Can Multi-Child Families Reach Financial Independence?
If you’re a parent (or a soon-to-be parent) and you’re interested in financial independence, you’ve probably noticed a certain demographic is missing from our little community — Lots of kids.
That’s right, children! If you scour the rockstar finance directory you’ll find 1471 personal finance blogs (as of the time of this writing). Of those blogs, you’ll find that the vast majority of them don’t have families.
It’s true the number of childless households has grown in recent decades, but rest assured that people are still having sex and still making babies. The human race isn’t dying out, and children are far from being rare little unicorns.
Of the women that become mothers in the U.S., the average has 2.4 children. In fact, a full 79% of mothers choose to have 2 or more children.
Again, this data is for the United States only, but the numbers are probably going to be similar across many developed countries.
Based on my own research, I know many families are striving for financial independence but few seem to have reached the elusive goal. Why is that? And how can we help them get to the promised land of financial independence?
The Financial Shackles
One of the prevailing theories about the lack of larger families in our little community, is that children are financial shackles.
While childless couples run like mad toward the goal of financial independence, those with families are (supposedly) tied down by the little financial shackles called children.
That’s the prevailing theory anyway.
I’m not going to lie, kids do cost money. Reaching financial independence with children is harder. It requires a financial skill-level and mental robustness that goes way beyond the average saver.
There simply isn’t a TL;DR version of “Financial Independence for Parents with Multiple Children“. You have to read the whole book, pay less for it, read it faster, and memorize more if it… all while changing a dirty diaper and cooking a nutritious meal.
(Good thing most parents are tough as nails!)
Don’t lose heart because of this added difficulty! It’s not impossible and not nearly as expensive as you might think. Kids are expensive because parents make them expensive. They certainly don’t have to be!
New parents tend to create a mental vision of what their family is should look like — A well-appointed 3 bedroom house in the suburbs. Cute well-dressed kids that go to private school. Music lessons and sports teams. A minivan and annual family trips to Disneyland or Hawaii. And every toy their little prince and princess can imagine… Then, these poor parents go about creating this insane vision.
OMG!
Of course you can’t reach financial independence quickly if you run a household like that! It’s a very expensive way to raise a family. So why do people do this to themselves?
I believe it’s primarily because that’s exactly what their friends and neighbors are doing. Peer pressure is pushing them down an unnecessarily expensive path in life!
Instead of succumbing to pressure, I’m going to suggest finding your freedom by imagining a different kind of family life. You can create an entirely different household — One not based upon the standards and expectations set by over-spenders. A family life filled with joy, happiness, and the experiences that YOU want.
One of the best ways to start this process is by finding better examples…
Start With Better Examples
Whether your planning a family (or already have a couple kids), finding other families that break the mold is important! Not only because they set a great example, but they can also provide strength and reassurance for families feeling the pressure to socially conform.
Finding good examples in your own local community is difficult — Most families don’t openly share the necessary financial detail. You simply can’t tell if they’re financially independent (or even striving to be FI).
Instead, I recommend reading the blogs of multi-child families that actually made it. Few people are as financially forthcoming as personal finance bloggers! They’re a treasure trove of financial details, frugal living tips, and the joys of living a financially-free family life.
Besides myself, there are actually a number of bloggers that fit this category. You should read these blogs!
Root Of Good — A frugal three-child family that seems to spend most of their time traveling and simply enjoying life. Justin and his wife make it look easy! The blog is a good balance of financials, and detail about how they live.
Tawcan — A FI family with two children living in Canada. Technically he still works, but really doesn’t need to. A lovely family that I’ve actually met in person.
FrugalWoods — Yes, the frugal queen herself! With one daughter and another ‘bun in the oven’, she’ll soon be setting a great example for multi-child families in the near future.
Financially Alert — Michael reached financial independence in his mid-thirties with two children in southern California. Much of their wealth is in real estate and he often displays impressive income numbers. Michael has a goal to reach $10 million before he’s 50!
1500 Days — Mr. and Mrs. 1500 reached financial independence with two daughters and one pet sports car. They have a very funny blog that sometimes delves deeply into the trivial details about how they run their household (think thermostat settings and laundry loads).
Turning Point Money — While his blog is mostly focused on money and investing, TPMoney has two kids and reached financial independence in his mid-30’s.
Asset Based Life — Paul doesn’t blog about his kids very often, he’s technically FI. Paul lives an asset based life with two boys. I’m also taking part in his 2018 stock picking contest.
Freaky Frugal — Mr. Freaky Frugal actually has adult-age children, but he qualifies as multi-child-FI nonetheless! Even though his kids are older, he has years of experience being FI. He reached financial independence and retired from fulltime work in 2012.
