RPF0664-Can_You_Become_Financially_Independent_If_You_Have

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00:00:15.600 | Today on Radical Personal Finance, we tackle this theme. Joshua, it seems like most of the

00:00:19.440 | proponents of FIRE, financial independence and early retirement, are either single people or

00:00:24.800 | childless couples. Do you think it's possible for families to achieve financial independence as well?

00:00:29.760 | [Music]

00:00:46.480 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:49.360 | skills, insight, and encouragement you need to live a rich and meaningful life now while

00:00:54.000 | building a plan for financial freedom in 10 years or less. Well, today we're going to talk about it.

00:00:59.120 | Do you think it's possible to build a plan for financial freedom in 10 years or less

00:01:03.840 | if those 10 years involve your being very busy and involve your budget being burdened with the

00:01:10.080 | many expenses of children? [Music]

00:01:18.800 | Question comes in in inspiration from a listener of mine who writes in from Australia. Writes in

00:01:24.560 | about a number of different things, but ultimately talks about this. This listener is newly engaged,

00:01:29.680 | planning to be married very soon, and says, "I despise having to take out a mortgage from a bank,

00:01:35.120 | which is one of my current joy-sapping tasks, only to be in debt for 30 years just so I can

00:01:39.840 | put a roof over my future family's head. Previous generations were raised to simply accept this as

00:01:45.200 | part and parcel of being a man and providing for your family, but the more I think about it,

00:01:49.360 | the less empowering it actually is. We've created a society where due to the constant need for a

00:01:54.480 | growing economy, housing affordability is at an all-time low. Nearly 35% of my take-home pay will

00:02:01.040 | go towards paying off a house for the majority of my working life. Talk about wage slavery.

00:02:06.400 | Financial freedom seems almost impossible for couples that want to marry young,

00:02:10.640 | have children, live on a single income, homeschool children, have a big enough house for their needs,

00:02:15.520 | have a level of stability in terms of not moving around and living in close proximity to family

00:02:19.920 | and support networks, etc. The whole FIRE movement seems geared to single people who are happy to

00:02:25.440 | work seven days a week for the best years of their life, or do so with a partner for even more

00:02:30.240 | income, never have children and retire at 40, having lived a selfish life with no legacy left

00:02:35.520 | behind. I recall your talking about what would make you happy on your deathbed, an extra zero

00:02:40.560 | in your net worth or children and family around you, and I couldn't agree more with your answer.

00:02:45.760 | Joshua, perhaps an episode on what financial freedom would or could look like for young

00:02:49.360 | families in our situation would be interesting. Thank you. Well, this is interesting to me,

00:02:55.040 | and I will talk about it. And I'm actually intentionally choosing to talk about it now,

00:03:00.160 | where my wife and I are today. You might consider this show something of a marker in the sand,

00:03:07.120 | because I will record my thoughts here in the midst of the thick of it with young children,

00:03:13.040 | and then we will see how my thoughts work out in the coming years. And you can judge for yourself

00:03:18.240 | in the coming years if we are able to accomplish our FIRE goals and FIRE plans, or if our goals

00:03:25.280 | are destroyed by our young family. For context, my wife and I have four young children, four

00:03:32.080 | children under the age of six, five and under. And any of you who have four children certainly

00:03:37.840 | know that that is a challenging phase of life. Young children are certainly challenging in and

00:03:43.840 | of themselves. One is a challenge, two is a challenge, three is a challenge, and four is even

00:03:49.040 | more of a challenge. So when you have four young children, five and under, life is very different

00:03:54.800 | than it was a mere six years ago when we were a couple without any children. And yet, things are

00:04:01.920 | not as easy as I expect them to be in 10 years. Not necessarily easy, but you know what I mean.

00:04:06.640 | It's one thing to travel with children who are independent and able to take care of themselves

00:04:12.880 | and able not to hurt themselves in some way. It's another thing to care for young children.

00:04:17.200 | And of course, there are many financial ramifications to this as well. But I am

00:04:21.600 | committed to two things. Not necessarily with equal commitment, but I am committed to these

00:04:27.280 | two things. I love my children. I wish to care for them and provide for them. And I

00:04:33.360 | value their presence in my life. I also wish to be a diligent steward of the resources that I have.

00:04:40.880 | And I wish to progressively work my way toward financial independence. And I have aggressive

00:04:46.160 | goals in that direction. So are these things contradictory? First, let's begin with the

00:04:52.480 | question. Is retiring early? Is FIRE, early retirement financial independence, is it harder

00:04:57.360 | with children than without? In my answer, the obvious, in my opinion, the answer to that

00:05:05.200 | question seems obvious. Absolutely. It seems obvious to me that it is absolutely harder

00:05:12.880 | to become financially independent at an early age with children than without children.

00:05:20.960 | I see no way to advance the argument that somehow children are going to help you to be

00:05:30.080 | financially independent faster or sooner. I don't see any line of argument that I could make in

00:05:36.080 | that direction. Rather, children are going to make early retirement and financial independence harder.

00:05:43.120 | They're probably going to make it take longer, and it's going to be more difficult on the process.

00:05:48.160 | But is FIRE impossible if you have children? My answer is no. It's absolutely not impossible.

00:05:59.360 | So let's begin with the basic formula of financial independence. This is the same for everybody,

00:06:05.920 | no matter whether you are a single individual, a married couple without children,

00:06:09.920 | married couple with children, single parent with children without, I guess you wouldn't be a single

00:06:15.120 | parent without children. You get the point. It's the same for everybody in every life stage,

00:06:19.680 | in every circumstance. The basic formula of financial independence is this. You need to

00:06:24.400 | earn income. You generate income in some form. Then you have expenses that are incurred to

00:06:32.000 | maintain yourself and your family in the lifestyle that you have chosen. If your expenses are lower

00:06:38.320 | than your income, you generate savings. And then that savings needs to be invested well,

00:06:44.320 | and the better you can invest that savings for financial growth, the sooner you can get to a

00:06:49.040 | point at which you can live on the income from your investments. And that is the definition of

00:06:54.320 | financial independence that we are using today. Your ability to live and maintain your lifestyle

00:06:59.280 | on the income from your investments. When you can live on the income from your investments,

00:07:04.160 | you are then by definition freed from the need to work for wages to support yourself and your

00:07:10.400 | family. And the idea is that you are freed from that need for the rest of your life.

00:07:16.000 | Now, if we accept that this is the building block of financial independence, and we look at the

00:07:21.200 | problem, we recognize that the fastest results, the people who can achieve financial independence

00:07:26.240 | fastest are those who have a very high income, very low expenses, and who can generate very high

00:07:34.080 | investment returns. So what results in the highest levels of income? Well, you are the people who

00:07:41.200 | earn the highest levels of income are generally those who produce extremely valuable work and

00:07:45.680 | who work very, very hard at it, and often who work very, very long hours, long hours of hard work

00:07:52.160 | that is considered to be valuable in the marketplace generates you high levels of income.

00:07:56.720 | What about those who have the lowest expenses? Well, those who are able to minimize their

00:08:01.440 | lifestyle expenses to the smallest amount for living small living cheaply, very efficiently,

00:08:08.080 | those people are able to have the lowest expenses. And then what generates the highest investment

00:08:13.360 | returns? Generally, that would be applying large levels of time and energy and skill to your

00:08:19.520 | investments to earn outsized returns. Now, the question is this, do children help with any of

00:08:24.560 | these things? The answer is obviously no. Children don't help with any of these things.

00:08:32.560 | Parents with children, or at least parents who value their time and effort with children and

00:08:37.920 | make a priority of their relationship with their children other than a priority of working.

00:08:41.920 | Parents with children simply cannot work as much as those who don't have children.

00:08:46.560 | For me, this has been one of the biggest costs of my children. My work week is necessarily shorter

00:08:53.920 | than it would be without children. I cannot maintain the same levels of work that I maintained

00:08:59.920 | five years ago. It's simply not possible for me to simultaneously work the number of hours in a

00:09:04.720 | week that I would like to work and also provide the care for my children and the care for my wife

00:09:10.080 | that I believe they deserve, that's important to me to provide for them. The time and energy that

00:09:15.680 | young children require of you is substantial. They suck your time, they suck your energy,

00:09:22.160 | and it's necessary to provide for them. A number of months ago, we were in a particularly difficult

00:09:26.560 | time, and I was having lunch with my dad and he was asking me how things were going, and I said,

00:09:31.280 | number one prop in my face right now is figuring out how on earth to build time to work. There

00:09:37.760 | were some weeks, a number of months ago, where I was lucky to work 10 or 15 or 20 hours in a week

00:09:42.640 | simply because the demands of my children, the needs of my wife, the needs of our household were

00:09:47.440 | so substantial that I couldn't carve out more than 10 to 20 hours in a week to work. And so,

00:09:54.320 | there's no way that you can argue, that I see, there's no way that I can argue that somehow

00:09:59.840 | children help you to do longer, harder work. Now, there may be, we'll come to exceptions in a

00:10:07.360 | minute. What about expenses? Well, the expenses of your household if you have children are

00:10:12.800 | necessarily higher at almost every level simply because you are supporting more people. And those

00:10:20.000 | people come with all kinds of extraneous expenses that are not there if you have fewer people.

00:10:25.200 | And then investment returns are, in most areas, probably harder to achieve. Whether it's due to

00:10:30.800 | the amount of time that you can invest, it's just harder to make better investment returns. You're

00:10:35.760 | limited on the amount of time. Now, that might be where you have the most flexibility. For example,

00:10:41.600 | if as your children grow and they become more useful to do work, maybe you could do something

00:10:46.320 | like use the extra manpower that you have to buy and fix and flip houses and clean up the property

00:10:52.640 | more quickly, etc. But if you compare even those benefits that we could perhaps argue for to the

00:10:58.880 | total amount of time required over a lifetime, that seems hard to me to argue. So, it seems

00:11:05.280 | obvious that children are not going to help you become financially independent faster.

00:11:10.880 | They're simply not. They're going to be a drain on your time, on your money, on your non-financial

00:11:18.080 | resources. They are going to make it harder and longer for you to become financially independent.

