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Insights from The Mind Money Spectrum Podcast Episode #143
Originally published Tue, 19 Nov 2024 06:00:00 -0500
Achieving Financial Independence, Retire Early (FIRE) is a major milestone many professionals aspire to. But what happens when you reach financial independence and you still have kids at home? How do you balance financial freedom with parenting responsibilities, all while teaching your children important life values like hard work, responsibility, and financial literacy?
As a fee-only fiduciary financial advisor working with high-performance professionals who seek lasting financial security and freedom, I am often asked about navigating this unique chapter of life. Having personally achieved FIRE and being a parent myself, I want to share practical insights on how to make FIRE work when you’re raising children—because parenting is a critical part of your life plan, not something separate from your financial goals.
Understanding Financial Independence Versus Retirement
First, it’s important to clarify a distinction: financial independence does not automatically mean retirement. It means that work for money becomes optional, not mandatory. You have the freedom to work because you want to, not because you have to. Many financially independent parents continue working—whether in their career or by building new projects—especially when their kids are young.
This flexibility is a gift, but it also introduces unique questions, such as what example you’re setting for your children about work ethic and how you’re managing your time and finances in this new phase.
Teaching the Value of Hard Work Without a Traditional Job
A common challenge for financially independent parents is demonstrating the value of hard work when they’re no longer punching a time clock. Kids naturally observe their parents’ behaviors, so the old notion of “go to work to earn money” is less relevant when work becomes optional.
The good news is that teaching hard work is about more than your employment or career. It’s about the pursuit of challenges, the discipline required to grow, and the perseverance needed to achieve meaningful goals. Here are practical ways you can model this to your children:
- Engage in Challenging Activities Together: Whether it’s physical exercise, household chores, gardening, or learning a new skill like a sport or hobby, let your children witness you embracing activities that require effort and growth. This displays that hard work is valuable for personal development—not just income.
- Make Work Fun and Collaborative: Chores and responsibilities don’t have to be drudgery. Turn them into games, add music, or do them together to cultivate a positive attitude around effort.
- Show the Process, Not Just Results: Be open about struggles, mistakes, and incremental improvements. When kids see you failing and trying again—like learning to juggle or improve at a sport—they learn resilience and the growth mindset, which is one of the most important lessons you can impart.
- Instill a Growth Mindset: Encourage your children to see challenges as opportunities to get ‘better,’ not to be perfect. Celebrate persistence rather than perfection.
Instilling Financial Literacy — One Age-Appropriate Step at a Time
Financial education is a cornerstone of helping children build a healthy relationship with money. As fiduciaries, we emphasize age-appropriate learning to develop lifelong money skills.
Here are some actionable steps financially independent parents can take:
- Introduce Saving and Investing Early: If your children receive gifts or allowances, consider showing them how to save and invest those funds. Demonstrate how money grows over time through simple visuals or apps that track investments in a user-friendly way.
- Practice Delayed Gratification: Teach your kids that money can grow if saved rather than spent immediately. This builds patience and reinforces the value of future rewards over instant gratification.
- Assign Household Responsibilities Without Pay: Help them understand that contributing to the household is part of being a family member, not a transaction. For extra earnings, they can look for ‘entrepreneurial’ opportunities by identifying problems and offering solutions (e.g., painting a fence or organizing a garage), which encourages entrepreneurial thinking and problem-solving.
- Spend Consciously: When children want new items like sports equipment or toys, ask them to demonstrate commitment and effort toward those activities before purchasing. This teaches them to value their investments of money and time.
- Use Real-World Situations as Lessons: Take children grocery shopping with a budget, discussing choices and consequences. Let them experience the impact of their decisions, like finishing what they buy rather than wasting food.
Creating Artificial Scarcity in a World of Abundance
Living in a society of abundance can make it easy for children to believe everything is easily replaceable. This can dilute their understanding of value and responsibility. It’s important to create artificial scarcity by setting limits and consequences:
- Don’t always replace broken toys or items immediately—sometimes, it’s a natural consequence for carelessness.