Money Scrap — Caroline managed to reach FI as a single mom with three kids before age 55. While she didn’t reach FI extremely early, doing it by herself is a pretty big feat.
Some Things Don’t Change — Slow Dad is a relatively new blogger, but he makes great use of legos! He’s a father of two that’s now semi-retired.
Some of these blogs are more well known than others, but I’ve had the opportunity to interact with each of these bloggers in some form or another. We comment on each other’s blogs, send tweets, and sometimes even meet in person.
The point is, they’re all real people who managed to reach financial independence with multiple children, and they’re perfectly willing to share their advice and experiences.
Find The Economies of Scale
Parents of multi-child families also have additional advantages that childless or single-child families aren’t going to see. I like to call these advantages “Economies of Scale”.
Just like in the business world where huge companies realize lower costs due to their immense size and scale, families can also realize lower per person costs than no-child or single-child families.
Here’s a few of the strategies that we use in my own multi-child household:
Hand It Down
Frugal parents have been using this strategy since the beginning of time — In families with multiple children, the younger siblings would inherit the clothes, toys, and other childhood paraphernalia from older siblings. This strategy works best if there’s a significant age difference between the children.
In our case, the Tako boys are 2 years apart. Hand-me-downs work perfect — Once Tako Jr. #1 outgrows a set of clothes they go into a series of Rubbermaid totes (like these) which are labeled by age. When Tako Jr. #2 is finally ready for a new size, we simply pull out the container, and he’s ready to go.
Before you sympathize with poor Tako Jr. #2 for always getting “the castoffs”, please realize that everybody in our family gets used clothing. That’s right, even Mrs. Tako and I! Nobody gets special new clothes!
‘New’ Is Now A Joke
Have you ever heard the phrase “See, this is why we can’t have nice things!” As a parent, I’ve actually found myself using the phrase. It’s a very dark joke.
Why? When you have multiple kids they develop this incredible ability to destroy anything nice within five minutes. Just got a new couch? Give two (or more) kids 5 minutes and they have it coated in vomit, feces, urine, scratches, glue, fingerpaint or magic marker.
You’ll wish you’d picked up a free couch on the side of the road instead.
Believe it or not, this is an incredible advantage! When you know absolutely anything you buy will be reduced to thrift-store levels in mere minutes, buying new is no longer important. It’s just going to get f*cked up anyway, so why waste the money on new stuff? Old, imperfect, and out-of-style makes so much more sense.
Buy in bulk
Anyone who’s stepped into a Costco or a Cash ‘n Carry knows that it’s possible to save money by buying in bulk. Most small families avoid buying in bulk due to the immense amounts of food sold at those places… but parents of multi-child families have no problem going through large volumes of food, toothpaste, toilet paper or even bulk packages of underwear.
Buying in bulk does save money, but you have to be smart about it. Know what your family can eat (or use), and avoid any unnecessary waste!
The Tako family buys about half of our food from bulk-food stores. Having a chest freezer saves us an immense amount of money by allowing bulk purchases to be frozen (especially when on sale). I track our food inventory closely, shop sales, and even utilize coupons to keep our food costs low. The four of us eat very well on $500 per month.
Sharing
This one should be entirely obvious, but you wouldn’t believe how often I see modern families fall into the obnoxiously expensive pattern of buying multiple of everything. Yep, that’s right, you DON’T need to buy two (or more) of every toy, activity, or game. The kids can share!
Initially you might see fights about this (our family certainly did), but that will eventually calm down once the children realize there are somethings that are “common” property and others are “personal” property. In our house, toys are designated as “common” property, and we take turns.
Fully Utilize Real Estate
If you look at most modern first-world families, children are frequently given their own bedroom and bathroom… which is absolutely preposterous if you compare this to homes built 50 years ago.
I don’t know when the housing culture changed, but entire families used to share one bathroom, and each bedroom would sleep two or more children. When guests arrived, they would sleep on a pullout sofa, rather than a separate “guest room”.
People were more efficient with their real estate back then. This proves an important point — When you have a second child you do not need to move into a larger home. Just utilize the home you already have more efficiently!
With real estate costs reaching new highs, it absolutely makes sense for families with multiple children to think about going back to some of those “old rules” from days long-past that were simply more efficient.
The Tako family is preparing to do this ourselves. Despite our large home, we technically only need a 2 bedroom 1 bathroom home. We’ve been practicing this for two years despite having significantly more space available — The four of us only use two bedrooms and share one bathroom! It won’t be a big sacrifice when we finally decide to scale down to a smaller home.
