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Financial Peace University Lesson 2 – Relating With Money
Nerds and Free Spirits Unite!
My wife and I did not attend this class with the rest of our mates. Instead we were on vacation in Disney World during the class (don’t worry, except for food and souvenirs, we had already paid for the vacation). We did, however, sit down and listen to the CD together. Though we did not get to engage in the class-wide discussion, we did take part in a little one-on-one discussion.
What you do with your money shows what you really care about
Dave starts off this week’s lesson with the following quote that I find quite apropos:
The flow of money in a family represents the value system under which that family operates.
It is such a true statement. The places that you spend your money are a great indication of what you find important. Are you giving money to help others? Are you saving? Or do you not have enough money to do that because you are buying every fancy electronic gadget that comes out.
Shocking news flash: men and women are different
Sorry, I got a little distracted by that quote, the main point of this lesson is to expose some of the differences between you and your significant other in relation to money issues. To promote understanding between the two of you, Ramsey spends part of the class discussing the differences between men and women.
For instance, here’s one generalization: men view emergency fund savings as “boring and not sophisticated enough” while women view it as “the most important key to our financial plan.” I found this interesting actually as I recalled a conversation I had with a friend in late summer 2008. The topic was about how he felt it was not necessary to keep your emergency fund in liquid savings due to the much better return that could be had in the stock market. A few months later (you remember October of last year?) his wife wore an exasperated look on her face one morning during carpool pickup when she was asking me if I had any insight into what was going on with the stock market and what would happen next.
On top of the gender differences, he also roughly groups people into two camps: nerds and free spirits. Then he spends a few minutes humorously discussing characteristics of the these types. The point, again, is to remind us that people are different; not everyone thinks exactly like you do (thank goodness) and that’s ok. Understanding this fact will make it easier for people to relate to each other and get down to the business of getting their finances on track.
Some marriage specifics
Ramsey then mentioned that the number one cause of divorces in America is money problems. While being at odds about your finances is a terrible source of stress for a family, being on the same page can actually bring an incredible level of unity to a marriage. This is exactly what I am hoping to accomplish with my wife through this class.
His advice for couples is that both of you do the financial decision making. It is not for one person to decide and force the other to comply. Instead, the decisions must be mutual. Of course, the nerdy, number-crunching, spreadsheet-loving one (that’s me in my family…but if you’ve read any of my other posts, you probably already know that) should prepare the budget and other financial documents. But that does not mean you are making the decisions, you are simply preparing the documents. The next, and more important, step is to come together to discuss the budget, make changes until you are both satisfied, and then agree to follow the plan. This can not be over-stated – it is critically important that both partners are involved in the actual decision making.
What about the singles?
Ramsey also suggests that a single person take the time to prepare a budget and follow-through on it. Obviously, that person does not have a spouse to meet with, discuss, and agree to the budget. If that is your situation, Dave strongly recommends developing an accountability relationship with a friend or mentor to help you along the process. This relationship should be with someone who is honest and caring enough to tell you when you are about to do something stupid with your money. You make all the decisions, but it is beneficial to have someone around to bounce ideas off of and to make sure you are following a good path.
Kids should be on commission, not welfare
This session concluded with Ramsey’s views on children and money. He started off this section by reminding parents that it is their responsibility to teach their children about money, not the school’s. He recommends paying the commissions instead of allowance – if they work, they get paid, if not, tough. When they grow up and are out in the workforce, they won’t be given allowance (hopefully not, at least) so they shouldn’t start thinking that is how money works now.
My wife and I have actually gone back and forth on this topic over the years. I do think the commissions idea makes sense and I think we will be instituting some form of it in the near future with our young children.
Wrapup
As I mentioned, we did not participate in the dicussion with our class so I don’t have any awesome insights to share with you. What we decided is that even though she did not think of herself as a “free spirit,” according to Ramsey’s definition, she is (and compared to nerdy me, she certainly is!). In our next post, we’ll be back with our class and will start into the nitty gritty of putting together the budget…check back then!
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great article. Based on your article it sounds like a really grea class
great article though you didn’t attend this class. it seem that money makes the world go round.
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