hopefully, the requests are few and far between. They're not proactively offered. That's what we do. We launder all incoming money through the joint and then we each move money from joint into our own separate accounts and that's all we need to know.

Now certainly, if you want a second pair of eyes on your spending, or your bank statements, you should feel free to ask. But I'm not proactively combing through what you're up to. There's a joint account that everything gets laundered through and then there are separate individual accounts where everyone agrees in the amount that goes in there, but what happens with that money is no questions asked.

Scott Rick: Pretty much. Yeah. We each get to spend some of our money without close monitoring. It's important to make it feel like ours. It's still ours, but you need some privacy, you need some individuality, even within a close relationship.

Ben Felix: Yeah, totally. Super relatable. Also, lots of confirmation bias for me, because that's how my wife and I do it.

Scott Rick: Ah. Good, good, good.

Ben Felix: Love to hear it. How do you square, though, the importance of joint bank accounts, which we talked earlier with what we're talking about now, which is having that individual account? How do we square that circle?

Scott Rick: The key thing is the laundering part. It's erasing the earmarks on money. It's all ours. You want the marriage to be communal, where you're not scorekeeping, you're not keeping close track of who's bringing in what. You want to say, “Can you wash the dishes tonight because I'm feeling tired?” You don't want to say, “Can you wash the dishes tonight? I did it last night.” Score keeping can be very bad for the relationship. The joint accounts does seem to help with reducing scorekeeping.

Keeping it communal. Relationships start communal and they slide into scorekeeping. You want to keep it communal. The joint account helps with that. Then you can use the separate to avoid these unnecessary disputes at the back-end. It's using account structure to get all the benefits that you can out of a good, healthy relationship. Communal nature, but avoiding the unnecessary fighting.

Cameron Passmore: Let's shift to the topic of gifts. What role do you think gift-giving should play in relationships?

Scott Rick: Ben seems immune, but for a lot of us, it's this mandatory unavoidable thing. It's not clear that if we had it all to do over again, we would have put valentines six weeks after Christmas and Mother's, Father's Day. I don't know, but they're there and they're hard to avoid, so we need to figure out how to deal with them. I suggest turning them into opportunities to express what we understand about our partners, make them feel seen and appreciated and loved. Because a lot of us walk around. If we're in a good relationship, we admire our partners, but we don't say that. We don't tell them why. Maybe we can't find the time to do it. You might say, “Oh, honey. I love you, because this and that.” Your partner might say, “Okay. Well, that's good. Can we figure out how the kids are getting into soccer tomorrow?” There's not a good time to bring that up. We have this appreciation that we don't often express. The gift-giving moments are those chances to say, you are seen and appreciated. We need to feel that. They're really important.

Ben Felix: My immunity is it's not that I never do anything nice, but I don't like having to do it on a specific day. Why does someone get to dictate that it's Valentine's Day, therefore, I have to do something nice for my wife. I'll get her, I don't know, pastry from the bakery, because she loves that, on a random day for no reason.

Scott Rick: I'm all for random days. There are these apps where you can say, prompt me six times a year randomly to say, “Would today be a good day for a gift?” You can swipe it away if it's not a good day. But it's good. You need surprises. You need those moments.

Ben Felix: I like that, that advice from the book, the random suggestion thing. I also think that your point about – this is how I interpret it at least, so you can tell me if I misinterpret it. It becomes a form of communication. Gift-giving becomes a form of communication.

Scott Rick: Yes. You might think, “Oh, I communicate all the time with my spouse.” Of course, but we're often communicating about logistical things and we're not deep into, "I understand your inner psychological life." It's hard to get to that. The gifts are a real important substitute for those moments that we don't delve into in everyday life.

Ben Felix: Which is a really interesting framing to think about this next question, which is how useful is it to ask your partner what they want as a gift?

Scott Rick: I certainly understand the temptation to do that. I have done that in the past. It's a way to avoid disaster. I mean, it's not the worst idea. It's better than not getting a gift at all, at least if they were expecting something. No, it just robs you of the opportunity to display what it is you understand about your partner. It shows that you're willing to please them, but it doesn't show that you love and understand them. It just shows that like, okay, I'm doing what I need to to put this fire out, and let's move on. I don't like that approach at all.

Just asking, it's not like it's so easy to just ask. You can ask in a way that really depresses your partner and makes them think you don't care about them. It's like, “Oh, God. Okay, your birthday's coming up. I don't know. You didn't like what I got you last time. Could you just tell me what you want?” It's not very romantic. Or if you call up your partner, from CVS like, “Oh, yeah. Valentine's is tomorrow. Do you want some crap here?” The asking itself can be a real problem.

Cameron Passmore: So, what can we do to improve our gift-giving skills?

Scott Rick: It takes time. It takes curiosity. You got to learn more about your partner, kind of what makes them tick, what they're anxious about, what they're excited about, what are their hopes and dreams and plans and goals and their questions. You can ask each other. You can borrow them from psychology. They're called the 36 Questions That Lead to Love. They're often used to get strangers to feel really close and intimate with each other quickly. Things like, “Oh, if you could have anyone over for dinner, who would it be?” It starts off light and it gets deeper over the course of the questions.

