Our returning guest today is Rachel Cruze:

As a #1 New York Times best-selling author, host of The Rachel Cruze Show, and The Rachel Cruze Show podcast, Rachel helps people learn the proper ways to handle money and stay out of debt. She’s authored four best-selling books, including Know Yourself, Know Your Money. You can follow Cruze on Twitter and Instagram at @RachelCruze and online at rachelcruze.com, youtube.com/rachelcruze or facebook.com/rachelramseycruze

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Show Notes:

I'm so excited to welcome Rachel Cruze back to the Work & Play Podcast! She is a personal finance expert with Ramsey Solutions and author of Know Yourself, Know Your Money. She's also a mama of three littles, two girls and a boy, so I have a special place in my heart for that. And honestly, she's just such an uplifting voice in my life today.

We're talking about the why behind your money—why we think or behave the way that we do when it comes to our spending, saving and relating to money. And most importantly, how we can continue to dream with our money when it feels like life might be a little out of our control.

For the full episode, hit play above or read through it below!

Nancy Ray: Well, Rachel, thank you so much for coming back to the Work & Play Podcast! I am so grateful to have you here and you're my very first returning guest, so welcome back.

Rachel Cruze: I love it. Thanks, Nancy. well, thanks for having me back. I so appreciate it.

Nancy: Of course. Well, we're here to talk all about your new book, Know Yourself, Know Your Money. I would love to know where it came from. How did this all get started?

Rachel: Yeah, well, gosh, it was probably like four years ago, I guess, that I was just in the season of my life where I really was learning so much about myself. I remember I read the book, The Birth Order, cause I'm a middle child. And I was like, okay, how does birth order affect you? I did the Enneagram and found my number and read tons on that. I was in some counseling at the time and I don't know, I just was really unpacking the depths of who I am that I really hadn't dug deep into. And as a result of a lot of that, I feel like I just became a healthier person.

I just was more engaged in my relationships. I feel like I was a better wife and mom and friend and team member. And through that process, I remember thinking, “Okay, how can this stuff apply to my money?” And as I started digging into that, it was like a black hole, is what I've been telling people. I just like I fell in and I was like, what?

Because for 10 years I've been telling people how to handle their money, how to budget, how to get out of debt, how to invest, how to refinance, how to, and I never really focused on the why.

And looking back, I'm like, man, why didn't I do that? Because I always talk about how personal finance is 80% behavior, and only 20% head knowledge. And so the “how to” of it, right, how to do these things is a small part, but actually doing i, that behavior, is so huge. So, digging into that was a big part of this book. Asking the why, why do I handle money the way I do?

And it came everything from how you grow up, your tendencies, your personality, your fears, your dreams, so much of it. So I kind of look at this book as kind of the root system of the baby steps, the Ramsey Solutions. Like, it goes underneath the foundation in our hearts, and when you can start to realize why you handle money the way you do, then you really can change your money habits and have lasting financial peace.

Nancy: I remember when we were going through the baby steps, that phrase, what you just said, the 80% behavior, 20% head knowledge is something that honestly was so comforting to me, because I didn't have a lot of head knowledge about money and what your dad always says about, you know, your biggest problem about money is looking at yourself in the mirror. You know, that's your problem is when you look at yourself in the mirror, it's you, it's your behavior. And I think, yeah, it's just so wise to ask that question, well, why? Why do I behave the way that I do? And I love how you talk a lot in your book about how that starts in childhood.

I mean, you start relating to money because of the money classrooms that you are raised in. So can you talk a little bit about what you explained in your book as a Money Classroom and how that impacts us, how our childhood impacts us?

Rachel: Yes. Yes. Well, your classroom growing up was, you know, your home, your childhood home. So you learned so many lessons and some lessons we take with us into adulthood and we use, some lessons we wish we could unlearn from those moments, you know, in these, in these classrooms. But you realize that money is communicated in two ways: it's communicated verbally, so it's either open or closed, and it's communicated emotionally, it's either stress or calm.

And so, as I was writing the manuscripts, I kind of was looking at these two things and I just remember these coming together and I was like, “Oh! God gave me a quadrant, like here it is!”