00:11:24.720 | Now, the only line of argument that I think could be explored is there does seem to be some

00:11:29.760 | research to indicate that married men, I don't know if it's both married men and married women,

00:11:35.440 | at least, probably not because most women, their earnings go down when they have children because

00:11:40.400 | they spend more time with their children, become stay-at-home moms, etc. But there does seem to be

00:11:45.040 | good evidence indicating that married men earn a higher level of income and in time generate a

00:11:51.040 | higher level of wealth than unmarried men. And I've often wondered about that and thought about

00:11:56.320 | that. I've wondered, is there a – and when you look at the correlation between higher income,

00:12:01.680 | higher wealth, and fatherhood, is it a correlation or is it a causation? I'm not yet convinced of

00:12:08.880 | the answer to that. I've not seen the data that would indicate that you can prove causation.

00:12:14.480 | I look a lot at my own psychology to see if I can see one or the other. For me, I am increasingly

00:12:21.680 | convinced that being married and having children is a causal factor in my earning a higher income.

00:12:28.720 | Personally, I find having children to be very motivating for me and to be very financially

00:12:34.320 | motivating. When I assess myself today versus, say, eight years ago before I was married,

00:12:40.080 | before I have children, I simply do not struggle with the things that I struggled with eight years

00:12:44.720 | ago. I don't struggle with all those silly things about, "Oh, I don't feel like getting out of bed,"

00:12:49.200 | or "I don't feel like going to work." I don't struggle with motivation or any of those things.

00:12:54.880 | And I don't think it's just related to chronological advancement of age, chronological age,

00:13:01.440 | because I have a number of friends who are my exact same age who went through – have gone

00:13:06.000 | through similar life paths. Many of them are entrepreneurs. But the ones that don't have

00:13:10.560 | children and who are unmarried in many ways seem to struggle with those exact same things that I

00:13:16.720 | struggled with when I was in college. Many times they seem to be ruled by their feelings and how

00:13:22.960 | they feel at a certain day, whether they feel like working or don't feel like working. Many of my

00:13:27.120 | friends seem to be fairly drifting in their life. They don't seem to be particularly focused.

00:13:33.680 | And I just don't – I don't struggle with those things like I did when I was younger.

00:13:38.400 | And so I am increasingly convinced that there's a causal factor to higher levels of motivation,

00:13:43.920 | higher levels of work ethic, higher levels of life organization. You simply can't be a father

00:13:48.320 | and have your family run at all smoothly and run your life in the same way that you did when you

00:13:57.280 | were single. The kind of haphazard approach to life where you go with the flow and don't plan

00:14:04.640 | ahead, you don't think ahead, that seems to necessarily change when you become a father.

00:14:09.840 | I know a number of men who are older, never married. And when I compare their lives and

00:14:16.960 | their same haphazard approach, they seem to be stuck in this endless immaturity,

00:14:23.600 | this sense of drifting where they don't make clear plans. They don't – they're not on top of things,

00:14:29.920 | really. Now, I don't think that it has to happen. I don't think that I'd recommend having children as

00:14:34.960 | financial motivation, necessarily. I don't see any reason why a single man can't develop himself to

00:14:41.920 | be focused and productive and to plan ahead and to deal with all those psychological weaknesses,

00:14:47.040 | etc. But I do think that there is a causal influence where children in many ways have caused,

00:14:54.640 | at least in me with my own personal experience, major psychological changes. And those changes,

00:15:00.240 | I think, have served me well. Even things like self-confidence. I compare my own personal levels

00:15:06.480 | of self-confidence, and because I've long been a student of confidence, I've long watched and

00:15:12.240 | observed my own lacks of self-confidence, I'm convinced that having children and leading a

00:15:19.200 | family has instilled within me far higher levels of self-confidence than I would have

00:15:26.000 | if I continued to be single. Even if I had the same level of chronological age, I'm convinced

00:15:31.680 | that simply the responsibilities and the experience of leading a family has given me

00:15:37.840 | much more self-confidence. Again, I compare myself to my friends and peers, who, a few of them that

00:15:44.080 | I am very close to, unmarried, no children. And of course, I have many friends who are married

00:15:48.720 | with children. And I see marked differences in the level of personal self-confidence from those

00:15:55.120 | of us who have children. I think back to, and I've often thought, what if I went back and became a

00:16:00.160 | financial advisor? If I started over today as a financial advisor, I could with my current,

00:16:06.960 | I started in the business 11 years ago, I could with my current levels of personality and

00:16:11.040 | self-confidence change and do what previously took me three or four years, I could do it in a year.

00:16:16.880 | And part of that might be to academic study, advanced chronological age, but I am convinced

00:16:23.520 | a big factor of it is the leading of children and the leading of family. When you recognize

00:16:28.880 | the responsibilities that you have towards people who depend upon you, and when you become accustomed

00:16:34.720 | to leading and directing a family, you simply don't care about other people's opinions as much,

00:16:42.000 | and you necessarily have to take a leadership role. So, I'll continue to watch it as years go by,

00:16:50.000 | and if any of you come across good sociological data on the subject, I'd be interested to read it,

00:16:56.000 | because it's something I think a lot about. Is there a causal factor between children and

00:17:02.560 | being a husband and a father to increasing levels of income and increasing levels of wealth?

00:17:07.280 | It's a question. But I'm increasingly convinced that for me, there has been a causal influence.

00:17:15.200 | It's not just correlation, it is causation. But again, I don't think it's necessary. I would never

00:17:21.280 | tell a single man, "You have to get married in order to be more productive in your life or to

00:17:25.440 | build greater levels of self-confidence." No, there's too many risks, there's too many dangers

00:17:29.440 | to marriage and children to make that argument, but it does seem to be a benefit that comes along

00:17:36.000 | with marriage and children. So, with that caveat, let's continue. My opinion is this. Reaching

00:17:43.120 | financial independence will be harder and more time-consuming for you to do if you have children,

00:17:49.280 | but it's not impossible. Now, I don't think the question is going to be solved by simply financial

00:17:55.440 | analysis, because I don't think that really any of us would use financial independence as our

00:18:00.960 | primary, ultimate goal in life. And this is, I think there are some young devotees of the

00:18:08.640 | financial independence philosophy who do hold this as a primary goal in life. And they seem to think

00:18:15.760 | that this will be a transformative thing, that once they reach financial independence, everything

00:18:20.400 | will be fine. To me, this is simply a mark of youthful exuberance and immaturity. And there

00:18:27.600 | are plenty of mature people in the financial independence space who would caution that

00:18:34.320 | youthful perspective and say, "No, you're going to be the same person you are before financial

00:18:38.720 | independence as you are after financial independence." There may be some personal goals

00:18:43.040 | that you can pursue more, some things that bring more joy to your life that you can have the

00:18:46.880 | freedom and flexibility to pursue after financial independence. But I don't think there's really

00:18:51.520 | anybody out there, at least anybody with some maturity, who would say that financial independence

00:18:58.000 | will be the defining thing in your happiness. Happy people will probably be happy before

00:19:04.480 | financial independence and will be happy afterward. And miserable people will probably be

00:19:08.080 | miserable before financial independence and will be miserable afterward. So to me, that seems the

00:19:13.360 | expected perspective of most people who are mature. Most of the focus on financial independence,

00:19:18.000 | I think, where it does get out of whack comes from those who are, again, expressing a youthful

00:19:23.600 | exuberance. And in time, with more life experience, that will probably be tempered. But I don't think

00:19:29.520 | there's anybody out there that's building their philosophy around financial independence as being

00:19:34.960 | the thing in their life. And so that's also not going to affect your perspective towards children.

00:19:40.720 | I think ultimately, your more basic level of worldview will be the thing that drives you,

00:19:46.080 | and then you look to see how financial independence fits in. Most people probably don't think that

00:19:52.320 | much about their philosophy of children. There are people who are very pro-children. There are

00:19:56.960 | people who are very anti-children. But most people seem to take life as it comes, and

00:20:01.840 | they—children happen organically or they don't happen, and they just simply adjust as time goes

00:20:08.720 | on. I do personally have a deep level of concern for what seems to me to be an increasing rejection

00:20:16.880 | of children. You see this a lot in popular culture right now, at least in the United States. You see

00:20:21.440 | it in Europe as well, from the British royal family to popular musicians and popular politicians.

00:20:27.360 | There's people who sincerely seem to be having this intense personal moral struggle about whether

00:20:33.840 | it's ethically right and morally right to have children. And I feel very sad and a great deal

00:20:42.080 | of empathy for people who believe that. I remember reading one young girl's essay that she wrote on

00:20:48.080 | this, and she poured her heart out. I think she was in her early 20s, and she wrote this really

00:20:56.000 | desperate essay where she poured her heart out about talking about how desperately she wanted

00:21:00.000 | to have children, but she had this intense ethical turmoil about doing so because of the impact that

00:21:04.720 | her children would have on the environment. And she was worried about global warming and the world

00:21:08.480 | blowing up, and it's just really remarkable. But ultimately, I think the underlying philosophies

00:21:14.960 | will be much, much stronger than any of the financial philosophies, whether you value

00:21:19.200 | children, you value human life, or you don't. So once you decide those things, once you decide

00:21:26.000 | if you are in the perspective of humans are either a blight upon the earth – you see this a lot right

00:21:32.400 | now, where if you take the extreme form of some worldviews, many people seem to believe that

00:21:40.400 | human beings are the greatest curse upon the face of the earth. And it's almost like some people

00:21:45.520 | dream that if every human being were vaporized from the surface of the earth – I don't know,

00:21:50.400 | raptured, you know, disappeared from the surface of the earth – then somehow this would make the

00:21:54.560 | greatest thing that could happen, because now the earth would be in its pure and perfect form,

00:21:59.040 | and things could flourish, and the carbon would go down in the atmosphere, and volcanoes would

00:22:03.920 | blow up less, and wolves would be able to roam the streets of – or roam the empty,

00:22:08.720 | grown-over streets of New York, and everything would be great. The buffalo could return to the

00:22:13.040 | prairies, and the – I don't know, the great white shark could regenerate itself and rule the seas

00:22:20.960 | again. That seems to be some people's perspective. I don't hold any of that. I see human beings as

00:22:27.680 | the single greatest resource that the world exists. I have zero fear whatsoever about

00:22:34.080 | somehow in the future – I mean, they've got the same tired, like, Malthusian overpopulation stuff

00:22:40.400 | that has been so utterly disproven in time over the decades, but it doesn't seem to die. It's

00:22:46.480 | this crazy philosophy that seems to continue on, even though there's no evidence for it whatsoever.

