Hey guys! I want to start off by thanking the Frugalwoods family for inviting me to guest post here. It’s always a trip reading about their frugal adventures in Bean Town. And I have to admit, they outdo my own family when it comes to frugality.
Before I jump into today’s new awesome, exciting, completely serious post, let me step back and introduce myself. I’m Justin from the Root of Good blog. At age 35, I’m a few years older than the Frugalwoods. My core goal during my 20’s and early 30’s was reaching financial independence and retiring early. At age 33, I hit that milestone and left the days of full time work behind for good. With a seven-figure portfolio and a three percent withdrawal rate, we should be fine for the next half dozen decades.
Along with me on this incredible journey through life are my wife and three children (ages 3, 9, and 10). My wife’s early retirement adventure hasn’t started yet, but it will commence in the near future. In fact, she resigned last month but it didn’t work. To keep her on board, Mrs. RootofGood’s employer offered a four day work week and a switch to telecommuting while keeping her at full time pay. Mrs. RootofGood is 20% of the way retired and we’re still working on that last 80%.
And now, onto today’s post…
While Mr. Frugalwoods and I enjoy/attempt to survive our very first month as parents to our daughter, Babywoods, I have a delightful slate of guest posts from my friends lined up for your reading pleasure. Today, please welcome experienced frugal father of three, Justin from Root of Good!
By: Root of Good
The Frugalwoods Are Screwed Because Kids Are Crazy Expensive… NOT!
In case the Frugalwoods haven’t received enough friendly advice on raising kids (as all new parents inevitably do), I’m here to provide even more. But I’d like to address the kids angle through the lens of an early retiree.
While you’re on the path to early retirement, you want to keep kid-related expenses to a minimum so you can maximize savings. Ignore all those studies that say it costs an average of a quarter million dollars to raise a kid to age 18. The key word there is average. Pro tip: don’t be average. There’s no one making you be average when it comes to raising your own kid. As the Frugalwoods point out over and over, there are many clever ways to remain frugal without sacrificing quality of life. That same truth extends to raising kids, too.
Kids just don’t have to cost a lot of money. Other than the necessities of food, clothing, shelter, and medical care, almost everything else is optional. You can spend a little on the extras or you can spend boatloads of money. But it’s a choice. Other parents, advertising, and peer pressure will try to make the spending decisions for you, but ultimately it’s up to the parents to provide a good life for their kids while managing the household finances responsibly.
You don’t need every baby gadget available. And even if you do need something for the little one, it doesn’t have to be brand new. Since kids grow up quickly, there’s a constant fire hose blast of baby stuff that other people desperately want to jettison. Ask your friends and family who have older kids if you need something and you’ll be doing both you and them a favor by taking unnecessary kid stuff off their hands. If that fails, check facebook, craigslist, or other online message boards and you can usually score free or near-free kid gear (and lots of it!). Yard sales are another source of cheap kid gear. $5 for a box full of clothes that originally cost hundreds of dollars brand new? Frugal score!
Don’t feel bad about getting second hand stuff for your baby. THEY WON’T KNOW OR CARE. After a few years, their cognitive abilities will grow to the point where they might notice the stuff you get for them isn’t brand new. Once that magical time arrives, it’s even more important to keep on getting used stuff because it teaches a great lesson. It’s okay to buy used stuff because it’s usually just as good as brand new stuff!
Nothing made me prouder than the day my kid shot down a classmate with expensive sneakers. The other kid was bragging about how awesome his two hundred dollar shoes were. My own kid quickly replied “wow, your parents wasted so much money on those. My shoes were $5 from the thrift store and they are just as awesome as yours” (they were almost brand new name brand sneakers worth $60-100 new). She’s flying the frugal flag proudly! Lesson learned by her: the value of an item is largely independent of how much you paid for it. Not only did I save $195 on the purchase price of shoes for her, I also provided the priceless lesson to always seek value when you need to buy something.
Having kids will cost you, but they also save you a ton of dough. In my famous article on how we paid only $150 in taxes on a $150,000 income, I determined that our kids save us $5,500 in taxes every year. That’s enough to cover our entire family’s grocery bill for the whole year!
