Tuesday, July 23, 2024

Are Your Children Stopping You From Achieving Financial Freedom?

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Are your children the reason that you can’t afford to save and invest for financial freedom—or the reason you can’t afford not to?

I usually write with a very specific audience in mind—the median wage earner young (under 35) and willing to make some big changes to move aggressively toward early financial freedom. To my delight, I’ve found that people from all different backgrounds, outside of my intended audience, are able to benefit from these ideas and accelerate toward early financial freedom from their respective starting points.

There is, however, one group of people who consistently push back on my strategy for moving toward early financial freedom.

That group is the upper-middle-class earner with a family, including a spouse, children, and often pets.

The conversation often goes something like this:

We are both smart, marketable, and reasonable adults who earn high incomes because of our solid educations from top colleges and consistent decade-long tenure in our respective professions. Each of us earns approximately $75,000 per year, for a combined total of $150,000 in household income. We provide the very best for our children; drive large, safe, inefficient vehicles; live in a large, newer, expensive home (of course, our home is so not expensive for the area—you should see the neighbors, AND you can’t get a home for the price we bought at nowadays anyway!), tastefully decorated, in a neighborhood with a great school district.

We’d love to move toward financial freedom, but you have to understand, the rules of personal finance do not apply to us, because we have a huge expense that NOBODY can get past:


You see, it is so expensive to raise children that our dreams of real estate investing, much less financial freedom, are utterly impossible, and the plan for attaining early financial freedom you outline in Set for Life utterly impractical. We will spend over $41,000 in childcare next year alone on our two to three children. That’s JUST daycare and does not include babysitters, activities, food, medical bills, and the like. Of course, the average childcare center is a bit lower cost than what we spend, but we just can’t send our kids to one of those lousy centers—the other children at some of those places are just awful!

Clearly, it is impossible for us to save money.

Further, the majority of time not spent at work or taking care of my basic bodily needs as responsible adult, like fitness (we correctly eat very healthy organic food, make time for a quick exercise session in the early morning or right after work, and just generally take care of ourselves, which is part of the reason why we earn such high incomes!) is spent with the family. My spouse is NOT going to hear it if I tell him/her that I want to start doing any of this “side business” stuff when there are children to put to bed, dinner to prepare, and dishes to be done. There is NO time that I can commit to the pursuit of early financial freedom.

Clearly, it is impossible for us to make more money, invest in assets that could produce outsized returns (but that require modest amounts of work), or build a business.

So, Scott—given my predicament, how do you suggest that I go about creating financial independence for myself and my family?

This blog post is an attempt to answer that question.


First Things First

Before we dive into solving this problem, let’s talk some math. Median household income in this country is ~$52,000 per year. The folks that I talk to in the upper-middle class about childcare costs routinely throw out figures like $30,000 per year for two children or even $40,000+ for three small children.

Someone spending $30,000 per year on kids ($2,500 per month) at $52,000 per year in household income has $20,000 left over to pay for EVERYTHING else, including taxes, rent/mortgage, transportation, and food. Clearly, that’s not happening. Still, around half of the children in this country grow up just fine. So, somewhere, somehow, the math regarding childcare expenses thrown out by these upper-middle-class income earners must be very off, or the perspective on reality that these upper-middle-class earners have is extremely different from that of the rest of the world.

Many people in this country raise happy, healthy, productive children for far less than the large price tag of $15,000 per year per child. They make choices like keeping one parent at home; sharing childcare responsibilities with friends, family, or colleagues; working at places that offer childcare as a benefit; moving closer to the grandparents for some free, enthusiastic babysitting; or finding some other creative method for low-cost effective childcare.

Related: Forget the American Dream—Renting, Not Homeownership, is the Path to Financial Freedom

It is at this point that folks begin making excuses and throwing out numbers to prove to me (or maybe themselves?) why they can’t move toward early financial freedom. Luckily, that is not going to be you, dear upper-middle-class dual-income family, because you are going to accept that millions of people who earn far less than you have economically raised productive, happy, and successful children. You are looking for solutions to your problems, not excuses to maintain your status quo.