00:22:52.640 | Or people talk about, "Oh, well, the natural carrying capacity of the earth is 5 billion people,

00:22:56.320 | or 1 billion people, or whatever their magic number is." It's absurd. The single greatest

00:23:00.560 | resource on the face of this earth is human ingenuity, and the human beings that exist.

00:23:05.440 | And every single problem that we face as a human species, we will solve it by the human resources

00:23:13.360 | that we have. There is no problem today that is unsolvable. And to think otherwise is the most

00:23:19.280 | destructive, self-defeating philosophy. So, you may have guessed, I don't buy this in any way.

00:23:24.880 | And it's this most remarkable expression of pessimism when people feel that their own

00:23:31.120 | species is not worth propagating, that their own family is not worth propagating, that the

00:23:35.840 | highest and best good that they could do is to make sure that the human race stops with them,

00:23:41.200 | and practically that they just fold up and die too. And you see this sense of pessimism

00:23:49.600 | that grips people, and they're stuck in this catastrophic viewpoint of the world that everything

00:23:56.000 | is falling apart and everything is dying, and there's no internal confidence to actually go

00:24:01.120 | on and build a brighter and better future. But rather, the sense of morose, foreboding

00:24:07.360 | catastrophism that results in them being depressed and wanting to end things every day. It's crazy.

00:24:14.320 | Now, there do seem to be some strong religious trends. If you study the global populations,

00:24:20.240 | there seems to be a high correlation between theism and people who are increasing. In general,

00:24:25.440 | you see if you study religion and non-religion, you generally see that the most fundamentalist,

00:24:32.160 | highly religious sects in different religions tend to be the ones that are growing, and that's

00:24:35.920 | having a transformative influence on culture, and so that's fascinating to watch. But I guess,

00:24:43.680 | at the end of the day, it comes down to your philosophy, you know? Do you see people as a

00:24:47.440 | blessing, as a good thing? Or are people fundamentally a bad thing? For me, it's fairly

00:24:52.480 | simple. The Bible says, "Be fruitful and multiply, fill the earth and subdue it." And so, I see

00:24:58.080 | human beings as the single greatest thing, the single greatest resource on the earth.

00:25:04.080 | The basic commandment for people is love God and love your neighbor. We can't love your neighbor

00:25:08.320 | if you're simultaneously looking over at them and wishing they were dead and gone.

00:25:12.000 | And most fulfilling experiences in life are enhanced by our community and sharing those

00:25:18.560 | with other people. So, it's not to say that parenthood is easy. It's certainly not. I doubt

00:25:24.880 | there's a parent out there who doesn't question if they wouldn't be happier at times without the

00:25:31.200 | work and the challenge that their children bring them. Just like probably there's not a couple out

00:25:37.200 | there that has chosen not to have children that wouldn't look over at parents and say,

00:25:42.000 | "Sometimes I wonder if we should make a different choice." I think most of us who are parents would

00:25:48.080 | admit that as much as we love our children, there are a lot of things in our life that are difficult

00:25:52.400 | without them. But at the end of the day, you have to choose. Or throughout history, most people

00:25:57.680 | haven't had to choose. It just kind of happens naturally. But today, increasingly, people feel

00:26:01.760 | that they have to choose. And so, it's going to go down to your philosophy, your philosophy of

00:26:05.600 | the value of people, the value of humans, what you're here to do. And in many ways, your positive

00:26:11.280 | feelings and optimism about the future or your pessimism about the future. So, you'll have to

00:26:17.360 | settle that yourself. But I don't think that financial independence is going to be the thing

00:26:22.480 | that makes the difference for you. So, assuming that you've settled it and assuming that you

00:26:26.480 | are in a situation where you've said, "Okay, I've got children," or "I'd like to have children,"

00:26:31.840 | does that mean that I've got to kiss off financial independence? Does the fact that I'm having

00:26:36.800 | children and I've got these two little children here in my household mean that for the rest of

00:26:41.200 | my life, I'm going to be stuck? I just can never grow financially? My answer is very loudly, no.

00:26:50.960 | Now, we need to, again, acknowledge reality. In my opinion, there's no question that children

00:26:56.160 | will increase the costs of your life and your lifestyle. And there are some important inflection

00:27:02.080 | points for you to consider as you even consider the size of your family. For example, many people

00:27:08.480 | who do have children today are choosing to have only one child or possibly two children. The

00:27:15.040 | number of families today that have only one child or two children is at a historic high. There's

00:27:21.680 | never been a period in history where so many families have chosen, so many parents have chosen

00:27:26.880 | to only have one or two children and then restricted their, through whatever circumstances

00:27:34.560 | or means, chosen not to have any more children. That's a really unique and modern development,

00:27:41.600 | and it's having very substantial influences on the world today. In some cases, it's having

00:27:48.320 | catastrophic influences on the world today. But it is fascinating to analyze it from a financial

00:27:54.080 | perspective. One child adds very modestly to the household budget of a couple. I guess before I

00:28:00.960 | even go to one child, we should talk about the financial benefits of being single versus the

00:28:04.880 | financial benefits of going through life as a married couple. That one's a little bit more

00:28:09.520 | difficult because a lot of it will come down to the quality of your relationships. If you are in

00:28:15.600 | a very low quality, contentious marriage relationship, in many ways, I think you can

00:28:20.560 | make a good argument that it's a lot better to be single. You have a high degree of freedom

00:28:24.720 | and independence. You can easily disassociate yourself from people that you don't wish to be

00:28:28.960 | with. Whereas when you're married, you can't do that. You're married, you're in it for life,

00:28:33.120 | you are in it. Whether it's happy for better or for worse, for richer or for poorer, you're in it.

00:28:38.400 | Now, financially, I do think the best financial arrangement, the most efficient financial

00:28:44.080 | relationship arrangement is going to be with two people working together. You can have such

00:28:50.640 | economy of expenses. It's cheaper for two people to live together in one house than it is for two

00:28:57.200 | individual single people to maintain two separate houses. When you can add your income together,

00:29:01.920 | you can mutually support one another. One person is going to go to school, one person's going to

00:29:06.560 | start a business. Well, if the other person is earning wages, they can support that other person,

00:29:09.840 | which makes it so much easier to go to school to increase your earning power or to go through the

00:29:15.440 | temporary financial shortfall of starting a business. So two people married is vastly superior

00:29:20.720 | financially to two individuals. There's only a reduction of cost when two people get married

00:29:27.520 | versus the cost of maintaining two separate households. But it's not necessarily the same

00:29:31.920 | way when you have children. So one child adds very modestly to the household budget. In general,

00:29:37.840 | I'm going to ignore things like birth expenses, not that they're immaterial, but simply that

00:29:42.880 | they're a one-time expense that is not repeated and they can be calculated. They're not insubstantial,

00:29:48.240 | but they're a one-time expense. The more important expenses are the expenses that continue throughout

00:29:52.880 | childhood until the age of adulthood. So for example, one child to go from a couple of two

00:29:59.280 | to a family of three means that there's going to be a 33% increase in your restaurant costs when you

00:30:05.440 | go out to eat. There's not necessarily a 33% increase in cooking at home costs, but there

00:30:10.960 | will always be a 33% increase in restaurant costs. There'll be a 33% increase in plane ticket costs.

00:30:17.520 | Whenever you go somewhere, you buy three plane tickets instead of two plane tickets. That's a

00:30:21.200 | really substantial cost. But some other things are only going to be marginally affected. Maybe

00:30:26.720 | you'll might have to have a slightly larger house, but you can still get by with a small house if you

00:30:31.200 | have one child. A two-bedroom house is adequate. A two-bedroom, one-bathroom house is certainly

00:30:35.120 | adequate. You need a little more space than perhaps the couple could get by with in a tiny

00:30:39.760 | studio apartment, but a small house is still adequate. So only slightly larger expenses.

00:30:46.000 | And frankly, you can stick one child just about anywhere. If you have a small closet in your

00:30:50.240 | studio apartment, you can convert that closet into a perfectly serviceable bedroom for one child.

00:30:55.680 | Most of the world lives that way. Most of the world doesn't have these huge extra bedroom for

00:30:59.360 | one child. They convert a small closet or a small little room where the child can have a private

00:31:03.760 | bed. You probably don't need a bigger car if you have three children. Maybe if you had a smart car

00:31:09.600 | as a couple, it doesn't work. You need a third seat. But a little hatchback still does. A little

00:31:13.840 | four-seat hatchback will work fine if you have one child. And then if you want to do fun things,

00:31:18.480 | you want to travel the world, well, you can still get by on a small sailboat or a little tiny

00:31:22.720 | RV. There's not a lot of big expense there with having one child. You will have significant costs

00:31:29.040 | in things like clothing. For example, you have a child. That means now that you have to acquire

00:31:34.080 | new clothing for that child. And that can be a major ongoing expense for children because they

00:31:38.480 | grow so quickly. And there's no real efficiency of reuse from multiple children. If you have

00:31:44.880 | four children and you have sets of clothing that you buy for the first one, with the exception of

00:31:49.520 | a few things that got worn out, most of the clothing can be handed down one by one. But you

00:31:54.320 | probably have cousins or nieces or nephews. You could probably get a lot of clothing donated as

00:31:57.680 | well. So there's not going to be a huge increase there. You will have costs that you incur for

00:32:03.440 | education of the child, depending on what structure you use for that. Those costs might be small or

00:32:08.000 | there might be substantial hobbies, classes, et cetera. But one child only adds modestly to the

00:32:13.280 | household budget. Two children, still very modest. There are costs that will significantly increase

00:32:20.240 | from now on as your children grow to a point where they eat a normal adult-sized food,

00:32:24.320 | which happens pretty quickly. If you go out to eat, you're going to have double the restaurant

00:32:28.080 | cost if you have two children than if you were a couple. You're going to have double the plane

00:32:32.960 | ticket cost. But there are still things that are not so much more. You can still fit in one hotel

00:32:38.240 | room when you travel. Yeah, you get two beds, but you can still fit in one room. You don't have to

00:32:41.760 | double your hotel rooms. The small house is still doable. You can still fit in a small car. You may

00:32:46.880 | have a higher cost of clothing. Maybe you have a boy and a girl. Now you have two wardrobes that

00:32:50.720 | you have to buy and you don't have any efficiency of reuse, but you can handle that in other ways.