Conclusion
In the past, I’ve said that children are one of the best reasons for financial independence. I feel like that’s still very true today. Children and financial independence do not need to be mutually exclusive. It doesn’t get said enough in our little FI community.
While raising a family of any size is a certainly a challenge, achieving financial independence with multiple children is harder. But don’t lose hope or become discourage by the lack of voices telling you “it’s possible”.
It really IS possible! My family is living proof, as well as the handful of personal finance bloggers that have achieved similar success. Don’t ignore these positive voices!
If you’re willing to work a little harder and up your frugal game just a little bit more, you can easily find yourself with a savings rate of 50% or more.
Well on your way to financial independence!
He, we are a multi kid household too, Mrs. CF has two children 😉
Economies of scale for large families, guess you have a point there. Love the “utilize your house better” when the family grows. No need to move (guess even with rooms in short supply, you can still have bunk beds).
It is more difficult indeed, but that only translates in time really. It just takes a bit longer to get to FIRE.
I like how you point out how Mrs. CF has two children… is she FI too? 😀
Clearly I missed an important detail here about your relationship!
Hehe, well we more than half FI, so perhaps she is 😉
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I am FI and have two kids. All of your points are right on! Kids don’t have to break the bank. It’s all about choices.
Great post! If I were to choose between having kids and FIRE, I’d choose kids if I can’t have both hehe.
I noticed that a lot of the FIRE bloggers you mentioned above had a good income (or their spouse did) before they retired. For a family making an average income, it might be more difficult though not impossible. For example, if a young couple who is renting out a small room is having a baby and need their in-laws’ help with babysitting, they need to move to a bigger space instead of cramming 4 people in a tiny room with 2-3 other adult roommates.
Kids don’t have to be expensive for sure, especially after you have one already. But speaking from experience, I can say that having Baby FAF did cost our family quite a bit. I will publish a post about it in the future.
Being a parent is a joy. But the joy comes with prices: money, time, endless worries, stress, you name it. When the kids finally grow up, you think you’ll enjoy the free time. Yeah, that’s right. At the same time, you might feel a little bit lost for not being needed anymore. Standing on the sidelines, sometimes you wonder what this whole parenting is about. That’s how I feel, as a mom of one grown-up kid, lol.
We have 2 kids and spending more time with them was a large factor in pulling the FIRE trigger. Sure they can be expensive, all the above and then college too!
There have definitely been times when they have been spoilt for various reasons but they are now fully on board with our more frugal life.
Kids aren’t expensive, parents make them expensive.
That is so true. Kids don’t need all those expensive clothes or toys. To them, they wouldn’t know any better between “new” and “second hand” things.
For our second kid, we reused a lot of things that we bought/received from our first kid. From a cost point of view, the second kid was a lot cheaper lol.
They’re so cute! I get wayyy to worried budgeting for little kids. “But what if they want tennis, golf, or piano lessons? What about private school if they can’t get into a good public school? What if they want to go to graduate school and get a Phd? They need their own room and new clothes! We need to budget all this in our FI number!”
Sharing seems pretty cool. It’s kinda nice to have a partner to play with all the time! Also, you’re perfectly right on the new clothes thing. I don’t buy myself any new clothes at retail (though I do shop on resale websites for clothes with tags still on them) and FireBear does not have that many clothes.
I think very worst case scenario. I mean, if we really need the money, I’m sure we could do something that would get the kids what they wanted. Maybe I should just reduce the FI number. After all, why work extra when the kids might not even want to do stuff like that?
I have three kids (two in University) and have been their sole provider for the last 8 years and , while I am not as young as many other bloggers , I still managed to reach FI early. It can be done!
Thanks for the shout-out!
Kids are indeed a huge complicating factor for your finances. Deferred gratification is a cornerstone of PF and FIRE, but kids & biology don’t respect that timeline. Affording kids AND enjoying your time with them when they’re young is a challenging puzzle to solve, and I’m glad you’re highlighting the possibilities here (and providing an ongoing wise example yourself).
Our net worth would be much higher if we hadn’t had kids, but I have no idea what I’d do with the extra money 🙂
And P.S. – shout out to the greatest superhero in the history of the world. Go Anpanman!
OK, Paul gets extra points today for spotting Anpanman. Way to go Paul!
Thanks for tallying up the blogs with multi-kid families! I get asked, all the time on the blog, whether it’s possible to become FI with kids, and clearly you’ve shown that it is absolutely possible and it’s parents that make kids expensive. After interviewing other FI couples with kids and doing case studies for families, the math shows that yes, it is absolutely possible to do this with kids. Especially if you are smart if it and use your space efficiently (my parents had me share a one-bedroom with them up until the age of 12…couldn’t do anything about it, we were poor, but it was no big deal). I applaud you for teaching your kids to be adaptable and learn the value of money. Well done!