It could also be used within couples, people who've been together for a long time, where the answers to these questions are totally non-obvious. If you're just going about your days talking about logistical matters, who's going to let the repair person in? These questions can help. They can really spark ideas for wonderful gifts.

Ben Felix: Okay, so we've talked a lot about romantic relationships. How do kids learn about money from their parents?

Scott Rick: They're learning by watching what we do. They're learning from our active verbal advice. “Hold on to that gift money from grandma. You don't need to spend it that quick. We don't need to run out to Target and spend it right away.” Then I might say that to my kid and say, “Hold on, let me just order the new iPhone here.” They'll see these mixed messages. As a tightwad, or a spendthrift, you don't love that aspect of yourself, so you're often telling your kid, basically, do as I say, not as I do. You don't have to be like me.

We see evidence of that, that the extreme parents give their kids advice to go towards the middle. Also, what the evidence seems to suggest is that over time, we become our parents. We pick up more on what they actually do than what they say in terms of advice. If they see you being a total spendthrift every day and you just keep telling them, save your money, save your money, it's not going to work. It's just kind of tell them that. They're eventually going to pick up on what you're doing now. They can't immediately pick up on everything. They can't buy an unaffordable house as a seven-year-old. But when they encounter these moments later in life, they tend to mimic what they saw earlier on. Eventually, we do look more like our parents than we might hope sometimes.

Cameron Passmore: What if your parents are mismatched?

Scott Rick: They both matter. It's who are you around, or who's doing the big decisions around you. It's who you're more exposed to. I don't know who would win out. It's just case by case. If dad's working all the time and mom is spending more time with you. It's like, well, what is mom? Even if mom and dad are mismatched, I would look more at who they're spending the most time with.

Cameron Passmore: Interesting. What if there's disagreements? How should parents navigate that?

Scott Rick: Assuming there are budgets and realities and trade-offs that need to be made, my advice is that when there's disagreements about material goods, should we get the new video game system, or the best bicycle, versus a medium bicycle? When parents disagree about that stuff, I say, let the tightwad usually win. Defer to the tightwad. That's just based on research about what makes us happy, material things versus experiences, and so the material stuff, our enjoyment goes down pretty quickly.

I say, let the tightwad win on the material decisions. But on the experiential stuff, should we take this vacation? Should we do certain things on the vacation? Should we go on this adventure? I say on those, let the spendthrift win, because those are really important, good vacations. They matter for a family and they matter in the moment. They matter for the anticipation of it and the stories you tell for years afterwards. They really do matter. On those types of things, I say, maybe let the spendthrift be in charge.

Cameron Passmore: Really interesting. Now, what if there's a difference in what a parent would have decided versus what a child decided to do with their money, if there's a difference in generational decisions?

Scott Rick: We need more research on the generational component. We need to follow people longer. But in our study where we brought in parents and kids and we had them talk about spending, it was really interesting. The kids were much more pro-saving than the parents. These kids were very conservative. I mean, maybe it's because they were in a lab and we had a video camera on them, but you saw a lot of the parents saying, “No. I mean, you can buy yourself a treat sometime.”

What's funny is the parents who were saying that tended to be more on the tightwad end of things. I think because they saw like, “I don't want you to maybe turn out like me, so you can loosen up a little, kid.” Again, the parent also knew there was a camera on them. In everyday life, the kid is going to see the parent saying, “No, I can't do that.”

Ben Felix: I love the advice on navigating disagreements, separating it between material and experiential purchasing. That's pretty fundamental where if a person thinks it's important to have experiences as a family, we talked with this earlier about how someone might rank high on the Cantril ladder, but not be doing fun stuff. It's a really nice way to solve that issue and settling those disagreements.

Scott Rick: I think it can work out. In our world, there is disagreement about what's material versus experiential, like a bicycle. What is that? Because it's meant for experiences. There is some ambiguity, but I do think in general that can be a good guideline.

Ben Felix: Yeah, I bought an expensive bike. It was really expensive. I use it a lot. I'm really tall, so I can't just go and buy an inexpensive bike, even if I wanted to. That's my excuse.

Scott Rick: That works.

Ben Felix: My wife agreed too, so that's what mattered, I guess. Based on all the research that you've done and the research that you did for this book, do you think people should marry for love, or should they marry for money?

Scott Rick: This was one of the things I was shocked by. I was curious, what's the advice that's out there? The digging around I did, I saw way more people recommending marry for money than marry for love. I wondered, maybe the people who believe you should marry for love, or actually having a good time and having fun, they're not writing these mean posts. F. Scott Fitzgerald, Great Gatsby, he had this advice. He said, you want to go to where the money is and then marry for love. It's not the worst idea. He's acknowledging both money and love matter, but it's not so easy to go where the money is.