00:32:55.760 | Now, when you get to three children, there does start to be an incrementally higher cost.

00:33:00.000 | You now have a massive increase in your plane tickets, your restaurant costs.

00:33:03.600 | It's double, more than double. You're getting five meals instead of two. You're getting five

00:33:09.440 | plane tickets instead of two. And now you're at the point where you will probably need to

00:33:13.520 | be committed to a bigger house for the duration of your child-rearing years. At this point,

00:33:20.080 | you're probably going to be on track for a three-bedroom house, especially if you have

00:33:22.960 | both boys and girls. You can still maybe get by with a five-seat car, but if your children start

00:33:29.280 | to grow pretty large, it's going to be physically tight. Very rarely will a family with three

00:33:36.960 | children still skip by with that tiny little five-seat hatchback. You start to get some broad

00:33:43.280 | shoulders on boys. You start to get some broad hips on girls. They don't fit. At least I don't

00:33:48.800 | fit that well in the hatchback. I remember when I was younger, my parents were trying to buy a

00:33:53.520 | smaller minivan. And one of the things was they stuck me in the backseat and they looked at it

00:33:58.320 | and said, "Yeah, this little minivan is not going to work for us." And I had to get a full-size van.

00:34:02.240 | Just your children get bigger, but the costs are incremental with three.

00:34:08.240 | Now, for children, you start to get tougher. Restaurants, very high. You're paying three to

00:34:13.120 | six times more than a couple would pay at a restaurant. Three to six times more for plane

00:34:18.160 | tickets. So instead of one or two plane tickets for a single person or a couple, you're now at

00:34:22.640 | six. That adds up. These days I buy six plane tickets. So that makes it much more substantial

00:34:31.680 | to get on an airplane. You probably have outgrown one hotel room at this point in time. It would be

00:34:36.800 | a very rare hotel room where you can fit four children and two parents in that hotel room.

00:34:42.880 | When the children are small, you can do it. But as your children grow, you're pretty much locked

00:34:47.120 | into two hotel rooms when you go somewhere. You're definitely going to want a larger house.

00:34:52.000 | You start to outgrow most cars and SUVs on the market if you have four children.

00:34:57.120 | You can still fit into something like a double cab pickup truck if you have bench seats front and

00:35:02.480 | back, but it's tight. You're going to need a full-size pickup. You can't get by with an F-150

00:35:06.560 | anymore. You need the F-250. You can't fit in a Jeep. You can't fit in a Toyota Prius. So your

00:35:12.720 | vehicles, you need a minivan or a seven-seat SUV. And even if you get something like a seven-seat

00:35:18.240 | SUV, most of them are going to be tight unless you get the very biggest ones, a big Ford Expedition

00:35:22.560 | XL or big Chevy Suburban or Excursion or something like that. You don't get much luggage space.

00:35:26.320 | Yeah, the Honda Pilot has seven seats, but by the time you flip down one, you don't have enough

00:35:33.600 | luggage space. They just don't work. If you're going to go traveling, you need a big RV with

00:35:37.840 | a bunkhouse. You can't just go down to 1-800-RV-4-RENT and rent whatever they have because

00:35:43.200 | there simply aren't enough beds. You don't fit on a 32-foot sailboat. You don't fit in most things,

00:35:48.960 | and so you've got to think bigger. And five children, that would be a big inflection point.

00:35:54.160 | Now, generally, your plane tickets add up a lot. You officially always need a minivan. So now,

00:35:59.680 | when you go on vacation, you're going to need two hotel rooms. You're going to need to rent a much

00:36:04.000 | more expensive car. You can't fit into the $12 a day car. You've got to have the $45 a day minivan.

00:36:09.360 | Six children, now you always need a full-size van or you need multiple cars. You need a big house,

00:36:14.720 | etc. Now, there are some efficiencies that can grow financially with you if you have a larger

00:36:20.320 | family. For example, let's say that you already have a larger car. Many people with two children

00:36:25.920 | will drive a minivan, and it doesn't actually cost you anything extra if you're already going

00:36:30.640 | to have a minivan with two children to have a total of five children in your minivan instead

00:36:35.120 | of two children in the minivan. And it doesn't cost you all that much on your fuel mileage to

00:36:40.720 | drive around with seven people total in your minivan versus four people total. Maybe you lose

00:36:45.280 | half a mile per gallon because of the increased weight, but not much. And you gain some other

00:36:49.440 | efficiencies. You have more drivers. If you have children who are older and have more drivers,

00:36:54.880 | and you're going to drive across the country, you can drive straight through because you have

00:36:58.160 | more drivers. It's easier. If you have more children, you get efficiencies, economies of scale

00:37:03.920 | with things like clothing. You can reuse clothing from one child to the next. Things like shoes,

00:37:08.880 | things like books. You don't have to go out and buy a whole new set of books for the fifth child.

00:37:14.000 | You've already accumulated them for one. And so there's a big difference between a couple

00:37:19.280 | and investing in a home library with one child. But a home library for one child can now be

00:37:25.040 | reused again and again for two, three, four, five, six children, however many you have.

00:37:29.200 | Same thing again with clothing, shoes, etc. Size of housing. You don't, just because you have more

00:37:36.080 | children doesn't necessarily automatically mean that you have to go to that much of a bigger

00:37:40.320 | house. If you're willing to be cozy, you can fit things into three rooms. When I was growing up,

00:37:45.920 | I'm the youngest of seven children. Although at that time, yeah, there was a time in my life where

00:37:54.080 | all of us lived in a relatively small three bedroom house. Now it was tight and my parents

00:38:00.720 | didn't do that for a long time. They adjusted their living circumstances and moved to a bigger

00:38:04.720 | house fairly quickly. But the point is, it is doable. A three bedroom house can have,

00:38:10.000 | in our case, we had four boys in one room and three girls in the other.

00:38:13.120 | So that, there are, it can be done. You don't have to automatically commit yourself to a huge

00:38:19.680 | giant house just because you have children. There are benefits. You have more help. There's more

00:38:25.120 | cooks in the kitchen, more gardeners outside, more tutors for the younger children. And there,

00:38:30.320 | you have more people to rely upon. For example, one of the benefits of having more than, more,

00:38:35.920 | having children and having more children is that you can rely on your children as you go through

00:38:42.080 | life. Pretend you only have one child. Many couples, one child. And in later years, your

00:38:47.760 | child goes out and gets married to a spouse who comes from an only child family. And as is the

00:38:53.680 | norm increasingly today, they have one child. Now, pretend that you and your spouse are now old

00:39:00.240 | and you need some help. You need someone to be there with you to keep you company, perhaps to

00:39:04.720 | give you some help around the house. Well, very likely, your in-law child's parents are also in

00:39:13.440 | a similar stage. And so what frequently happens in parts of the world where there are changing

00:39:19.680 | day demographics and what's increasingly going to happen in the United States is that you'll find

00:39:23.840 | that your child and their spouse, who of course is an only child, will have four old people to

00:39:30.000 | take care of. So now you have two middle-aged people who may or may not have a child to either

00:39:38.560 | have additional work for them or additional help for them, but you have two middle-aged people

00:39:43.520 | caring for four old people. That's really tough. That's really, really tough. That's very different

00:39:51.200 | than if you as the adult had four or six children and now the four or six children can share around

00:39:58.320 | the care for mom and dad. And this is one of the things that has happened demographically with old

00:40:03.840 | age welfare programs in the United States and is happening throughout much of the world, which is

00:40:07.920 | why it's going to be so tough on old people, is because as people started to have fewer children,

00:40:14.000 | all of the math of the programs has fallen apart, where you don't have enough young workers

00:40:19.200 | working, earning money, paying taxes to support the older programs, and you don't have enough

00:40:23.440 | workers to care for all the old people. So right now things are working, but at some point in time

00:40:28.560 | there's going to be, demographically, unless there's some major change, which I don't see

00:40:32.480 | any reason why that would happen fast, at some point in time the young people are going to look

00:40:37.200 | at the old people and say, "Yeah, we can't do it anymore." And what happens then? I don't know.

00:40:41.040 | But it's not necessarily a bright future for a lot of older people. And now as those government

00:40:46.720 | programs start to increasingly collapse, as the government programs start to have fewer funds,

00:40:52.480 | as there are fewer younger workers to care for the older people, you're going to see the government

00:40:57.200 | institutional financialized programs start to go down. Now it's a much scarier thing.

00:41:02.640 | Imagine yourself as an 85-year-old, and yet you have one child who is not doing well

00:41:09.680 | themselves. Your future looks a lot scarier than if you have three children who can care for you,

00:41:17.760 | and one of them has the financial flexibility and the lifestyle flexibility where they can

00:41:21.920 | care for you. So that may be one thing. You have more people to rely on as your children grow.

00:41:30.400 | It's interesting that that's a very touchy subject for most people today.

00:41:33.920 | When I used to do retirement planning for individuals who were planning to retire,

00:41:38.640 | the number one goal that most retirees seem to have is not being a burden on their children.

00:41:43.760 | Now I think we all share that, right? None of us want to be a burden on our children.

00:41:47.760 | But what's fascinating is that that's a relatively new thing, culturally. Most historical cultures

00:41:55.040 | seem to have a different expectation of their children. Most historical cultures have seemed

00:41:59.440 | to say we invest in our children when they're young, and our children owe us a duty of care

00:42:04.240 | when we are older. I personally believe that's the right thing, that I owe my parents a duty of care.

00:42:10.560 | But it is, it makes a big difference. I would say one other simple expression today would be

00:42:17.680 | simply the ability of, if you're currently caring for your older parents. I remember when

00:42:25.280 | my grandparents, I have one grandmother still alive, she's 105 years old, but when my other

00:42:32.560 | grandparents were in their 90s and my parents were caring for them, my parents built a house,

00:42:36.960 | moved them in with us, wanted to provide care, we never wanted to send my grandparents to

00:42:41.840 | an institution. And so that care is really, really burdensome. It's really tough. And my

00:42:48.000 | grandfather had dementia, required full-time care for many years. That's very, very challenging.