The savings aren’t limited to tax deductions and credits. Having kids radically changes your life, which means your spending patterns will change, too. Since the Frugalwoods are already doing it right by spending next to nothing on dining out, drinking in bars, and entertainment, they might not see a huge spending reduction in those categories, but most families will. For us, having kids means spending more time at home with frugal family activities. Playing with your own kids is a wonderful and endless source of free entertainment!
If you focus on free or cheap activities first, then you won’t have time to spend money on expensive kid-related entertainment. In our city, there’s a constant flow of downtown festivals and community events at libraries, museums, and community centers. I can’t recall the last time we spent money on any of these activities.
In early retirement, our family of five lives on a budget less than $33,000 per year. Some say that’s not possible with kids, but we are living proof that it’s entirely feasible to have multiple kids and live very comfortably on significantly less than a six-figure salary.
Kids and Early Retirement
If you retire early, will your kids turn into lazy blobs and fail to launch when they are adults?
Kids don’t really get much benefit out of watching you leave for the office every morning and come home late at night. They don’t vicariously absorb “work ethic” by watching you pull out of the driveway. They have absolutely no clue what you do at work each day.
In contrast, there are actually a lot of advantages to retiring early with kids. You can spend more time with them and teach them things they won’t learn in daycare, preschool, or regular K-12 school. You could even push the early retirement advantage further by choosing to homeschool your kids.
By leaving the working world and entering the realm of early retirement, daycare fees disappear. No longer will you have to pay someone else to take care of your kids!
In early retirement, your time becomes yours once again and you can spend it however you want.
In our case, we love to travel. Early retirement freed up our schedules to allow extended vacations. Since I retired early two years ago, we spent the first summer on a 2,500 mile road trip along the east coast of the US and into Canada. This past summer, we packed our bookbags and jumped on a flight south of the border for a seven week adventure across Mexico.
To offer a bit of perspective on raising children in today’s world, let’s take a quick glance back at the typical family in the time of George Washington. Times were tough. Luxuries and conveniences were rare or non-existent. The family home had one room, perhaps two, at a time when families had a half-dozen kids (not the 2.3 children of today). Today’s youth would love the fact that they might not have to go to school…. Until they found out they would instead be working in the fields or in their parents’ workshop before they lost all their baby teeth.
In the age of Washington, entertainment included telling stories around the fire, rereading one of the few books your family owned (if anyone enjoyed the benefit of literacy), playing simple games, and playing music (for those wealthy enough to own an instrument). Clothes were expensive, ill-fitting, worn out hand-me-downs (unless you were the first child). Adventure travel would be the hours-long trip (possibly on foot) to the nearest town to sell your family’s produce at the market once per week.
Fast forward to the average family of 2015. We are freaking wealthy beyond belief! Kids today, even poor kids, are so much better off. Free education, vaccines, the internet, libraries, cheap computers and tech toys, and an unbelievable range of entertainment options. Clothes are cheap (and even cheaper if you shop thrift stores). Safe, reliable, and fast transportation lets families visit other states and countries quickly and inexpensively as compared to riding a horse or in a wagon.
The internet acts as a great equalizer of opportunity for kids of all socioeconomic backgrounds. With Khan Academy, Codecademy, Coursera, and other self-paced learning opportunities available for free, eager kids of modest means can get ahead. In terms of our basic bundle of human rights, females are on par with males (and they can even vote now!) and slavery is abolished. Times are pretty good these days for kids and adults of all backgrounds. Most people today live like the aristocracy of G-Dub’s time, yet we’re too busy to realize that wonderful truth.
Our lives today are so much easier than they were a century or two ago, and that’s true regardless of whether or not you spend a ton of money raising kids. George Washington thought he was living in Revolutionary times. But we’re living in truly revolutionary times today!
Everything’s Gonna Be Alright
I’m pretty happy with the choice to retire early with school age children still at home. The change in lifestyle saves us money on kid costs and it’s wonderful to spend the extra free time with them while they’re still young.
For the Frugalwoods, I imagine they’ll do spectacularly well when they leave the city life behind and move to the homestead with their little bundle of joy in a few year’s time. It’ll be a time of new opportunities with the kiddo, and a great chance to get much closer to nature on a daily basis.