I have been thinking about the ever-blurring line between Needs and Wants and how that plays into Financial Independence. What wants should we sacrifice, which ones are non-negotiable, can we afford to mix in a little luxury, why do we own 4 car seats for 1 child
For a long time, I felt we had struck a balance between frugality and not passing up experiences we value. We are still in a fairly good spot but adding in all the costs that come with a child has shifted and twisted that line every month.
Raising Kids is effing expensive
The costs just keep on rolling in, and the vast majority of them are mandatory.
Daycare, car seats, car big enough (and safe enough) to fit two car seats and a dog without preventing my seat from backing up. Approximately 1 million other necessities that come along with keeping a kid safe, fed and entertained.
Anyone who says kids don’t need to be expensive is full of it. Child Care and Insurance are enough for me to call it expensive (over $10,000/year and our childcare is far more reasonable that a lot of other people I know)
Another interesting factor to consider is how technology impacts our expectations
Technology continues to make life easier……at a cost
- Cell phones (92% of adults now own one, 68% own smartphones)
- Personal Computer – must have for our household for blogging, banking, shopping (no stores for me!)
- Cleaning Robot – Now that I have one, it’s a necessity
Some will scoff at my technology list above, but they are practical and a necessity in today’s world. That doesn’t mean you have to pay a premium for them or can’t find deals, but necessary none the less
Maybe a new category should be added to Needs Vs Wants… How about Needs Vs Wants Vs Practical Needs That Save Time and Make Our Life Easier?
For example, we could get by with one car seat that is a NEED, but the thought of moving that car seat 3* times per day, in Minnesota, when its 0 degrees outside sounds like one of the levels of hell. And if $250 bucks puts me back on earth I call that a great damn deal.
I mean, this FIRE thing is all about stealing as much time back as possible, finding some now is well worth a few hundred bucks every year.
*Transfer from Mrs. AE’s car to Daycare, Then Daycare to my car, Then My car back to Mrs. AE’s for the next morning.
What about some Luxury?
Can FIRE and Luxury mix? Or are they mutually exclusive? I’m not going to dive too deep here in this post but will in my next post when I talk FIRE and cars (Specifically cars for people with kids).
One Need to Rule Them All
As I was thinking through this, I came full circle to something I go back to frequently, that it is much more important to think about than all the Needs, Practical Needs, or Wants I outlined above:
The NEED to trade your time for money
Trading a Finite resource for something close to infinite seems increasingly crazy to me every time I think about it.
How about trading time for something that has the ability to generate itself when enough of it is grouped together and deployed correctly?
Hard pass. No Thanks.
A dollar is a dollar, whether is used for infant formula or a night on the town. But how you earn that dollar is much more interesting concept than debating about needs or wants. Because needing a paycheck to fund everything you need or want, luxury or necessity, car seat or iPad is not the ideal way to live.
It’s Time to Shift Our Focus
Now that my student loans are gone, we can fully dedicate our time to building wealth. Which is getting increasingly difficult to expedite with all the costs that will be coming with our second child. Investing in long-term index funds is not going to be enough.
In order to continue making progress, we are going to have to stretch our comfort zone and make some adjustments to our retirement heavy investment plan we have been rocking for the last few years. We need to start generating income outside of our 9-5, that can fund our lifestyle without a 100% of our attention.
Adjustments I am considering right now:
- Pumping up our brokerage account balance – Need to start funding the years before our retirement accounts kick in
- Preparing for opportunity – With the vast majority of our money in retirement accounts, we are not prepared to pounce on opportunities that arise. A few that come to mind – real estate or starting/investing in a small business.
The timing probably isn’t right, but with two kids under 2 it probably never will be. It’s time to start preparing for some calculated risks. No guts no glory?
I made it all the way through this without 1 Lord of the Rings pun