And so that Classroom #1 is the anxious Money Classroom. And if you grew up in this classroom, that means it was verbally closed. So it was not talked about, and it was emotionally stressed. So you felt tension around money, but you may not have been able to pinpoint why, because it wasn't talked about.

Classroom #2 is the unstable Money Classroom. And this is where it's verbally open, but emotionally stressed. So lots of conflict and fights. So you may have heard your parents have the same money fight over and over again. Or they fought with extended family members about money, but poof, you heard it.

Classroom #3 is the unaware Money Classroom. And this is where it's verbally closed, but emotionally calm. So if you grew up in this classroom, your head was probably in the sand when it comes to money and you really didn't think about it until you got off on your own and you were like, Oh wow, okay. I gotta kind of figure this out because it wasn't a deal, right? It wasn't stressful, but yet it was never talked about.

Then Classroom #4 is definitely the healthiest Money Classroom, and this is where it's verbally open and emotionally calm. So you can have $10 in this classroom, you could have 10 million, but the idea here is that money was controlled. There was a plan. So, the emotional aspect of that money was really calm, but it was also talked about. And so your parents or parents engaged you in conversations when it came to money and you knew what they were doing, you knew how money worked. And so when you got off on your own, you were like, okay, you understand this world.

Nancy: I love when you talked about in the book, my favorite stories that you shared that make me laugh is from childhood. When you said that your mom, when you guys went to the movies would get the large bag of popcorn and she would fold it up—because you could get free refills—she would fold it up after the movie was over, stick it in her purse, and when you guys went back to the movie theater in a couple months, she would use this same bag over and over.

I literally, I was laying in bed, I was laughing out loud reading it at night, and I read it to Will. He was like, “No way. That is hilarious.”" And I just love how real and transparent you are in the book because you know, your childhood was at first, I mean, you can tell me what Money Classroom, obviously you think it was, but I feel like as your parents grew financially—because when you were born wasn't weren't they going through bankruptcy, and that was like the low of it. You correct me if I'm wrong—but of course they became more secure and learned about money, and then your dad built this amazing business on how to handle your money well. But what would you say, do you think that you were in different Money Classrooms or did you kind of live in the secure Money Classroom through most of your childhood?

Rachel: Well, it was funny when I was writing this out, you know, and I got to that fourth money classroom. I really do feel like that was our home growing up. Not that we were perfect by any means, but there was a level of communication about money. There was a level of control.

And I had dinner with my parents soon after I kind of wrote that part of the book and they're asking how it was going. And I was like, good. I was like, well, I'm just writing about these Money Classrooms. I was explaining it to them and I was talking about how I grew up in Classroom #4, and they both kind of looked at each other and started laughing. And I said, what? And dad said, “Well, that's because your memories start when you were like four years old, but before that it was Classroom #2.”

And I was like, okay, the lots of fighting, lots of conflict. So yeah, I think you definitely can change classrooms depending on situations for sure. But yeah, it was, it was so funny, but even that Classroom #4, I mean, they all have downsides, and I talk about that, the downsides of each classroom in the book, but even for the fourth Money Classroom, you have to watch out. And people that grew up in that classroom, you have to realize that money smarts is not a gene.

Just because your parents were good with money, it doesn't mean that you're automatically going to be born with that. You have to do the work as well. And so there can be a level of entitlement in Classroom #4, if you grew up there that you're going to go off on your own and you're automatically going to be smart with money, you're automatically going to make all the right decisions, and that's not the truth. You really still have to be disciplined, even if you were a product of Classroom #4.

Nancy: And I think that gives any listener so much hope. Number one, that you can switch classrooms, especially, you know, you and I, we’re raising three little kids. So of course my mind is going to—I really hope that I'm going to give them a secure money classroom. You know? That I'm hoping I'm pouring that into them, but what hope can that give anybody listening? Like maybe I'm not doing it right. Or maybe I had an anxious Money Classroom growing up. Well, you can change that for the next generation. You can learn, you can provide a secure money classroom for your kids. And that's just really encouraging even to hear that, you know, your parents kind of switched, you know, when you were really little, like we have the ability to switch and provide that for our kids, which is just super encouraging.