00:42:53.200 | But one of the things I'm grateful for and proud of is that at the time, my parents had children

00:42:59.440 | who were adult children who were able to help and relieve some of that burden. Now, my parents still

00:43:06.400 | bore the primary burden of caring for their parents, as they should, but some of us grandchildren were

00:43:13.520 | able to be there. At the time, I had graduated from college, I moved back with my parents,

00:43:18.640 | and one of the reasons I did that was because I was able to help care for my aged grandparents.

00:43:25.120 | My siblings also were able to do that. It was much easier for us to provide respite care

00:43:29.360 | so that my parents could get away. They weren't stuck in the same way that so many today are,

00:43:33.760 | where you have a single individual or a couple caring for parents, or often a single child

00:43:39.760 | who is a single parent caring for aged parents. It's very, very difficult.

00:43:44.160 | So, perhaps I belabor that too much, but as you have more children, you have more people to rely

00:43:49.600 | on. And in many ways, there's more security, even emotional security. If you have one child

00:43:55.520 | and your child dies, that can be really, really tough. Obviously, it's tough if any child dies,

00:44:01.120 | but I think there's a great comfort that parents can take if they have other children to comfort

00:44:05.760 | them in their time of loss. I had one sister that died when she was 14 years old. And one of the

00:44:12.080 | things I'm very grateful for is that I wasn't one of two children. And my family, we missed

00:44:19.360 | my sister very, very much, very, very much. But I don't feel this just constant, never-ending

00:44:25.680 | pain of loss because I have many other siblings. Our family get-togethers and holiday celebrations

00:44:32.640 | are noisy, exuberant, jubilant affairs. And of course, there is probably a lifelong sense of

00:44:41.040 | loss of the death of one of my – of a sibling. But the fact is, my parents still have six other

00:44:48.640 | children to enjoy their old years with, to enjoy the fruits of their labors with, to enjoy the

00:44:55.280 | many grandchildren and the great riches of that. And that wouldn't be the case if they had only

00:44:59.840 | one child. I had a former co-worker of mine who – he had one child. And I think it was – he had,

00:45:10.160 | I don't know all the circumstances of his marriages, but he was in a second marriage with –

00:45:14.480 | where his wife didn't have any other children. They had one child. And he was extremely involved

00:45:19.680 | in his son's life, extremely involved. And they had many rich and rewarding experiences

00:45:26.400 | throughout their lifetime. My co-worker was financially extremely affluent, had plenty of

00:45:34.720 | money, plenty of time freedom. They spent years – they bought an RV and his son was into dirt

00:45:40.720 | biking. And so, they would go all around the country in this RV and enter all the dirt bike

00:45:45.200 | races. He was a devoted, loving father and seemed to have a rich and rewarding relationship with his

00:45:51.120 | son. For circumstances I never learned, his son committed suicide when he was in his early 20s.

00:45:57.680 | And I just remember talking with my friend – we weren't at the point where I ever inquired about

00:46:03.440 | the circumstances, it was none of my business. But my friend had all the money in the world,

00:46:08.080 | was extremely financially well off, had all the toys, the fast cars, the big boats,

00:46:14.000 | the beautiful big houses on the water, had everything, and was totally set up. Retired

00:46:20.240 | at a very young age, pursued an active retirement out sport fishing in his big giant boat,

00:46:27.440 | traveling the world, big RV, traveling around with his wife. And yet, it seemed like there was this

00:46:34.640 | just deep emotional pain and loss that could never be changed. And he was psychologically healthy,

00:46:43.920 | but as I reflected on it, I imagined myself in his position and I thought how painful that would be.

00:46:49.200 | How painful that would be. In comparison, I have another friend of mine who he and his wife had

00:46:57.120 | eight children, and two of their children have died. Their oldest also committed suicide in early

00:47:03.360 | 20s, and one other child died in an accident. But as I looked at them, I see that through the pain,

00:47:10.880 | through the deep pain, and I don't know what pain could go deeper for a parent than

00:47:20.160 | when a child commits suicide. I pray that I never experience it personally, but man.

00:47:26.080 | How does it get more difficult than that? But through the pain, as I look at this other family,

00:47:32.720 | I'm grateful that they're surrounded by their children and they have this love and this

00:47:37.920 | comfort that comes from their other children. Now, these days, we don't think much about that,

00:47:46.000 | the advancements of medical science and the advancements of, you know, we don't think much

00:47:53.120 | about losing children. Prior generations thought much more about it. Most of us don't.

00:47:58.640 | And yet, I don't think it's foolish to think about it. That just the, that if you have one child,

00:48:08.320 | if your child dies, it's, have a deep impact on your life. So, whether it's people to rely upon

00:48:16.240 | and having, or just the joy of that. You gain, even as you have more children, you do gain many

00:48:22.080 | efficiencies in many aspects of life. You gain efficiencies with child care, for example. Let's

00:48:30.080 | say that your husband, your wife, and you are both working. You have one child, you're paying

00:48:36.400 | for daycare. Well, financially, that sometimes works out. You have three children now. It often

00:48:42.080 | works out financially very superior for a mom to be a full-time mom. And so, if mom is going to stay

00:48:48.560 | at home and care for the children with one child or with three children, there's not a difference

00:48:53.840 | in incremental cost financially. There's certainly a difference of incremental amount of work and

00:48:59.520 | stress and skills that she has to learn to care for three children versus one, but there's not an

00:49:04.400 | incremental financial difference. You're not paying three times the child care costs with,

00:49:08.000 | if mom is at home. You do, of course, have other considerations. I think every parent,

00:49:14.400 | you wonder if there's an optimal amount of focused one-on-one time. If your time is divided among

00:49:20.800 | four children versus one child, there's no question that you have less time with each

00:49:27.120 | child with four than one, and you look at that and you think about that. But you do gain efficiencies.

00:49:34.560 | There are many efficiencies with more children. I think you can justify some financial expenditures

00:49:42.240 | because you have more children to allow yourself to give your children a richer experience.

00:49:47.040 | Example that comes to mind is when I was growing up, we were homeschooled, but we always had

00:49:51.600 | an expensive microscope. My parents had bought a very expensive professional level microscope for

00:49:59.120 | our science classes and science experiments. We'd go look at pond water and stuff like that.

00:50:03.760 | We were the only family I ever knew who had a microscope like that. Most children, of course,

00:50:08.000 | have the microscope in school, but we always had a nice fancy expensive microscope.

00:50:11.920 | Well, if you amortize the cost of a fancy expensive microscope over a bunch of children versus the

00:50:17.040 | cost of one, you could perhaps justify some of those expenses. The counter argument is,

00:50:22.160 | of course, maybe you have more money if you have one child and you can easily justify it that way.

00:50:25.920 | The point is that there are some benefits there. I think you can make some good arguments that

00:50:33.680 | you are providing your children a better circumstance if you have multiple children,

00:50:38.960 | better growing up circumstance. For example, you're creating a family network, a tribe or a clan

00:50:47.120 | for your children to rely upon. And if you can maintain a positive, healthy home atmosphere

00:50:54.880 | and positive, loving relationships between parent and child and among siblings, I think the network

00:51:02.400 | that you build for your children of their siblings is one of the most valuable assets they have in

00:51:07.040 | life. Today, I would say that I rely on and value my siblings very, very deeply. And when you think

00:51:16.880 | about how to provide for somebody, when you build a support network for children and for siblings,

00:51:23.360 | it's a lot stronger than I can imagine anything else being created outside. And if you look at

00:51:29.680 | the world, kind of popular level, and you start talking to people, it seems like many people

00:51:35.280 | don't have much of a support network. Many people have difficult relationships with their parents.

00:51:42.320 | Of course, many people don't, and we want positive relationships. But some people seem to have

00:51:46.960 | difficult relationships with their parents where they feel like they can't rely on their parents.

00:51:50.800 | And they don't even have the emotional freedom to expect to rely on their parents, even as adults.

00:51:56.960 | And then many people don't have siblings that they can rely on. They don't have those close

00:52:02.000 | bonds and relationships. And then as local communities have increasingly fractured,

00:52:07.920 | unless somebody has a strong church community where they can rely on, where instead of it being,

00:52:12.960 | you know, I attend religious services here, but rather they feel a part of a family,

00:52:17.200 | many people are going through life alone, fighting alone. I'll tell you, that has never

00:52:24.320 | been my experience. And when you talk about the confidence that can be created to pursue something,

00:52:29.120 | to start a business, etc. When you feel like you have a deep reserve, when you feel like you have

00:52:34.800 | a safety net that's built up with people, it creates more confidence in you. Now, many people

00:52:41.040 | are seeking to use government and government forces to create that safety net, to establish

00:52:46.000 | a universal basic income and basic welfare programs, etc. Maybe, right, maybe that can

00:52:53.280 | have an influence. I can concede that that might help some people. But at the end of the day,

00:52:58.240 | a check from the government is nothing compared to the support of your brother.

00:53:04.800 | I don't see how it can compare. And especially as the government becomes increasingly bankrupt,

00:53:15.520 | how does that compare to the support of your brother? So, if you feel like you have a wide

00:53:20.320 | family network with siblings that you can rely on, it creates this intense sense of belonging,

00:53:26.000 | an intense sense of place. And I think that has untold ripple effects. I've only recently begun

00:53:31.680 | thinking about this, but realizing I think how important that is. I think children who grow up

00:53:36.880 | with multiple siblings have better social skills, have better coping skills. I recently saw some

00:53:42.320 | evidence that I'd never seen before, but I saw some evidence that children who grow up with

00:53:47.520 | multiple siblings have much higher rates of staying married, lower rates of divorce. Now,

00:53:55.200 | I'd like to see that corroborated and dig into that. It was just, I saw it in passing, but

00:53:58.800 | I can easily believe that. When you grow up, learning to cope with sharing a room with

00:54:05.120 | siblings and learning how to control yourself and learning how to move together as part of a group,

00:54:09.520 | it creates, I think, a much healthier, balanced personality that makes it easier to integrate

00:54:14.800 | with your spouse. I think it's very challenging to raise an only child and not have that only child

00:54:23.200 | have this sense of entitlement. Not impossible, but much more challenging than if a child grows up

00:54:29.600 | among others. And I'll just tell you, as a child growing up in a big family, I think it's a lot

00:54:34.960 | more fun. A lot more fun. When you fact that you always have multiple playmates, you can always put

00:54:41.200 | together a game, a sports game all by yourself without having to get five neighbor kids out of

00:54:45.760 | their house, it's simply a lot more fun. We certainly aren't at this stage in our parenting,

00:54:52.080 | but I'm imagining a day in the future when parenting will be easier because the children

00:54:56.800 | can be together, they can protect one another, they can care for one another, and mom and dad

00:55:00.560 | can sit back and they can go on an adventure, and because they have built-in friends. I think that's

00:55:05.280 | really useful. So I share those things because I think those arguments may be underrepresented

00:55:11.760 | in the marketplace. I don't think that those give financial proof that a family with children is

00:55:21.200 | going to become financially independent earlier. I acknowledge that firsthand. But I think they're

00:55:26.160 | offsetting benefits that are probably under-discussed. And if you focus on everything

00:55:31.920 | financial, and the only lens through which you view things is the dollars and cents, I think

00:55:38.480 | you've got a very shallow, thin, and inferior worldview. This is one of the things that deeply

00:55:43.920 | bothers me and troubles me about our modern society, that we have a tendency to bring

00:55:48.640 | everything back to measurements in terms of dollars. I believe dollars are a very useful

00:55:54.960 | measurement. They're a very useful barometer. But when you...they need to be kept in their place.

