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Money Chats: What Does Financial Independence Look Like For Moms?

October 11, 2018
financial independence

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If you Google financial independence you will probably find tons of websites and blogs written by guys who live in the American Midwest embracing a minimalist lifestyle.

Maybe they have no car. Just bikes or an RV. They worked a bunch of years and saved anywhere between 35-65% of their take home pay and now they live a financially independent lifestyle, encouraging others to do the same. We’re not going to knock saving and encouraging others to do the same, but the idea of schlepping multiple children around on a bicycle just isn’t that relatable for most moms. Have they ever tried grocery shopping with three kids on a bicycle? We bet not. This article is about finding your definitition of financial independence. The version that works best for you.

For some background, the traditional definition of FI (as the cool kids say) means having enough income that you don’t need to work anymore. This income may come from various investments like stocks or real estate or it may come from self-made businesses that provide passive income. If you choose to work it’s because you want to and you are truly passionate about your profession. If life throws you a financial curve-ball (you get laid off, you get sick or a loved one gets sick) you can also better withstand the setback. You don’t have to worry about asking for time off because you don’t need the paycheck. It’s freedom! It’s not so much about depriving yourself, but it does require making some sacrifices. And making sacrifices can be hard for many people. But not for you, rockstar mama. Because you are self-selecting to get control of your financial future. FI provides the freedom to be financially secure while also choosing some of your wants and passions.

You may have heard the acronym FIRE – Financial Independence Retire Early. While some people desire to retire early (before the traditional retirement age of 65 years old), if you already have kids or take care of your aging parents then this might not be in the cards. And that’s okay. Let’s focus on YOUR version of financial independence – your OWN FI.

financial independenceLet’s redefine FI for moms. What does it look like for you and your family? FI for moms can be about earning an income on your own terms so that you can spend time doing the things you love. Maybe that means working from home. Or maybe it means saving less in the short-term while you take a few years off from your career to raise your children, only to ramp back up once they are in school. Maybe FI means having the ability to be present for more everyday moments… playing at the park with your kids, taking up a new hobby or going on a trip with your family and paying for it in cash! Working 60 hour workweeks, nights, and holidays would be incongruos to these plans.

When planning FI for the long-term, one place to start is with your ideal retirement age and work backwards. So, let’s say you and your partner want to retire at 55 years old (ten years before you are “supposed” too). You might also think of where you want to live and what you want to do in your 50’s since you will still be active. Will your children be out of the house by then? Will they be in college? How do you plan to pay for that expense?

Remember that FI means something different to everyone. Here’s what our unique experiences with FI look like:

money mindsetMK Says…

For my husband and me, financial independence means having enough money in savings at the age of 36 that we are on track to meet our long-term financial goals. It also means having time — time to parent our 2, 4, and 7 year old children, time for each other, time for exercise and eating healthy, time for passions and hobbies, and time to pursue meaningful careers.

On first glance, I would say we’ve achieved this. Our retirement funds are on track, we’re making solid progress toward being able to pay state school college tuition for all three kids, and we are working diligently to grow our emergency fund + the “help my aging parents” fund. But it means that every day my husband and I have to make a conscious choice to say no to extraneous spending and consumerism beyond the basic necessities. 

I would be lying if I said this wasn’t hard. I actually really appreciate aesthetics – beautiful clothing, fun hair colors, newly remodeled homes. I also secretly long to sell our townhome and move to a SFH with a nice yard, big front porch and a quiet street. But these are things I forego in order to have greater financial reward on down the road and more meaning in my present life. By choosing to work in public service, my husband has a great work-life balance doing something he enjoys but with lower pay. It means my kids and I get to spend more time with him and he feels validated by giving back. And becuase I chose to stay home, it means no pay but gives me time with my children and the flexibility to explore side income opportunites. We certainly can’t afford all of life’s luxuries, but we are able to save for our future. And we have also gained time. More than anything in the world, I value time most.

money mindsetVon Says…

I’m still working on my plan and tinkering with it. For me, FI means being able to pay for my daughter’s college education with investments. Whether it’s real estate or stocks or whatever… this is something that is super important to my FI plan. I don’t want to feel that we are just working paycheck to paycheck to pay for her future school costs. Also, to me, FI means that we don’t have to worry about when we are going to get paid because we have multiple income streams to support our lifestyle. If one income source dries up, we can be okay because we have other ones. So I’m hoping to add two income streams to my life over the next two years. Every six months, I revisit the plan to make sure that I am on track with my personal goals. I have both individual goals and collective goals with my spouse and family.

While this may not be the traditional FI plan you will hear people chat about, it works for us. Sometimes it’s about taking what you see and hear and making it work for you and your family, then forgetting about what others say.

Here are some things to think about as you (and possibly your partner) create your own FI plan:

-What do you value?

-If you had extra money, what would you spend it on?

-What would you do if you didn’t have to work? (Coach your child’s sports team? Take month long summer vacations? Visit your family more?)

-Does the idea of saving money make you happy or excite you?

-If you have a partner, are they on the same page as you?

-Are there any major financial responsibilities that are coming up in the next 5-10 years that you know about? (College tuition for the kids? Parent moving in with you?)

Take some time and go through the questions. Add your own questions to the list. Customize it for you. It’s important to really get clear on what you want and then you can work through the exact numbers afterwards. Personal values first, then numbers.

We are living proof that the definition of FI is different and that’s okay! Go out and make your own FI plan. This is your life. Take control mama!

Related Post: Money Chats: Money Mindset For Moms 

Related Post: CFO Your Life

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