Kids are expensive. Nobody ever says they are going to have kids to help speed up their journey to financial independence. That is absolutely not the reason anyone would decide to have children. It probably goes without saying, but there are many things bigger in life than pursuing financial independence. If we don’t take time to experience the joys of life when we are younger, then what’s the point of financial independence? For some, that joy means raising children; for others, that may be travel, charity work, or other passion projects.
The pursuit of financial independence does not have to be an all-out sprint to the finish line. The journey usually starts by reducing expenses and paying down debt. Finding ways to increase income is also a critical part of the equation. More extreme measures may be required if you’re trying to break the paycheck-to-paycheck cycle. However, once you’re able to increase the gap between income and expenses, pay down high interest debt, and build a savings cushion, it’s important to then spend time enjoying the benefits of that hard work even if you aren’t yet financially independent.
Expenses When Pursuing Financial Independence with Kids
Our expenses have continued to increase over the past several years. Much of that is due to now having two young children. We expect expenses to continue to increase as they get older. Bigger grocery bills and more expensive activities alone will continue to become more expensive. We do our best to keep lifestyle inflation in check but it gets harder with a growing family.
I love seeing young, single folks in their early 20s fresh out of college pursuing financial independence. In many ways I’m jealous of their early start on this journey. We didn’t get going until I was nearly 30 and have been playing catch-up ever since. With that being said, the “I live on $1,500 a month” posts are perfectly doable when you’re young and single, but that would be really challenging with a family of four. In my early-to-mid 20s I was able to live off $1,500 a month as well even before knowing about the concepts of financial independence, though the reason is that’s about all the money I made in a month at the time.
With our first child, our annual costs increased by about $10,000 right off the bat with increases to health insurance premiums and day care. That doesn’t include the cost of clothes, formula, diapers, crib, and so much more. Our increase in monthly expenses easily increased by $1,000 to $1,500 a month. Now that we have two little humans, the cost of doing almost anything continues to go up and will continue to do so as they get older. Kids don’t have to be super expensive, but I don’t buy into the narrative that children don’t have a significant impact on our financial journeys.
Changing Your Money Mindset With Kids
One of the biggest differences in pursuing financial independence with kids is the mindset shift. This may be obvious but ensuring that my children are in a safe and loving environment that allows them to thrive takes top priority. It’s no longer just about my happiness; it’s collectively what’s best for the family. The benefits of my day job, including health insurance and life insurance, take on a different meaning. I could roll the dice and live without health insurance (and I did for years, which is not smart), but there’s no way I would put my family in that situation.
While it’s all the rage these days to hate on the traditional 9 to 5, there are plenty of work environments that provide good work-life balance, paid time off, and other benefits that are difficult to obtain as an entrepreneur. If you happen to be someone working in a toxic environment or spending 80 hours per week at your day job, then you should be doing whatever you can to get out and find a better situation.
There is a delicate balance between making enough money to support your family and having enough time to spend with them. I do believe that spending time is the most important thing when it comes to raising children. At the same time, living a more frugal life may allow you to find a job that provides the flexibility and financial means to design the life you want. For example, the choices we’ve made over the past several years have allowed us to move from two incomes to one.
Other Expenses When Pursuing Financial Independence with Kids
We’ve already mentioned the high cost of health care, day care, food, diapers, formula and clothing. These expenses alone can easily account for thousands of dollars in expenses per month. We were lucky to find in-home daycare and preschool that only cost about $600 per month. Many families are paying double that per child. All of the other expenses mentioned above can also eat into monthly expenses. Below are a few additional costs that may not be as obvious.
Saving for College
We’ve elected to put $200 per month into 529 accounts to save for college. This isn’t going to be nearly enough to pay for our kids’ college, but at least it’s a little something. We are still undecided if we plan to pay for our kids’ college in full. We have a lot of time to figure it out and in the meantime we will continue to put a little bit of money away in college savings accounts.
Sports and Other Activities
Our 5-year-old son loves playing sports. Right now, the costs are reasonable to sign him up for each session. However, if he continues on this trend, activities will get more expensive. I don’t think he’ll ever play on super expensive travel teams, though if he’s passionate about a sport or other activity we want to ensure he or his sister have the opportunity to participate. In the past few weeks we’ve paid $84 to sign him up for basketball, $60 for a Cub Scout camping trip, and another $40 to buy his clothing for scouts. These things aren’t going to get cheaper, especially as his sister (18 months) starts to get involved in activities as well.
Something our family loves to do is travel. We take several weekend trips every summer to the lake and prioritize other family vacations. We do what we can to use miles and points to offset the price of our trips but that doesn’t fully eliminate the costs. Next year we have two destination weddings that we plan to attend. While we may not take the kids on both trips, even the one they will attend means two extra plane tickets, more expensive food bills, and additional expenses for activities. We are fortunate to be in a position to be able to travel with our family without going into debt. We could choose not to travel and would probably achieve financial independence a few years faster, but that’s not worth it. We’ve created many great memories through our adventures and will continue to do so.
Family Over Self When Pursuing Financial Independence with Kids
There are many families that have become financially independent with children. There are many others, like us, who are in pursuit. This MarketWatch article by Tanja Hester provides stories from other bloggers such as Tread Lightly Retire Early, Journey to Launch, and Tawcan, who are on a similar path. We’re all taking our own path at our own speed.
The important thing when pursuing financial independence is to keep putting one foot in front of the other. Small steps add up to huge wins over time. I don’t ever plan to fully retire, though at the same time advancing along the financial freedom spectrum provides us with options if my current job situation ever changes.
Being a parent pursuing financial independence is a constant balancing act. We do our best to spend on things we really care about, and cut costs ruthlessly on things we don’t. Even though we got a late start on our financial journey, having several years to get our finances in order before having our first child was a huge advantage. Our 18 month old will hopefully never know what it’s like to live in a home drowning in debt. So, is financial independence possible with children? Absolutely, but it definitely takes more work.