You might have had a reaction to the title of this episode – maybe a smirk or a raised eyebrow. I’m here to talk about why I believe Dave Ramsey, despite his significant contributions to the financial industry, is not a financial coach.
It’s okay if you have a different opinion. Experiences shape our perspectives, and that’s what makes this conversation interesting. I acknowledge Dave Ramsey has helped many, including me, but as a financial educator, not a coach. I’m passionate about financial coaching, and through this article, I aim to clarify what financial coaching truly means.
Dave Ramsey’s Influence and the Distinction in Roles
Dave Ramsey has been instrumental in helping people with their finances. However, there’s a distinction between educating and coaching. From my perspective, based on what I’ve seen and heard, Ramsey excels in financial education but does not align with what I see as financial coaching. Let me share why.
The Core of Financial Coaching
As the host of the Financial Coach Academy podcast and a devoted financial coach myself, my focus is on advancing this particular field. Financial educators, counselors, and advisors are undoubtedly important, but financial coaching offers a unique value.
Analyzing Dave Ramsey’s Approach
Using the six characteristics of great coaching, I listened to a recent episode of the Dave Ramsey show (Feb 8, 2023) to illustrate how his methods differ from financial coaching. Walk through this, I’ll be using my own framework of what financial coaching is, which I talked about on episode 19.
Owning What You Don’t Know:
- This is a tough point to judge for Ramsey. I don’t have enough data to determine if he admits not knowing something. His show likely curates calls, which might not reflect a true coaching scenario where unexpected questions arise.
- Ramsey’s advice often seems to reflect his values more than those of his callers. The ‘7 Baby Steps’ and advice like avoiding restaurants while in debt suggest a one-size-fits-all approach. In contrast, financial coaching is about aligning strategies with a client’s unique values and circumstances.
Exploring ‘And-And’ Scenarios:
- In cases like Brenda’s dilemma about buying in California, Ramsey’s advice didn’t explore multiple scenarios. He opted for simple solutions like “Just rent” without delving into Brenda’s personal reasons or considering various options. This lack of exploration is a departure from the depth and breadth of analysis typically found in financial coaching.
Focusing on the Whole Person:
- Tyler’s situation, where he and his wife had different views on debt repayment, demonstrated Ramsey’s focus on financial outcomes over emotional and relational aspects. Great coaching takes into account how clients feel about their financial journey, not just the numbers.
- Ramsey’s style is more direct, telling people what to do, such as advising Brenda to rent or telling Tyler to pay off debt immediately. Financial coaching, however, is about guiding clients to make their own decisions, empowering them in their financial journey.
Avoiding Shame as a Motivator:
- The use of shame or guilt as a motivator, evident in some of Ramsey’s responses, contrasts sharply with the empowering nature of financial coaching. Coaching should be a shame-free process that encourages positive motivation and self-efficacy.
Detailed Analysis of Specific Cases
- Brenda’s Case: Brenda, considering a home purchase in California, was advised by Ramsey to focus solely on the financial gain and opt for renting as a simpler life choice. Effective coaching would have explored Brenda’s reasons, emotional factors, and various financial scenarios in depth.
- Tyler’s Dilemma: Tyler’s conflict about using savings to pay off debt versus his wife’s preference for a slower approach was met with Ramsey’s black-and-white advice. This situation called for a nuanced understanding of the couple’s emotional state, especially with a new baby at home. Coaching would seek a solution that respects both Tyler’s and his wife’s perspectives, rather than pushing for an immediate debt payoff.
- Tim’s Sacrifice: Toward the end of the episode, Ramsey tells guest Tim, “Are you willing to sacrifice now or do you want to suffer for the next two decades?” So there were two choices, and the way they were framed makes it sound like there’s no choice at all.The message SHOULD be – progress is most important and there are infinite number of ways to make progress on your debt. Let’s figure out a plan for you to get out of debt that is best for you.
- Statistical Justifications: Ramsey’s use of statistics, like the percentage of millionaires who became wealthy by getting out of debt, skips the critical step of understanding how a client might interpret and feel about these statistics. Financial coaching involves dissecting these stats and aligning them with a client’s individual thoughts and feelings.
The Journey with Clients
As a coach, you’re on a journey with your clients. It’s not about giving one-size-fits-all advice and moving on. Coaching involves understanding clients’ unique challenges, fears, and aspirations. It’s about helping them find a path to financial wellness that aligns with their individual needs and perspectives.
Dave Ramsey’s methods have undoubtedly helped many, but they differ significantly from what I consider financial coaching. Financial coaching is about empowering clients, respecting their unique journeys, and fostering critical thinking. It’s about understanding that one method, like the debt snowball, isn’t universally applicable. At the end of the day, Dave Ramsey has contributed greatly as a financial educator, but in my perspective, he does not embody the role of a financial coach.