If you already have children and are just now looking into getting your act together to aggressively move toward early financial freedom, then I’m sorry to say that no, you can’t have it all. You cannot continue to earn what you earn, spend what you spend, and put no effort into building a business or delivering investment returns and expect to move toward financial freedom at an accelerated rate.

The fact that you have children and have bought yourself into an expensive lifestyle does not preclude you from the realities of math and money. You absolutely have to earn more, spend less, or put in the time necessary to build businesses or scale investment returns the same way that those of us without children do it.

There are three fundamental areas that I will address in this blog post:

  • Deciding if your children are a reason to move toward early financial freedom—or a reason not to pursue early financial freedom
  • Deciding if the lifestyle changes needed to accelerate toward early financial freedom are unacceptable “sacrifices” or desperately needed “improvements” to your lifestyle
  • Deciding the pace at which you want to move toward early financial freedom—is a slower, more methodical approach appropriate for your circumstances?

Are Your Children the Reason You Can’t Afford Financial Freedom?

As an unmarried man with no children, I get to pursue my goals with very minimal financial and time obligation to others. I completely direct my professional and financial goals and have little to no need to compromise in my efficient pursuit of early financial freedom.

For the married parent, things are different. I get that. Therefore, I believe that additional perspective is needed. Why you want financial freedom and how the pursuit and eventual attainment of that goal will affect your children’s lives is a big component of the decision to take action. Are your children the reason that you can’t afford to save and invest for financial freedom, or the reason you can’t afford not to?

There are several ways to look at the motivation behind financial freedom (and I postulate that there’s likely to be a blend of the following):

  • You are motivated because you desperately want to be a bigger part of your family’s day-to-day life and can’t stand the fact that for 9-10 hours a day you are at work or commuting.
  • You are motivated because you don’t want to be forced to work a dull job for the next 20 years. This part of the motivation comes from your own selfish desires (not that this is a bad thing!) and is separate from the motivation to spend that time with your family instead.

Again, I do not have children, but it seems to me that a good parent could fall into a trap depending on the motivations behind the decision. In a way, reducing expenses and moving toward early financial freedom is a burden on the family that will result in sacrifices that the family has to make for the benefit of the aspiring early retiree. In another way, reducing expenses and rearranging the family’s spending and investment strategy such that one or both parents can remain at home is a tremendous gift to the family, with many decades of fond memories to be made.

family yard

“Sacrifice” Vs. “Improvement”

Are the changes necessary to move toward early financial freedom unacceptable “sacrifices” or desperately needed “improvements” to your family’s quality of life? Like your motivation, your “why,” this is a matter of perspective that only you can determine.

You must decrease your spending, increase your income, deliver outsized investment returns, or start a business to accelerate toward early financial freedom. An efficient operator will do all of those things synergistically. The question is—will that decrease your family’s quality of life, improve it, or make no difference?

Looking for ways to cut back on spending that make no difference in your day-to-day happiness should be a no-brainer. Things like downgrading the car(s), eating healthy food from reasonable grocery stores, and biking to work are good places to start. Those are layups.

The problem is that the things that will materially impact your financial position are things like housing, transportation, childcare, income production, and investing, depending on the amount of after-tax assets outside of home equity you have accumulated to date. Those categories will impact the time you spend with your children—and where they spend their time, if they attend or will attend public schools.

Is it an acceptable tradeoff to move to a B+ school district instead of an A- one? I get that education is a touchy subject. But what if your cost-effective and time-saving commute means that your children get an extra hour with mom and dad every evening? Might that be more advantageous than the slightly better school? How do you even know that the top school in your district is the best school for YOUR kid? What if the decision to move districts is so cost-effective that it not only comes with an extra hour of Dad time every day but ALSO Mom full-time at home? What if the stay-at-home parent can remain phone accessible and manage a handful of rental properties while the portfolio kicks off the ground?