- Limit impulse purchases and teach the impact of waste, such as environmental consequences of garbage.
- Emphasize taking care of belongings and the household to foster stewardship and gratitude.
This helps children appreciate resources and understand that not all things are infinite or guaranteed.
The Importance of Independence and Letting Children Solve Their Own Problems
One of the most powerful lessons in parenting aligns with the Montessori philosophy: “Do not do for a child that which they can do themselves.” This builds autonomy and self-confidence. For example:
- If your child falls off a bike (and is not hurt), encourage them to get back up and try again.
- Allow children to tie their shoes, pack their school bags, and take responsibility for their schedule—even if it means sometimes being late or missing out on events.
- Provide opportunities to solve conflicts or challenges independently before stepping in.
These experiences prepare kids to be competent, self-reliant adults—a crucial part of their lifelong success and happiness.
Balancing Work, Parenting, and Financial Freedom
For parents who have achieved FIRE, work often becomes an optional but fulfilling part of life, especially while children are young. Here are some thoughts on managing this balance:
- Consider the Age of Your Children: The needs of kids change dramatically from infancy to high school. Many financially independent parents choose to continue partial or flexible work until children graduate from high school or college, then switch gears.
- Create an Intentional Family Lifestyle Plan: Decide as a family how to allocate time and resources. For instance, the flexibility of FIRE might allow for day trips, frequent involvement in children’s activities, or international travel that wouldn’t otherwise fit into a conventional work schedule.
- Reframe the Meaning of Work: Work can be a source of personal growth, identity, and fulfillment, not just a paycheck. Model this concept to teach children that effort and purpose extend beyond financial necessity.
- Set Boundaries to Avoid Laxity: With increased flexibility comes the risk of complacency. Maintain routines, chore responsibilities, and expectations to nurture discipline and effort in the household.
Planning for the Financial ‘What-Ifs’ of Parenting
Choosing to have one parent stay home or reduce work while raising children introduces risk—such as reduced income, potential impacts on long-term savings, and future retirement security. Here are important considerations to manage these challenges:
- Assess Your Risk Tolerance: With fewer earners, your household becomes more vulnerable. Work with a financial planner to understand what risks you can reasonably take on and where you need safeguards (insurance, emergency funds, etc.).
- Be Flexible and Iterative: Financial plans are not set in stone. Regularly review your goals and progress with your planner, and be prepared to adjust lifestyle or work arrangements if circumstances change.
- Plan for Re-Entry to the Workforce: If one parent steps away from full-time work, have a plan for how and when they might return, ensuring skills stay sharp or new ones are developed.
- Align Financial and Parenting Priorities: Sometimes you may prioritize family time over rapid financial independence — that’s valid and shouldn’t induce anxiety. Instead, plan accordingly.
Final Thoughts: Intentional Life Planning Goes Beyond Money
FIRE is not just about reaching a numeric target; it’s about designing a life on your own terms—one that integrates your values, relationships, and personal growth.
As parents who have reached or are nearing financial independence, remember that your children learn from your daily actions, what you prioritize, and how you face challenges even without a traditional job structure. Consistently modeling hard work, responsibility, resilience, and thoughtful money management will shape your children’s future far more than just talking about money or traditional employment ever could.
If you’re a high-performance professional striving for financial freedom while raising a family, focus on creating a holistic life plan that merges your financial goals with your parenting values. Building this foundation now ensures you enjoy the freedoms FIRE promises — not just for yourself, but as a legacy for the next generation.
Ready to build your intentional financial plan for life with kids in the mix? Reach out for a fiduciary financial consultation focused on your unique goals and values. Together, we’ll make your financial independence work for you and your family.
For more insights on FIRE, parenting, and intentional life design, check out the episode 143. FIRE with Kids? Here’s How to Make It Work!, and be sure to subscribe to the Mind Money Spectrum podcast.
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