00:56:00.960 | And it really bothers me that increasingly many people measure even their self-worth,

00:56:07.040 | not by who they are as a person, not by their ontological reality in the world,

00:56:15.360 | but based upon their earning ability. And people measure one person versus another and say,

00:56:21.200 | "Well, I earn this much, and this person doesn't earn this much." And there's this intense

00:56:24.960 | class warfare, especially in the United States, where the culture is so fixated on money. And

00:56:31.040 | everyone's, "Well, men earn more than women, and women earn more than men." And I look at those

00:56:35.600 | arguments and I think, "Do you really value yourself exclusively based upon your annual

00:56:40.720 | productive income, your personal GDP, your growth, your personal output, economic output?"

00:56:45.680 | To me, that seems the thinnest and most depressing of statistics to measure yourself on

00:56:52.560 | rather than your ontological worth, your...rather than your role in life, your husband, your father,

00:57:03.840 | your wife, your mother, your son, your daughter, a valued member of your community,

00:57:10.560 | your good neighbor, your loyal citizen, you are a helper of those in need. Is that not more

00:57:16.880 | important than your annual income? And it's...everything always comes down to annual

00:57:24.400 | income. It's really, really, I think, a really destructive worldview to measure your worth

00:57:29.360 | by your net worth, to measure your contribution by your income. It's not that net worth can't be

00:57:38.880 | a useful metric. It's useful to track your productivity. I think it's very important to

00:57:43.440 | track your net worth because it's a barometer, it's a metric that you can judge to see your

00:57:50.160 | general efficiency with productivity. It's a measurement of your productivity.

00:57:56.320 | But that doesn't mean that if your net worth is declining for a good reason, that you're

00:58:02.400 | worth less as a person. And the same thing with your income. Do we really say that the person who

00:58:09.040 | makes $500,000 a year is a more important member of society than my wife, who makes $0 per year,

00:58:18.400 | and yet is pouring out her life into molding and shaping the lives of children, and who lays down

00:58:25.840 | her life into molding their character and shaping and forming their personality so that they grow

00:58:32.320 | into mature and stable adults? Is it really more helpful and more valuable if she goes and becomes

00:58:38.320 | a top-flight attorney, making $500,000 a year, so that we can hire people to do that work with

00:58:45.520 | our children? I find that the most insane of concepts, except that's the primary metric.

00:58:51.360 | Especially mothers labor under this burden that somehow they have to produce more financially

00:58:56.160 | in order to be worth more. My husband will love me more if I make more money. It's crazy.

00:59:01.760 | So let's assume that you're not making financial decisions based on the money, the finances,

00:59:07.120 | but that you are seeking to work within the constraints of your situation

00:59:11.840 | toward financial independence, even perhaps while you're caring for your children.

00:59:15.360 | Well, I would say first, let your larger family give you the personal motivation to earn more

00:59:21.840 | money. I think, personally, it's easier for you to become financially independent,

00:59:28.400 | even perhaps if you have five children, if you have a household income of $500,000

00:59:33.360 | and household expenses of $100,000, than if you're single, casting about, earning $40,000 per year.

00:59:39.360 | You're going to have an easier plan to financial independence, earning half a million dollars per

00:59:44.000 | year, even if you have five children, than if you're single, earning $40,000 per year.

00:59:48.720 | So I see no reason whatsoever that you should simply say, "Well, I have children, thus I can't

00:59:53.840 | make a lot of money." That's silly. Let your motivation and even just the duties and the

01:00:00.080 | responsibilities that you have motivate you to earn more money, motivate you to build a better

01:00:04.880 | business. First, the data's on your side. People who have children tend to make more money. And as

01:00:11.200 | I stated earlier, I think there is a causative influence there. Not absolute, but there is a

01:00:16.240 | causative influence there. My opinion and reality is this. Most people don't make much money

01:00:23.600 | because they never decide to make much money. And they never pursue that as an important goal.

01:00:29.520 | Most people have never set an income goal in their life or made a plan as to how they could double

01:00:35.600 | or triple or 10x their income. And so because they never decide to do it, they never specify

01:00:40.560 | it and state it clearly as a goal, they never do it. Because they're never tuned into the

01:00:44.720 | opportunities to do it. They're never tuned into the ways to do it. They're never thinking about

01:00:48.320 | how they could accomplish it. Now, can you do that as a single person? Of course you can.

01:00:53.200 | Any single person could set out a goal and say, "My goal is to double my income. My goal is to

01:00:58.240 | make $100,000 a year. My goal is to make a million dollars a year." And there are many people who

01:01:02.320 | will accomplish that, never marry whatsoever, never have children, and accomplish those goals.

01:01:07.120 | So of course that's possible. But it's certainly a little bit more important, probably, to people

01:01:12.560 | when they have others who are depending on their income. That was my experience. I never have

01:01:18.240 | cared that much about making more money. I generally have always been more comfortable

01:01:23.600 | just simply simplifying my goals and expenses. If I were single, I'd probably be living in the

01:01:29.280 | back of a pickup truck parked out in some random national forest land in Utah, staring at the red

01:01:37.200 | rocks every day, reading nonstop, living on $5,000 a year. Because I've never cared that much about

01:01:45.040 | making a lot of money as compared to indulging my own lazy streak and sitting around and enjoying my

01:01:51.920 | intellectual pursuits. Knowing what I know now, I would bet you that's where I'd be.

01:01:57.200 | But yet, I don't want to stick my wife in the back of a random pickup truck and tell her,

01:02:03.840 | "Figure out how to live here and stare at the red rock cliffs." I'm not going to do that.

01:02:08.000 | I'm not going to tell my children, "Yeah, we're broke, but we're going to live in this cargo

01:02:12.880 | trailer in the middle of nowhere because we can do it cheap, and I'm not going to provide any

01:02:17.280 | interesting opportunities for you." That's absurd. And so I embrace a totally different perspective,

01:02:22.320 | and I have a much deeper level of motivation and a much more useful, greater use of money

01:02:27.520 | than I would if I were single. So I say embrace it and let the goals, let the things that you

01:02:33.840 | desire to create and provide for your children, the experiences, the opportunities, the things,

01:02:38.320 | the relationships, the opportunities, let that motivate you. And instead of sitting around being

01:02:43.600 | a dirt bag, living in the back of your pickup truck, earn a million dollars a year and let

01:02:50.960 | that motivate you. I think that's powerful and may move you in the direction of financial

01:02:57.680 | independence. I think you can adjust your family lifestyle to an efficient mode of operation

01:03:06.000 | and gain from those benefits. The reality is a dual income, no child household,

01:03:13.920 | where both parents work for wage, both adults, both people in the, in the, the husband and wife,

01:03:20.880 | a dual income, no child household, where both people work for wages is absolutely the least

01:03:27.040 | efficient financial life possible. It's the most inefficient financial plan I can imagine.

01:03:34.000 | You have extremely high taxes that come in on earned income. You have very few deductions,

01:03:40.240 | no business deductions available to you, not even any deductions related to children,

01:03:44.000 | no child tax credits or whatever the equivalent is in your country. You have no family business,

01:03:49.200 | you have no built-in helpers. If things are bought, you buy everything with after-tax income.

01:03:53.760 | It's extremely inefficient. Now you don't have to have children to adjust it to be more efficient,

01:03:59.360 | certainly not. Just because a couple doesn't have children doesn't mean that they can't both run

01:04:04.240 | their own businesses. They can and they should if they're inclined towards entrepreneurship,

01:04:08.080 | but adjust your family structure and use what you've got. If you have a dual income household

01:04:16.800 | and you have a child and now mom stays home with the baby to pour her life into that baby,

01:04:24.080 | you probably won't lose all that much spending power that can't be made up in other areas.

01:04:30.720 | You're going to have lower tax rates, you're going to have more efficiency at home,

01:04:36.320 | better family frugality, so just simply use that as a benefit.

01:04:39.680 | Now, remember, and this is especially to my listener who is engaged, not yet married,

01:04:49.040 | remember that you have different phases of your life and you can build your plan efficiently while

01:04:55.360 | also simultaneously incorporating your children. If you are engaged and not yet married, I would

01:05:01.120 | caution you and say this, you do not need the same lifestyle as a newlywed that you might need if you

01:05:08.560 | have three teenage children. So, plan accordingly. When you are newlyweds, and this listener

01:05:16.880 | especially was not distraught but annoyed with the fact that because they value having children,

01:05:23.360 | that they're going to be locked into an expensive house in the suburbs and they're just kind of

01:05:27.200 | going to be stuck into the normal wage slavery of life. I deny that. I deny that wholeheartedly.

01:05:34.400 | Keep your expenses super cheap, especially before you have children.

