Today, we are fortunate to hear from a good friend of mine and a big Money and Megabytes supporter. Haskell shares some nuggets of pure wisdom and poses some important questions. I think you’ll agree he’s a great writer whose experience we can all learn from!
Thanks to Joey for the opportunity to write this guest post. I have been a reader and fan of this blog since its inception. I am unsure if I can offer much new in the way of financial advice, but given that I may be a bit older than the average reader of this blog, I thought some reflective, summary advice might be helpful, even if it merely echoes previous, more detailed posts. Also, I think the pre-family financial discussion is a bit different (and seemingly much more simple), than the post-family financial discussion. Below, I detail five pieces of financial advice for those in the pre-family stage, and I then pose five finance-related questions for those who, like my wife and me, have children.
- Give Sacrificially. I wish I had been better about this, but money given can be some of the very best money spent. Many in the FIRE movement recognize this, even if it delays financial independence. (See, e.g., here, here, here, and here),
- Save Automatically. I don’t think I can improve on the Frugal Professor’s hierarchy of savings, but I will say that automating savings has worked well for me, especially when I was an extremely busy young professional.
- Choose Frugal Friends. For better or worse, we tend to drift toward those with whom we spend most of our time. As such, having friends with similar financial philosophies will be helpful in the quest for financial independence.
- Live with Roommates (Close to Work). Living with roommates can be difficult at times, but the relationships built, the interpersonal skills honed, and the significant savings on rent and utilities makes it worthwhile. Also, I never regretted living close to work (even when mugged; see below on “safety”) — not only did I save on car-related expenses, but I also saved time and improved my health by walking to work.
- Focus on Lasting Purchases. The best money that I have spent (outside of giving) has been spent on experiences/travel and building skills. These things tend to outlast material purchases, don’t have to be insured, don’t break, and don’t increase worries. As to material purchases, I have been most happy with basic, but high-quality items that promote activity (like my Garmin watch or a good pair of running shoes).
- Schools? How do you decide between “metro-public schools,” “suburb-public schools,” “religious private schools,” and “secular private schools.” This decision has massive financial repercussions, not only from the cost of the education if you choose “private,” but also on the cost of your home and the cost of your commute if you choose to live further from work to get access to “better” public schools. As an educator, I believe high-quality education is of tremendous value (though I don’t think it is clear which of the four categories of school is “best,” and which category is “best” may vary from child to child).
- Skills for Children? How much do you spend on skill-building activities for your children? The opportunities are endless – sports, music, art, language, tutoring in various areas, etc. I think parents should be active in their children’s education, but there are some areas (e.g., music) where my wife and I wouldn’t even be able to instruct on the basics, and there is significant value in team sports (though I don’t believe specialization or year-round training is appropriate for young children in most cases).
- Savings for Children? How much should you save for your children? The education landscape could look vastly different by the time my children are ready for college, and we are trying to find the right balance between helpful assistance and harmful pampering.
- Buying Time? Time with family is precious, so to what extent do you outsource various chores to free up time with family? I think the best strategy is to involve your children in the chores (and give them their own chores). That said, while giving children responsibility early is usually wise, we also want to have time for leisure activities with our children.
- Buying Safety? I’ve been held at gunpoint twice, chased in rougher neighborhoods multiple times, had my car and home broken into, and my bike stolen. Still, but for having a family, I would probably choose to live in a neighborhood some would label “transitioning” or “dangerous.” Why? I loss less than $1000 in the robberies (the bike was a $50 garage sale bike, two $200 car stereos, some fairly minor car repair, and a bit of cash), but in 12 years of independent living pre-marriage, I easily saved over $30,000 in total rent costs (not to mention the money and time saved by being close to work). Physical safety is harder to monetize, and cannot be guaranteed, but now that more people depend on me, I value the likelihood of physical safety more than I did when I was single. There are many choices between the highest crime neighborhoods and bubble-wrapped gated communities. You obviously cannot, and probably should not, completely shield yourself and your family from all danger, but settling on the “best” environment is difficult.