Rachel: Yes, I know. And in the book, I really encourage the reader that where they are present day, you can move to that Classroom 4, like, you can start working. Yeah, no matter what classroom you grew up in, you're exactly right. It doesn't matter. You may have some habits out of it or the way you view money may be affected because of your classrooms—that's why it's important to go back and identify that—but anyone, anyone can have a healthy relationship with money. You can learn to communicate about it, even when it's difficult, and you can learn to have a plan around it as well.

Nancy: Well, what if we're like wired differently? Because you talk, I mean, you guys talk about this all the time, natural saver versus natural spender, the nerd, the free spirit. You said in your book, there are seven major money tendencies we have. Can you just share a couple of those and why those are important?

Rachel: Yeah. So these tendencies, neither one is right or wrong. And the extremes of these tendencies can be a little unhealthy. So we don't want the extremes, but, and saying, okay, here's where I naturally fall when it comes to money.

So for example, one of them is experiences or things.

When you spend money, do you tend to spend it on an experience? This would be me. So I'm like: a nice massage, or go to the zoo with my kids, go on a great vacation, give me a great experience.

Or is it a thing, an item? That’s more my husband. He's like, okay, if I'm going to work hard for money, get a paycheck and buy something, I want to reuse it over and over again and let it advance my life.

And so again, neither one is right or wrong, but just understanding “This is where I value to spend my money.” Because specifically for married couples, you're going to find tension in this. You're going to find when you do the budget, one of you is going to tend to spend it on experiences, and the other one's an actual item or a thing. And so learning to come together and have shared goals have, shared dreams and working that plan together is really important. But being able to identify it is huge.

So which one are you Nancy, are you experiences or things?

Nancy: A hundred percent experiences, I am right there with you. And I'm trying to think about what Will is, and I think that he might be things. I mean, he likes a really nice pair of shoes. Like he just got almost $200, $300 pair of shoes and I'm like, I would never spend that much money on a pair of shoes, you know? So I think that he might be in the things category, too. I kind of want to ask him tonight at dinner to see what he thinks.

Rachel: Well, another one that kind of piggybacks off of that idea is quality or quantity.

So, I'm more quantity. I will have 20 pairs of cheap earrings from Amazon and be perfectly happy, you know? I don't need like really, really, really nice things. I appreciate, you know, some nice investment pieces, I do. A nice purse, I get that. But overall, I like to have options.

So I'm quantity and Winston is definitely quality. He he's like, give me three nice pairs of $2-300 boots and I'm good, I can wear them for the next eight years of my life. And so, knowing that, too, is really important because you don’t want to trigger the extreme.

So for the quantity side of people, we can tend to cope with spending, because we justify our purchases. We say, Oh, it's just $15. It's not a big deal. Or this sweater it's on sale. It's 70% off. So, I might as well just get it. We can justify it. But you really have to ask yourself, “Okay, why do I feel like I need to be buying? Why do I feel like I need 30 pairs of earrings?” You know, like when does it become too much? And so the minimalist mindset is really healthy for us quantity people—and I can speak from experience—to make sure things are not, you know, becoming our coping mechanisms.

And then the quality people you, they have to watch out too, because they can kind of turn their nose up, if it's not a certain brands or as from a certain store or all of that. And you can end up wasting a lot of money when that's your standard, 24-7.

Nancy: That’s so good. That's such a good perspective just to know those things about yourself. They absolutely affect what you're hitting when you, you know, what you're buying, when you hit that Prime Now button or the Amazon button, and you can justify some things maybe that are way more expensive than they should be, if you're a quality person when you don't really need them, but you want the best quality or, same with quantity, you know? But just knowing that about yourself is ultimately a gift to your money habits, your spending habits. You know exactly why you're getting that thing. And then you maybe pause and think, “Is this the wisest decision?” before you hit that button.

Rachel: Yep. And then another really important one is the question: Why do you want money? And it's either for security or status.

And so for security people, they want money to know “I'm going to be taken care of. If something bad happens, when something bad happens, I'm going to be okay.” And again, the unhealthy side of that is they can live a lot and make decisions in fear. They hold their money tightly. They don't live with that open hand on the extreme side.