01:05:39.840 | When my wife and I were married, we rented a really cheap apartment. We had a tiny 243

01:05:44.880 | square foot studio apartment that we rented for $500 a month. Take advantage of the efficiency,

01:05:51.440 | the financial efficiency of that phase of life. Prior to that time, she was renting the apartment

01:05:57.440 | for $500 a month and I was renting for, I think more than that, I can't remember now, but at least

01:06:02.800 | $500 a month. I think it was more than that. And so, our per person cost for apartment rental

01:06:09.520 | went from, let's just pretend I was running for $500 a month myself. You take two people running

01:06:13.600 | at cheap, which is that's certainly cheap, $500 a month and bring those two people into one. Now,

01:06:18.320 | your monthly rental cost per person drops at $250. And because you, maybe you maintain both

01:06:24.000 | your incomes, now you have an extra $500 of savings. Just because you marry doesn't mean

01:06:30.800 | your life has to get more expensive. Let it embrace the cheapness of it. Live cheap, live small.

01:06:39.840 | Even when you have children, the vast majority of baby expenses are unnecessary.

01:06:44.320 | Now, most first time parents think they are necessary. And then after you've had a few

01:06:51.920 | babies, you pretty much simplify and you don't really need the vast majority of the stuff that

01:06:56.160 | you get. There is a joy, especially that your wife will experience of creating a beautiful nest. And

01:07:01.840 | it's nice to be able to provide that. It's nice to have your wife develop a beautiful nursery and

01:07:08.320 | have it painted just how she wants it and have her stencils just how she wanted it and a beautiful,

01:07:11.760 | perfect bedding. It's fun. And it's really nice. And that's enjoyable. But it's not necessary.

01:07:18.080 | And if you as a couple collectively share the goal of financial independence, you might simplify

01:07:23.040 | that nest a little bit. One of the things that I would do differently going back in time,

01:07:28.320 | when at that phase of life, I did not have the goal of being financially independent at an early

01:07:36.480 | age. I had a fairly stable life. I had a stable, profitable business. I was making excellent money.

01:07:43.680 | As far as I could see, looking at the future, I had a fairly clear 40-year plan. I was a financial

01:07:50.160 | advisor. I had built a stable practice. I wasn't going to fail out of the business. I had clients

01:07:54.960 | that I liked. I didn't foresee any major changes. And so after we'd been married a year, we bought

01:08:01.440 | a house. And I was very careful and thoughtful in that house purchase. But I wasn't trying to cheap

01:08:06.080 | out and get the cheapest place that I could live. I was looking to get a very comfortable house that

01:08:11.440 | was modest because the house that you choose drives so many other expenses in your life.

01:08:17.520 | So I wanted a modest house, but a comfortable house. I wanted a house that was big enough,

01:08:21.120 | big enough for children, but not too big, comfortable enough, but not too comfortable,

01:08:26.400 | small enough, but not too small. And so we shopped carefully. And I thought I found what I thought

01:08:32.640 | was the perfect house. It was a large three-bedroom, two-bath house. I had just under a half an acre

01:08:37.760 | of land right in the middle of town. I wanted to have chickens. I wanted to have a garden.

01:08:41.280 | I was right in the middle of everything. We could walk to the library, walk to the grocery store.

01:08:44.880 | I was less than, I think, about a quarter of a mile from my office. So I could walk to work.

01:08:49.680 | And I did. And it was great. And I loved it. And so I went ahead and bought the house because we

01:08:54.800 | thought it was the perfect house at the perfect time. But it did make a major change. But we

01:08:59.520 | didn't have early financial independence as a goal. I didn't foresee any reason why I would

01:09:04.880 | ever need to change my career. I had total time freedom. I could come and go. And so I didn't see

01:09:09.600 | the benefit of being financially independent. I had pensions. I had passive income. So the early

01:09:15.840 | financial independence plan was simply that I could live on the passive income from my practice.

01:09:20.080 | I didn't need to have huge amounts of savings. So we bought a house, fixed it up how we wanted it.

01:09:25.360 | And we made a lot of frugal decisions along the way. But in hindsight, if I were doing it over

01:09:30.080 | again, I wish we had stayed in the tiny little studio apartment. We, my wife, we had worked it

01:09:36.960 | out where she would put a baby if we had a baby. I don't think we could have had-- the toddler would

01:09:40.320 | have been uncomfortable to bathe, but a baby was no big deal. I wish we'd stayed in a studio

01:09:44.160 | apartment. And instead of buying a house for our own personal lifestyle, I wish we'd bought

01:09:48.320 | an investment house instead and just simply made that the first purchase. No, we didn't.

01:09:53.120 | But I point out to you that you could. If you have a desire to be financially independent,

01:09:58.160 | just don't move into the hedonic adaptation phase. Keep things simple. Live in a small

01:10:03.600 | apartment. Live cheap. And maximize the time that you are a newly married couple before you have

01:10:09.600 | children. Don't spend money on big infrastructure expenses. Spend money on fun, on experiences.

01:10:15.600 | Go skiing, go surfing, go on vacation. Enjoy that time as newlyweds. Lighten up on your

01:10:21.280 | entertainment budget. Just minimize on those other things. The best thing that we really loved about

01:10:26.000 | a tiny studio apartment, it took no time whatsoever to clean. On Saturday morning, we lived near the

01:10:30.960 | beach. On Saturday morning, we would say, "Okay, let's clean the house." And 10 minutes later,

01:10:34.320 | we'd get on our bicycles and we'd go to the beach. And that is the thing to do as newlyweds.

01:10:38.720 | So live cheap. Live inexpensively. Now, as you start to expand, maybe you have a baby in a little

01:10:45.040 | tiny apartment, recognize that children are generally not self-aware enough to have much

01:10:50.000 | other than basic needs. A three-year-old child does not care whether you live in a huge giant

01:10:55.440 | house or whether you live in a single wide mobile home or whatever the Australian equivalent of that

01:11:00.240 | is. A sandbox is enticing to a child, whether it's a natural sandbox at the beach or whether

01:11:08.240 | it's a designer sandbox at your big fancy house. So there's no reason to expand your lifestyle all

01:11:14.960 | that much at an early age. And you don't need to buy when you have young children, you don't need

01:11:20.000 | to buy all the expensive things. Just take a picnic and go to the beach or go to the forest

01:11:26.000 | or go on a hike and think very carefully about any kind of expectations that you start to build

01:11:31.280 | into your children. There's no reason why you have to build children with expensive tastes.

01:11:40.720 | Now, if you live in downtown New York City and you put your children into the designer daycare

01:11:46.640 | and the designer elementary school that everybody has to get into, and your children are surrounded

01:11:51.680 | by peers who have all the latest and greatest gadgets and who are spending their weekends at

01:11:56.480 | the expensive place, et cetera, you're going to build into your children expensive tastes.

01:12:01.360 | And they're going to be bugging you for expensive gadgets and doing this and going to that and the

01:12:06.480 | other thing and all your money will be gone. But that's your fault for building those expectations

01:12:11.280 | into your children. You can also build the expectations into your children of a simple

01:12:17.440 | lifestyle, which has the ancillary benefit of being a frugal lifestyle. Now, am I saying that

01:12:24.000 | we should abuse our children by not providing for them opportunities? No, but I don't see that it's

01:12:28.880 | any benefit to establish these expectations in a child that in order to be happy, they have to

01:12:33.200 | be part of a consumer culture. I think the exact opposite. I want to be happy with simple life,

01:12:40.960 | with simple toys. And so why should I not want the same thing for my child?

01:12:44.560 | So how do you adjust your financial independence plan to the phases of your life? Well, here's

01:12:52.160 | what I say. If you don't have any money, rent a small, cheap apartment, whatever the smallest,

01:12:56.720 | cheapest thing is. Maybe you live in a sailboat. You can live on a sailboat as a young married

01:13:00.480 | couple and save a ton of money. If you're in England, you can live on a riverboat. If you're

01:13:05.360 | in the United States, you can live in a single wide or live in an RV. Do it. It's fun. It's an

01:13:09.760 | adventure and it saves you a ton of money. Don't buy a house just because you had a baby. Buy a

01:13:14.640 | rental house and stay living on the sailboat. You can have a one-year-old, a two-year-old,

01:13:18.720 | and a three-year-old in the RV. You can have two or three children in the RV and be totally

01:13:22.400 | comfortable. So live in the sailboat, live in the RV, and buy a rental house. Then, as you start to

01:13:31.120 | have, maybe you have two or three children and your oldest is two, three, four years old, whatever,

01:13:35.600 | buy a duplex or a quadruplex and live in one small unit. Yes, it's only two bedrooms, one bath,

01:13:43.040 | but you can easily put three or four children in one of the bedrooms of a two-bedroom apartment.

01:13:47.680 | The kids, it's fun. It's a lot better for a child to share a room than to think, "Oh, I've got three

01:13:51.600 | children. I have to have a five-bedroom house so everyone can have a bed or a bed, its own room."

01:13:56.240 | Far better for the children to share rooms. You don't have the same concerns about privacy that

01:14:00.160 | you'll have in the future. The children will enjoy it. You don't need the space. Children

01:14:04.080 | don't take up that much space. They're kind of small for a long time. So live in one of the

01:14:09.040 | two-bedroom apartments in your duplex or your quad that you bought and let your tenants pay it off

01:14:15.120 | and save money. Work hard, build a business, save money. Then as you start to get into the phase of

01:14:21.680 | life where you need to expand, it's one thing to have a child that's not walking on a sailboat.

01:14:28.400 | It's another thing to figure out how to engage your seven-year-old. So as you start to need a

01:14:32.320 | little space, then if you've put the foundation in place in those early years, go ahead and expand.

01:14:37.200 | Expand to the three-bedroom, two-bath house in the suburbs, but don't make it a 30-year plan or

01:14:43.120 | a 40-year plan. Just be smart about it and recognize that at this phase of life, this is

01:14:48.480 | what we need and figure out how to get there efficiently. Just because you need a bigger house

01:14:55.040 | doesn't mean you can't do it for less. There's a reason why people in the country probably on

01:15:01.280 | average have larger families than those living downtown. Now, do people in the country have more

01:15:06.000 | children or do people with children move to the country? Probably both. But most people with a

01:15:10.960 | number of children don't want to live in downtown San Francisco. It's just not conducive to family

01:15:15.600 | life. The suburbs are a much better fit. That's why those suburbs were built. But now you have

01:15:22.320 | children. Does that mean that you have to go and buy the most expensive house? No. Does that mean

01:15:27.120 | that you have to live in California? No. You can adjust, and if you have flexibility for your

01:15:32.480 | career, figure out how to adjust. Figure out how to adjust things with your family. Think of

01:15:37.360 | different strategies. For example, one of the things that I'm grateful for is my parents built

01:15:42.240 | a house when we were younger. We had outgrown the first house that we lived in that my parents owned.