I’m FI and semi-retired with two kids.
For me it isn’t about the kids so much as the income level.
A two income household (should) be able to save a fair bit. Add a kid and the childcare costs (before school age) eat a sizeable portion of one income, either in nursery fees or forgone earnings where one parent works less to look after the kid.
More kids makes that expensive period longer (unless they are twins I guess).
Being frugal can reduce that financial drag, but won’t eliminate the loss of an income entirely.
End result? Earn more, or take a bit longer to reach FI. Either way be nice to your kids, they will be the ones choosing your nursing home!
Ah Slow Dad. Did your blog URL change recently? I was looking to include you in the list above, but the old links I had were broken.
Yep. I got paid to go away, took the money and waited out the lockout period, then set up shop at at new home.
Now I’m writing at SomeThingsDontChange.com. Tell your friends! 😉
Having multi-kid is probably a huge barrier to blogging. That’s why there aren’t many bloggers with more than one kid. Even with one, it’s tough. 🙂
I would like to have 2 kids too, but Mrs. RB40 didn’t. Oh well, I’m happy with one.
I think 2 is manageable. On the other hand, 3 sounds pretty crazy to me.
The biggest additional expense is moving to a bigger home. We live in a 2 bedroom condo and it wouldn’t work with 2 kids (plus my mom for 9 months/year.) It’s already getting super tight.
I totally agree with Joe’s comment. Finding time to blog while working part-time and primary care giver to multiple little ones is difficult.
We moved to a low cost area with a strong employment market to combat the rising expense of larger house. This has helped significantly in compounding our wealth over the years while still maintaining a lifestyle we enjoy.
You could totally pull-off 5 people in a 2 bedroom condo… just start hot-bunking those beds! 😉
As far as finding the time to blog… just skip sleeping. It works (sorta) for me!
I’m new and relatively unknown but I’m a blogger with three kids who reached FI many years ago and left the 9 to 5 for side gigs and way more free time to do things like comment on other blogs! I don’t have facts on this but I think having kids made our marriage stronger and having a family depending on me gave me extra emphasis on increasing income and being frugal, two keys to FI. Plus having kids makes you grow up, share more, and makes you less selfish. Those things all help on the journey to FI. I think it is sort of like giving to charity. On paper I’d have another million or more if I had invested what I gave away but in reality I think I would have less. The act of giving made me a better person with a better money attitude and in the end that made me more money. I think kids are just like that.
Wow! I love your blog. I just got married, I moved to Romania so my wife can finish her medical studies. I started to get interested in FI cause I make a very low income (1300usd/month). And then I stumbled into your blog via another blog. This post was well written and I found that my parents did all of these things. Nice to read it and learn. Thank you
My family has two children and we are currently chasing FI. We expect to get there in around 10 years when I’m 45. The children clearly slow down the path to FI. I had the Geo-Arbitrage conversation with my wife recently. If we did not have kids, we’d be out of our high cost of living area and basically FI today. As it is, we spend more living in NJ near family. We are also saving for college (not necessary but our choice). We spend on pre-school. We spend on select activities that have value. Getting to FI with kids is possible. I’m going to do it. It’s certainly not easy though.
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Wow, 2 is the magic number for FI-ers with kids.
Kids sharing bedrooms sounds like a reallyyy good idea. Teaches sharing and doesn’t spoil them. That’s what we’re thinking (but more out of organization of space since we are in a townhouse with 2 bedrooms on top and 2 on the way bottom floor.)
We have two kids and hope to reach FI over the next 3 1/2 years before turning 50. I think you are right that peer pressure pushing people towards a more expensive life can make FI with multiple children more difficult. A lot of people who are focused on keeping up with the Joneses won’t achieve FI, even if they don’t have any kids, but making sure their kids are dressed like child models and have the best and newest of everything certainly doesn’t make things easier!
We have followed many of your suggestions, including handing things down, buying in bulk, and sharing. In general, the FI crowd is pretty resourceful and hard-working – a second, or third, or fourth child may change the math and the timeframe, but I think many of your readers can ultimately achieve the end result they are striving for!
Retiring On My Terms recently posted…ROMT’s Financial Resolutions for 2018
Some parts of kids being expensive we couldn’t avoid – we live where our jobs are and it’s expensive to live and get childcare here in the SF area.