We tend to hang out with people with similar socioeconomic characteristics. They're not throwing open their mansion doors and saying, “Hey, come on in. Have some, have some.” Even if you do meet someone with money, are they super eager to share it with you and see it as our money? There are people who live in apparent luxury, but they feel poor, because there are these strict guidelines between this is mine and this yours and maybe you get an allowance or something. It's just not practical, this marry-for-money advice.

Of course, you need love. You need both kinds of love. You need the passionate, burning love of an early relationship. You also need the companion at love. Like, “Hey, I enjoy hanging out with you and watching Rocky Four. Let's just have fun doing that.” I was watching that with the kids last night, so that's top of mind. I think you need both and something else. You need love, you need money, enough money to be comfortable enough, but you also need psychological similarity.

You need similar values, goals, plans, interests, not identical. That would be boring. You don't want to marry a clone, but you need these similar tastes. There's a story of this couple. They were in love, but he wanted to go on a farm and raise 10 kids in a very religious way. She was a city dweller and she wanted maybe one kid, maybe no kids and wasn't very religious and they were in love, but they knew that it just wasn't enough. They had the love and the money, but it was just going to be a disaster. They went their separate ways and they lived their happy lives on the farm and in the city.

My advice is you go where the similarities are, and then you marry for love and money. It's a high bar I'm proposing here for marriage. When you're dating, I say, my goodness, just explore. See what's out there. For actual marriage, you got to meet a lot of criteria.

Cameron Passmore: What do you hope people will take away from your book?

Scott Rick: Certainly, I hope they'll be better gift givers and I hope they will be more mindful if they have kids about what they display around their kids. I hope their bank account structures change to those structures that people make and benefit from. I don't expect readers to follow every bit of advice. I think that's fine. But I do think reading through my perspective and the logic of it all will be a useful exercise. Just considering this perspective, which again is I think very unusual in this personal finance, self-help space, that tends to be very puritanical and it's about how to get rich.

I’m not saying it's bad to get rich, but that is not what my book is about. I can't tell you what to invest in, what fund. There are other people who are good at that. Mine is about routes to happiness via money changes.

Cameron Passmore: Great book for people to read.

Ben Felix: I mean, anybody really, because everyone will have a relationship of some sort at some point where money is a medium that will affect joint decisions.

Scott Rick: Certainly. Group of friends wants to take a vacation, but we all make different amounts of money. Yes, this looms large in all interpersonal settings.

Cameron Passmore: How did writing this book change your personal approach, or perspective on spending?

Scott Rick: It probably made me even more of a spendthrift.

Ben Felix: Oh, wow.

Cameron Passmore: Wow. Really?

Scott Rick: Yeah. I talk a lot about, when do we get to eat, drink and be merry? What do people regret later in life? I see my kids growing up way too fast. All these thoughts tilted me even more towards going for it a little bit in terms of, if there's an opportunity for fun, but it's expensive, go for it, rather than saying, “Well, let's save it and hope something better comes along later.” Part of that is the world we find ourselves in and there's uncertainty about the future and worries about what that will look like. It made me lean even more on seizing the moment.

I'm not going all in. I still have these automatic payments going to savings, retirement and kids’ college. That's all in the background. That's happening automatically. I'm not living like each day is my last. I'm just erring a little more on the side of trying some more fun things, even if they cost some money.

Ben Felix: Does that mean you've increased your fun budget?

Scott Rick: As a spendthrift, I don't do real micro categories. I think that's really helpful and great for tightwads. But yeah, I don't need that advanced notice of like, “Oh, I need to set aside this amount for fun.” I can find it in the moment. I mean, I probably should be a little more careful in my own budgeting, but it's more of a loose mental accounting that I'm up to.

Ben Felix: Amen. I think that's great. I think personally, budgeting is the most excruciating exercise I've ever tried to engage in, so I don't do it. I do what it sounds like you do, which is I save the amount that I know I should be saving and don't stress too much about spending, but I'm probably more of a tightwad, it sounds like, than you are.

Scott Rick: Yes. I think so.

Ben Felix: Though, I still hate budgeting.

Scott Rick: Well, we can find some common ground.

Cameron Passmore: Our final question, Scott, and this has been great. How do you define success in your life?

Scott Rick: It's a great question. I have no idea. I don't know. It's a real day-to-day thing. For me, it's just, am I happy? Are the people around me happy? Do things seem to be going well? It's hard to know. In psychology departments, there's often this joke of like, “Oh, you're fine. How am I?” Instead of like, “Oh, how are you doing?” You need this outside view. I wish I had a better answer for you. I'm sure you've had guests that have much more insight than I do. I'm still trying to figure that out myself.

Ben Felix: I think that's a great answer.

Cameron Passmore: Agree. This has been an incredible conversation. Scott, we're so grateful. Your book Tightwads and Spendthrifts: Navigating the Money Minefield in Real Relationships is, I think, a must-read for everyone. Thanks for your time.

Scott Rick: Oh, my gosh. Thank you both so much. This was a lot of fun.

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