Marriage and Money – Dave Ramsey vs. Suze Orman
Money is one of the primary reasons for divorce in America these days. It’s a challenge taking two different personalities and getting them to agree on how to spend and save money. So, how do you manage your money well and keep your relationship strong?
Leading financial show hosts Suze Orman and Dave Ramsey provide great guidance on money but have very different views on relationships and money. Suze takes the approach of separate accounts and what’s yours is yours. She recommends that couples keep individual accounts and that they should each contribute a percentage to the joint bills, such as housing and food. The percentage that she recommends is based on the percentage of income each person earns. For example, Spouse A’s income is 40% of the household income and Spouse B’s income is 60%, they would split the joint bills 40/60. Suze says whatever is left over from the budgeted monthly payments is personal money for each person.
Dave, on the other hand, recommends Christian principals of a couple becoming one. He says spouses should combine all finances and work together towards a common agreed upon goal. He tells people to work together on a household budget and a piece of that budget should be spending money. This way, all money decisions are made together and nobody feels like they are earning less.
Kinsey and I lean towards the Dave Ramsey model. We plan our financial goals together, budget money together, plan our giving (to church and charity) together, and pool all our money and investments into joint accounts. We do have separate accounts too, but the separate accounts are only for our budgeted spending money. All of our money goes into our joint account, and then every 2 weeks we each of us gets our budgeted spending cash (we call it our allowance). This way, we plan our financial life together, but we still each have a little fun money.
We started out our relationship with separate money and never saw eye to eye about a lot of things. However, since combining our money and planning together, we’ve been much more successful, at saving, giving, investing, and planning for our future. We were able to quickly save up a down payment for a new home once we agreed on the same goal and planned for it. Most importantly, we rarely argue about money anymore, because we both know what to expect and what is planned for.
Recently I saw an episode of the Suze Orman Show, in which a woman had just won a hefty law suit settlement. Suze had advised the woman to pay her own debts and keep the rest of the money for herself – not paying off her husband’s student loan. Yikes! Really?! Aren’t we in this together as a married couple? There are several flaws I see with the separate money method.
1) Separate money equals separate lives. When married, you are in it for the long haul. Your life plans should be agreed upon with your spouse. We have seen real estate clients who can’t purchase a house because they live separate financial lives. One person has saved, while the other has blown their money and damaged their credit.
2) What if one spouse ends up staying home to raise kids? Then what? Does this mean that they are broke and the other spouse is in control? I don’t think so. Both spouses need to have some spending cash and equal say in financial matters.
3) Separate money equals greed. When spouses have separate money and separate financial goals, they can easily end up greedy. You end up having arguments over the dumbest little things like whose turn is it to pay for dinner? Arguments like that can destroy your date night real fast.
4) Retirement. What happens if one spouse is properly saving for retirement and the other is not? What could happen 30 years down the road?
5) Shouldn’t you be planning for a lifelong marriage, rather than planning how you can get ahead individually?
The bottom line is this: couples that plan their lives and finances together are much more successful financially and with their relationships. This involves a lot of work, communication, understanding and patience; but it’s well worth it.
Related post: My Debate With Suze Orman