And then the other side is status, and that sounds like a bad word, I don't mean it to be bad, but it's more like, “Hey, I want money so that I can do things.” And this is me. I'm like, I will budget. I will save, I will be wise with my money, but I'm going to do it so that I can buy a cool minivan because I got three kids now and I want a fun minivan, you know?

So I will do these things so that I can spend and have a “fun life.” But the unhealthy side of that again, is that our material items, our accomplishments can become our identity. And so we have to be careful with that. So status people, I always tell them to ask the question, and I have to do this for myself, is: “If nobody sees this purchase, do I still want it?”

Nancy: Hmm. That's a good question. That's, yeah, that's certainly good.

Rachel: That's big for me, for sure.

Nancy: You talk a lot about fear in the book and I'm really passionate about fear. I feel like the Lord has been teaching me a lot about fear and the power that it can hold in our life. I did a whole podcast episode about what I learned about fear last year, especially in the midst of this pandemic and how we are living. I can grab hold of us, especially in relation to money. But I feel like we don't really talk about fear and money.

Can you talk about different types of fears that we experience when handling our money?

Rachel: Yes. Well, it was so interesting when I was writing this chapter, I talked to Dr. Chip Dodd about this and he told me, I love this, because he said part of fear, it can be a gift actually, because fear is your body's literal response that you are in need of something. And so when it becomes paralyzing, when it becomes overwhelming, when it turns into anxiety, that's unhealthy. I don't want that kind of fear, but if you kind of have this knee-jerk reaction of some kind of fear, when it comes to money, listen to it and say, okay, what is this telling me?

Because it may mean that you put some safeguards in place or you change your habits in order to mitigate that fear. So, one of the fears that I hear a lot of people talk about, specifically women, is if something bad happens, am I going to be okay? It's that financial security—insecurity, if you will—fear. And for a lot of people, they had that in 2020. And for some people, it was an irrational fear because they don't have debt. They have an emergency fund. And even if they were laid off or furloughed, they had a backup plan. They were good.

But some people had that fear because it's real. Like if you were one of the 40% of Americans that could not cover a $400 emergency in cash and you were laid off and you had bills to pay and debt owed and no money. Yeah, you’re going to be fearful. And so what does that fear tell you? It's telling you, “Hey, you have to change. What you've been doing is not working. You need to start working a plan.” You need to say, “Hey, I need an emergency fund. Hey, I don't need to be owing people money because that adds to the stress.” And so that's what you have to look at and say, “Okay, whatever my money fear is, I need to tell the truth about it.”

What's the truth in it? And what can I do around it to help me not have this fear anymore?

Another fear people have is: I won't win with money because of how the world works.

And again, enter in 2020, right? With a pandemic and an election and all these things we can't control. And it's so difficult to live in that place where you're like, I have no control over what's going on right now. So you have to focus on what is, what are the things you can control?

You can control what you do with your income. You can control what you're going to do with that stimulus check that comes in. You can control that money, because it hits your bank account. You can control your work ethic. You can control who you hang out with. You can control elements of your life and your money. So focusing on that and putting your emotional energy towards those things versus sitting at home and wringing your hands about things that you can't.

Nancy: Yeah, it goes right back to that person in the mirror. That's right. What are you doing? How can you control this? Because we have more control over our money than we think we do. I mean, that was the biggest light bulb moment for us when we started going through the baby steps, was we can do this. We didn't even have that much money when we started. When we got married, we had very little, but we were like, “We can do this, because it's our behavior.”

And I just think it's incredible how fear really does impact us and impacts our beliefs, and if we can just change that belief, change that thought pattern of, “I'll never win with money.” You know, “The world is too hard or my life is too hard,” and just look at ourselves in the mirror and say, “I can win with money, I don't have to be afraid. There are opportunities. Yes, the world is hard. Yes, this is a crazy year that we're living through, but there's still opportunity,” and just change. I mean, that is that's life changing.

Rachel: Exactly. Yeah. And fear is a terrible financial advisor.

I mean, and when you're basing all your money decisions on fear, you're not going to make great decisions. And so that's what's important, you're right, to focus on the truth, the truth of the situation and the truth that yes, everyone has the ability to change. Everyone does, but you have to have that hope and that belief, you're exactly right.