But we managed by consciously spending very little on variable expenses like clothes and toys, gladly accepting gifts of used clothes, books, and toys instead, and will do this as long as we can or until JB outgrows zir cousins. Then we’ll figure out another source of used clothes 🙂
I have to admit that repeating the costs of childcare have slowed my desire for any more children but I’m starting to come around to the notion that it’ll only be really expensive for the first 3-5 years in daycare and we’ll keep the other costs down the same way. Competition is so fierce for cheaper public preschool here that my application from over two years ago still hasn’t been considered. And my child is nearly three!
Now, if only there was answer to not sleeping for the first year(s)!
Great post! I agree many FI bloggers don’t have kids or when they do, have family nearby willing to provide free child care. It’s frustrating to read about how quickly a high earning couple can hit FI when we got our kids who either need one of us to quit our jobs or to be an expensive daycare. We chose the former, but our savings rate definitely took a hit.
Now I worry my obsession with FI is leading me to avoid any costly decision, even before I consider if it was worth it. Like having more kids, or staying in our big suburban home (which is only 5 miles from work). Even though my life is really good compared to most of the world, I now nitpick at every little thing that could be simpler if we were FI. So I decided to write about it…
You can add one more to the “FI chasers with kids” blog count.
We were hoping to have our future kids (so far just one) share a room (because it teaches them the importance of sharing) and my sister and I shared a room while I was growing up too. Bunk beds for the win!
I think it certainly doesn’t help towards FIRE but it can be done- as you’ve proven!
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Mr. Tako, I love your “financial shackles” analogy for kids… haha!
We have been planning college expenses recently and had to gasp when we realized how much school will cost once our little ones attend. Almost a $1M!! Granted that assumes inflation and our kids attending Standford and MIT, but better to plan conservatively, right? 😉
You do a great job and balancing FI and frugality, and your family benefits well from it. Enjoy the continued journey and thanks for the mention.
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Very well written article Mr. Tako. Your couch looks just like ours, we got it 15 years ago at a furniture store discounted for scratches and nicks. The couch and chair look like the day we bought them and are really durable, even with our dogs and cats, we got lucky I think. Sometimes kids cost more after college than their years before. Living at home, looking for jobs, vehicles needing repairs, etc. It seams like it takes kids right out of college that aren’t in high paying jobs a few years to get established, at least at our house it does, and so it goes.
Mr. Tako – Thanks for the shout out!
We definitely followed the Hand It Down advice because our 2 son were just 2.5 years apart. We also followed the Buy In Bulk advice as well.
Both sets of our parents also gave us furniture and other handouts that they no longer wanted.
It really helped that Mrs. Freaky Frugal and I were both naturally frugal and wanted to teach that to our children by example.
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Thank you Mr Tako for writing this post. My wife and I have 4 children and we are on the path to FIRE. I’ve been reading FI blogs for a couple of years (yours, 1500 days, and budgetsaresexy) to help us on our way and appreciate the nod to a smaller group making this journey with the wee ones. Live within your means, spend thoughtfully, and save for our future. It’s also a great lesson to teach the younger generation and has the added benefit of getting to spend more time with them as they grow.
3 kids
Small salaries most of my life
Wife works part time
More than millionaires
It’s possible
It’s probable if you do it right
Kids are the why for us.
Carry on!
Great post
YES! I have been lurking FI blogs for years and this is going to send me down a bunch of really gratifying rabbit holes…I’m going to spread it out so I remember to interact with the littles too 🙂 I got here from bingeing Millennial-Revolution. We have 3 kids under 6 and are pursing FIRE. We got on board a bit late but have the heart for it and managed to keep a stay at home parent full time (husband) while I/we enjoyed 3 separate year long Canadian maternity leaves with the whole fam while saving a little bit here and there. Now that I’m back at good but not amazing salaried work it’s time to start planning a little more carefully. I’m thinking part time retirement in the moderate future and fill retirement early TBD by the income husband brings in once littles is in kindergarten in about 4 years. All we want is more family time. Thank you for this!
I am a dad with 2 lovely girls. Completely agree on some other posts about 2nd child being as expensive. We reused all the baby clothes and toys for the 2nd child. The extras were some shoes and other things we really needed. As for FI, I started thinking about FI when my first child was born and entered into real estate investing. If it weren’t for the kids, I might have never thought about FI as much or so early in life. So would definitely agree that kids are actually big motivation for FI. As for income, after becoming a parent, it pushes you to test your limits to make more for your expenses and then a bit more for emergencies. Because more than FI, the fear of failing as a parent is a very big motivator. BTW, I doubled my income since I became dad (8 years).