Is it an acceptable tradeoff to take a shot at starting a family friendly business with your children in their spare time? Can that still be a fun and enriching experience to replace another way you might have spend your Saturday? How about investing in real estate and letting them learn about that process?

A Change of Pace

I spent my first few years out of college moving toward early financial freedom as efficiently and aggressively as I could without sacrificing the fun and good times that I hope every recent college grad gets a chance to enjoy. I encourage my peers to do the same. There is no reason not to aggressively save, invest, pay down debt, and house hack, if practical, in your 20s so that you can achieve financial freedom or close by your mid-30s or even earlier.

It’s fairly easy for a young, single person who has made few permanent decisions to optimize for early financial freedom. But a family that has acquired cars, a home, a 401(k), kids with friends at school, and the other trappings of middle class life may feel uncomfortable optimizing for financial freedom all at once.

And that’s OK.

While it’s slower to move toward early financial freedom with a big mortgage, two car payments, hefty childcare expenses, and some consumer debt, it doesn’t all have to be changed at once. It’s OK to move toward early financial freedom one step at a time.

Related: At Age 26, I’m on the Brink of Financial Freedom: Here’s How I Did It

Perhaps instead of trading in your 7-year-old SUV next year for a brand new one, you sell it and buy an efficient, safe, reliable, used Toyota Corolla instead. And yes, you can easily fit two children in car seats in the backseat of this excellent vehicle. Those with three or more children with multiple children needing car seats have permission to purchase a used minivan.

Perhaps when it’s time to move, you move to an affordable property instead of the biggest, newest home in the best school district that stretches you to your financial limits.

Perhaps when the kids go to school, you find opportunities for fun and affordable after-school programs at your school or in the community instead of continuing with expensive childcare. Perhaps you wait out the next few years of expensive childcare and don’t assume new expenses when the kids hit school age.

Perhaps when you DO receive that raise, you don’t spend it. Instead, you invest it. When that promotion opportunity with more hours at a less convenient location comes up, you weigh the increase in wage with the decrease in ability to build or invest in assets because of the longer hours you’ll need to put in.

If you keep financial freedom a priority in your mind, then over a relatively modest number of years, you are likely to make choices that optimize for that goal and see incredible progress.



While I am neither married nor expecting children at this time, I hope to raise seven future, unborn, unconceived “Trenchlings” at some point in the future. I understand also that I have a warped view of the world. I have already amassed significant assets and a skillset that I believe will allow me to easily produce significant income with or without a traditional job (I love my job!) during my parenting years. Thus, I hope to have the fortune of never truly being burdened by these expenses because of the actions I am taking ahead of time financially and otherwise.

But if the situation described by my upper-middle-class friends earlier sounds anything remotely like your situation, understand that you have a good problem. You earn an incredible amount of money and have a high probability of maintaining those earnings over time. Your lifestyle is one that few people in the world will ever experience and is literally the height of luxury across the vast majority of human civilization.

Not all of life is about early financial freedom. It’s totally acceptable for financial freedom to NOT be your goal. But if you are reading this blog, looking for chances to work toward early financial freedom through real estate investing, you need to begin solving problems and figuring out how you can move toward your goals, instead of wasting your time complaining about why you can’t.

Look—I get it. You aren’t sustaining a household income of $200,000 per year if you are a moron. The folks I know in the upper-middle-class are in very little danger of going belly-up in the next crash—they have stable jobs, marketable skillsets, and a margin of safety built into their lives. Obviously, you have some cash for a rainy day and are well-prepared to handle the majority of life’s curveballs.

But we’re about more than just preventing personal bankruptcy here in terms of our financial goals. The objective of the vast majority of investors is ultimately financial freedom. There’s a reason you are reading this; there’s a reason that you are taking active control over your financial picture. Understand that for you, moving toward financial freedom rapidly is going to be easier than it will be for almost anyone else in the country, let alone the world. You are only kidding yourself if you refuse to see that.

We’re republishing this article to help out our newer readers.

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What are your thoughts?

Let’s get some parents’ perspectives in the comments below!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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