Nancy: And I love in the book at the end of that chapter, you have a list of like fears and you're like, Hey, you take a minute, write down: What are your fears about money? Because if you write that down and acknowledge them, then you're going to—again, know yourself and know your money—know how you're going to operate an act with your money, so that you can not act out of fear, but instead act out of confidence, which I thought was so good.

You talk about dreaming. And I want to talk about this a little bit, because this has played a huge role in our marriage and our life with money. It is so important to be able to dream about what you can do with money that you save, what you can buy, what financial goals you can achieve.

But right now I feel like people they're just having a hard time dreaming. I mean, I've even felt that in our own marriage ourselves, it's like, no, we just right now kind of feel like we need to hoard some things and pile up cash and just kind of watch and see what happens. So what advice do you have for somebody who maybe is having trouble dreaming or maybe having trouble saving money because they feel like it's not worth it just in the state of the world right now. Like what encouragement do you have for anybody listening?

Rachel: Yes. Well, if you're not dreaming, you're probably not saving. And there's a real element, and you said it and I'm like, yes, that we are kind of in just like the tactical day-to-day of life.

And I feel like we were in that a lot in 2020, right. Just like get through the day, figure out what we need, what scary thing's going to pop out around the corner? Because it feels like it's just everywhere.

And so for a lot of people, they kind of had to be heads down. And for some people, for good reason, right? If you’re in a really hard place financially, you don't have the capacity to look up and be like, “Oh, where are we going to be in 10 years?” You're like, “No, I need to pay rent. And it's due in a week and how am I gonna get the money?”

So there's, there's a reality to it for sure, but I don't want that to be your life.

I want you to be able to get to a place where you have a level of a solid foundation under you financially, and a plan in place where you're making progress. And when you have that plan, then you're able to look up and say, okay, let's look in the future.

Where do we want to be? Where do I want to be in 5? 10 years?

And it's amazing when you can put those dreams out there, your savings follows because I know for me, it's hard just to save and just save. Like, that's it. Sometimes my retirement, honestly, I know we put 15% of our income into retirement, or little bit more sometimes if we have the ability to, and it feels like a black hole. I'm like, “Oh, I'm never going to see this money again.” I know it's wise and I know 65-year-old Rachel will be really proud of 33-year-old Rachel, but it's hard sometimes.

So having these wins that you have in life to say, “Hey, in the next three years, here's like a goal we have,” and it can be anything. It can be, “Hey, I want to go back to school. I want to start a business. I want to give more. We want to go on this great trip, if we ever can travel again,” you know, we want to do these things. And when you do that and you have that dream and you have that goal out there, you will have the motivation to save.

So, I do find when people are not dreaming, it's so difficult to save.

Nancy: Yeah, I totally agree. I have to have some sort of finish line or milestone that I'm looking towards. Otherwise I just don't care and just kind of spend my money like on whatever happening in my life right now. And the kids are on whatever. But if we have a goal that we are reaching towards it. That's what I love about the baby steps, too, is because it's like right away, you have goals—attainable goals—in baby step one and baby step two. Getting out of debt, it’s this huge goal. So it kind of gets your muscles ready. Like, Oh, I can actually achieve goals with money.

And then it's so fun because when you're actually debt free, you get to dream of all kinds of fun things, you get to determine what the next step is in your financial journey. But yeah, I think dreaming is huge to just cling to and hang on to, especially in a year that that has been so difficult.

Okay, I want to close with just some funny, fun questions and stories because I love your writing style. I know you love to have a good time. Can I just say the story, your book about when you rented the Netflix documentary on, who is Anthony Wiener?—I just had to share this because I literally, this again was me like laughing out loud. And I was like, “Rachel is funny.” Like you are, how do you make a book about money funny? I don't know, but you did it—But, you've rented this documentary and then you come in and your husband's on the phone with, you know, Netflix or your cable company, whoever, and is saying “We did not rent a movie called Wiener!” And you're like, “No, I did. I did.”

So I just had to say like, that was probably my favorite story in the book. Literally we read it out loud again, laughed, we were just like cracking up. So I just wanted to thank you for being so real and transparent and hilarious in this book, because it literally was so funny just because you and Winston, you're just normal people. You still work things out with money. Like you're still learning together even after being married for so long. So anyway, I just had to share that. It was great.

Rachel: I'm so glad. I'm so glad it got a good laugh after it happened. I thought, Oh my, this was, this was something else.

Nancy: So hilarious.

Okay. Last question is what are you on the Enneagram? I actually think I know, but because I listened to a podcast, I cannot, I don't know if it was your podcast or someone else’s, you were talking to Ian Morgan Cron, trying to figure out what number you were.

Rachel: Yes. I know. I know. I tell everyone that I want to be a seven. Deep down, I think I'm a 7, but I, I always test as a 3. I do think I'm a 3. I mean, I I've come to grips with it because there's parts of a 3 that I 100% relate to. And I'm like, I don't know why, and they say the number you hate the most is the one you probably are.

So I think the 3 is so me, cause I look at other 3s and I'm like, Oh really? Yes. A hundred percent. But a lot of my friends, it's funny. My friends are all 3s, 7s and 8s. I have a lot of 8 girlfriends.

It was so funny, because when you were like, “I'm either a 3 or a 7,” my husband was like, “I think you're a 3, but you could definitely be a 7.” I heard you say that.

Well, just share some fun things. What's a good book you're reading. What's something that you're loving. It can be like any kind of product or thing. Just some fun things. Okay. Oh boy. Okay. I'm on like a book binge. I guess I go through these stages and I just read and read and read and read and read and read. So I just finished last night—actually I read two books at a time. I usually read like a spiritual great book and then like a crazy thriller fiction—So I just finished yesterday, The Screwtape Letters by CS Lewis. Great book. It's kind of an oldie, but it's a goodie. And then The Wife Between Us is another one I finished. It's a thriller, but gosh, I could name off 30 thrillers right now. The Last Mrs. Parrish, the Guest List. Anything by Ruth Ware, I've read all hers.

Nancy: What's your number one thriller? Can I tell you, I have never read a thriller!

Rachel: The Silent Patient. A great one, The Silent Patient. Oh yeah. Oh, it's good. Cause it's psychological. It's a psychological throws they're going through and you're like, okay, what, what made her stay silent? I don't give anything away—it's the title of the book, but Oh, it's good. Okay, Nancy, pick up The Silent Patient. It's great.

But I also love people's stories. So I love Glass Castle. I love Hillbilly Elegy, Educated and Matthew McConaughey’s book, Greenlights. I read that one last week and it's great, that's a great book. I loved reading about his life. Oh, I think we could keep going but we won't.

A product I love—I always tell people this and it's so funny—but it's called The Makeup Eraser, and it's this like microfiber towel thing. You just get on Amazon, it's pink, but it gets off makeup unlike anything. I've had every kind of makeup remover because I wear a lot of makeup for my job with being on camera. Oh, this thing will get off anything, in like three swipes. It's amazing.

Nancy: I love recommendations like that. That is awesome. Well, thank you, Rachel. Thank you so much for being here. Thank you for sharing your heart and all of your knowledge and your new book.

Tell us where can we find you and where can people buy the book? I'll definitely leave a link for it in the show notes, but to end, tell us about your podcast, too, because I love your podcast.

Rachel: Oh, thank you, Nancy. Yeah, anywhere books are sold. You can pick it up on Amazon or Books-A-Million, Barnes and Noble, Target, Walmart, rachelcruze.com and the podcast is the Rachel Cruze Show. So you can check that out on Podcast apps or YouTube, as well.

Nancy: Awesome. Well, thank you so much for being with us, Rachel.

Rachel: Thanks, Nancy, thanks for having me back on. Well, thank you so much for listening to our conversation.

Work & Play Cornerstore

I hope you enjoyed it as much as I did. It's time for the Work & Play Cornerstore where I share a book I'm loving and a thing I'm loving, but today I'm adding Rachel's book—I do love her book, Know Yourself, Know Your Money. I'm also going to add her thing that she highly recommended, which is The Makeup Eraser cloth.

For quick access, you can head directly to my Amazon affiliate store. You’ll be able to see everything I've ever recommended here on the podcast or on Instagram.

I'm going to close with words from Rachel. She said,