01:15:48.800 | We moved out of it. They rented it out, moved into a rental house. The rental house worked for a

01:15:53.280 | while, but in time, the landlord was ready to sell it and demolish it actually. And so my dad was

01:15:58.400 | trying to figure out what do I do. He didn't have the money where he could afford, with my mom being

01:16:03.360 | at home, he didn't have the money where he could afford to easily comfortably buy a house, given

01:16:07.680 | high housing prices in town. But he did have the money where he was able to buy an acre of land,

01:16:13.280 | 30 minutes outside of town, out in the, would be a little bit farther out than the suburbs.

01:16:18.240 | And he had the time freedom, even though he was working a traditional salaried job,

01:16:22.160 | he had the ability to do work from home, and so he built a house. And he did a lot of the work

01:16:26.320 | himself. Not all of it. Hired a general contractor for some of it, but he did a lot of work himself.

01:16:30.720 | And he had the benefit of having a bunch of children. I don't know if it adds time to it,

01:16:36.160 | or helps, but he did have a bunch of children. And it was a really unique thing because we spent

01:16:41.680 | a couple of years building a house. And I would say on the net, the children were helpful.

01:16:47.200 | We did the roof. Children can easily do roofing. We did not the plumbing, but we did the electrical

01:16:54.320 | work. He did the electrical work himself, but children can run wires. It's not that hard when

01:16:58.640 | you have some direction. We didn't do the drywall, but we did all the painting. We moved into the

01:17:03.920 | house. We didn't have floors. We laid all the floors. Did some of the tile work, laid all the

01:17:08.640 | wood floors, et cetera. And so in that period, that had the couple benefits of number one,

01:17:14.320 | being able to build a big, huge house. When we moved into the house, there were 10 people living

01:17:19.120 | in the house. Six children, two parents, two grandparents, 10 people living in this big,

01:17:22.480 | huge house, huge house. But we also had the benefit of doing it at a lower cost because

01:17:26.960 | we did a lot of the work ourselves. And that formed a valuable part of my education and my

01:17:32.240 | siblings' educations, where for years, many of us used those carpentry skills, used those building

01:17:38.720 | skills, and used that to generate income because we had far more skills than our peers. So you

01:17:45.280 | can't do that with a three-year-old. The three-year-old shouldn't necessarily be out

01:17:49.680 | crawling through the rafters, stringing wires, but you can do it with a nine-year-old.

01:17:55.280 | You can do it with a 12-year-old. And that's about the time in your life where you might need a

01:18:00.000 | little bit more space. The three-year-old is not thinking about how nice the house is or how much

01:18:03.840 | space there is. They're thinking about their Legos. They're thinking about their dolls.

01:18:08.080 | But as they start to grow, use them and form that as a valuable part of their life and their

01:18:15.840 | education, et cetera. Now, I don't know what the ideas are that will work in your situation,

01:18:22.400 | but you can find them. And everything else that we talk about in good personal financial

01:18:27.360 | management and frugality holds constant. Just because you need a bigger car doesn't mean you

01:18:32.000 | need to spend a lot of money. The minivan that we have, I paid $3,000 for it years ago. I've driven

01:18:39.600 | it, what, 60,000 miles? I think I've had probably $1,000 of repairs, general maintenance. I mean,

01:18:45.040 | it's been great. I paid $3,000 for it. It's five-star crash safety test rating, et cetera.

01:18:50.400 | It's just as safe as a $40,000 minivan. Just because you have children doesn't mean you have

01:18:55.040 | to go and buy a brand new Honda Odyssey. So don't think that just because I need a bigger car,

01:19:02.720 | I automatically have to spend $30,000. You don't. Just because you want to travel and build

01:19:08.000 | experiences with your children doesn't mean it has to destroy your family budget. If Disney World

01:19:14.560 | will destroy your budget, don't go to Disney World and don't nurture a love of Disney in your

01:19:18.800 | children. Parents create this thing. Now, many parents love Disney and they want their children

01:19:24.160 | to have the experience of Disney. And so they create it intentionally. They expose their children

01:19:28.320 | to the Disney characters and they build this passion for Disney stuff in their children.

01:19:32.880 | And then it's their greatest achievement as a parent to take their children to Disney. That's

01:19:36.640 | fine. You're a parent. You can parent your children how you want. But recognize that you're

01:19:40.720 | the one building that in your children. You build the connection to Disney, which then builds the

01:19:47.760 | $10,000 Disney bill into your life when they're a little bit older. If you want to do it, fine.

01:19:53.600 | But you can also build connections to almost anything else. If you don't want to go to Disney,

01:19:58.400 | take your children to the national park. Teach them to love hiking. Teach them to love swimming.

01:20:03.360 | Teach them to love snorkeling. Teach them to love kayaking. It's a lot easier and cheaper

01:20:09.120 | to teach your children to love snorkeling or kayaking and spend a couple hundred dollars

01:20:13.600 | on snorkel gear and kayaking gear. And then go to places where you can camp and snorkel and kayak

01:20:20.160 | and build rich, rewarding family relationships. Your children will be grinning and having tons

01:20:24.720 | of smiles at the end of the day. Just as much, maybe more, I'm biased, but just as much as if

01:20:29.840 | you went to Disney World. The choice is yours. What are you going to build in your children?

01:20:36.400 | Just because you need more food to feed the hungry mouths doesn't mean you need to spend

01:20:41.120 | like crazy. There is obviously an increasingly caught increasing marginal cost of food,

01:20:47.760 | but you can grow a garden and offset that. It's a very healthy thing for children to be involved in.

01:20:52.880 | I'm sitting here looking out the window at my garden right now that my children helped me plant.

01:20:56.640 | You can buy your food in bulk. You will have to make a change of restaurants. I don't see any

01:21:03.520 | way around that. There's just no way where you can afford to hire servants in a restaurant to feed

01:21:08.560 | you and five children as cheaply and as afford as rationally as you can if you and your five

01:21:16.800 | children do the work. That is certainly one where there's a big, big difference and a big change.

01:21:23.360 | But you can still go to restaurants sometimes and you can still plan ahead at how to do that

01:21:28.240 | frugally. And if you make enough money, you can still go to restaurants. But keep your hobbies

01:21:32.160 | simple. Do the children all need the super high end stuff? Do you need individual expensive lessons

01:21:37.840 | at the most elite place on Saturday morning? Or can the family develop a hobby that builds those

01:21:42.560 | same skills? Many times we as parents want so much to give our children the best of everything

01:21:49.680 | that we automatically assume that that means that we have to spend. It doesn't.

01:21:55.200 | If you want to make a happier, more adjusted child, and if you had to pick from these two extremes,

01:22:03.680 | you don't. Just trying to make a point. You might have parents, they work in high status,

01:22:10.960 | high prestige jobs, and they're worried about doing the best thing for their children.

01:22:14.720 | So they buy all the most expensive schools for their children, all the most elite things.

01:22:18.880 | They hire the world's most expensive nanny to take care of the children and take them to school back

01:22:23.360 | and forth. They hire the world's most expensive housekeeper to have the house in perfect

01:22:26.640 | situation. They buy the world's most beautiful house. They buy all the coolest gadgets and the

01:22:31.680 | coolest things and the best clothes that their child looks totally great. And then they don't

01:22:35.840 | see their child because they're busy working all the time. And their child grows up without the

01:22:40.080 | emotional security of knowing that mom and dad love me. Now you flip that and you could have

01:22:46.320 | the poorest family in the world that doesn't have money to go and do anything except play at the

01:22:51.120 | local park, that doesn't have the time and the money to go out to restaurants. But you have

01:22:56.880 | parents who pour themselves into their children and the child has the emotional security of knowing

01:23:02.160 | mom and dad love me. I ask you, which child do you think will be more successful in life?

01:23:11.920 | The evidence is all around you. Now that doesn't mean that a wealthy parent who wants to put their

01:23:19.920 | child in the fancy school and buys all the fanciest things can't also make sure that their

01:23:25.680 | child knows that they love them. They certainly can. And it doesn't mean that a poor parent can't

01:23:32.000 | neglect their child because they're spending so much time worrying about money such that their

01:23:35.920 | child grows up without foundations. Obviously, the money is not the causal factor. But the money is

01:23:42.400 | not necessary to build the emotional security into the child. And I would say this. Plan your fund

01:23:56.080 | around things your family can do with you. And plan your financial independence around your

01:24:02.960 | children. I believe that the costs of raising children are higher than the costs of not having

01:24:12.800 | children. I also believe the rewards are incalculably higher. Now, since I have children,

01:24:22.080 | I'm biased. And I have a tendency towards confirmation bias. I want to believe that my

01:24:26.960 | wife and I made the best decision to have children because I have children. That's confirmation bias.

01:24:32.480 | And if you don't want to have children, you're going to want to believe that your life is happier

01:24:39.280 | than those who have children. And there's good evidence that you could look at on both those

01:24:43.440 | situations. I'm recording this episode, as I said at the beginning, I'm recording this episode

01:24:48.640 | while my wife are in one of the most tiring, demanding seasons of our life, where we get to

01:24:54.800 | the end of the day, and I don't have a lot of energy left at the end of the day, and neither

01:24:58.160 | does she. So, I think we're in the thick of it right now. But I still, I look at others, and I

01:25:07.360 | walked around me, and to me, I see tremendous joy. My children bring me tremendous joy,

01:25:12.720 | tremendous satisfaction. I'm so grateful to be blessed with them. Let me give you some examples

01:25:17.920 | from the world of fun. I, over time, I enjoy looking at different YouTube channels, and I

01:25:23.360 | watch different people, and I am a student of life. I study what people do, and I try to do my best

01:25:28.320 | with the limited information that's presented to try to understand how people think, what they

01:25:32.640 | see, and just to watch people. There's a channel that I found years ago on YouTube. So, I'll use

01:25:38.640 | YouTube channels. You can look up these channels if you want. Years ago, I found this YouTube

01:25:41.760 | channel because it was on RVing, and it's called Gone With the Winds, W-Y-N-N-S. The protagonist

01:25:47.600 | on the channel are Jason and Nikki Wynn, and for a long time, they lived in an RV, traveled around.

01:25:51.760 | Very good. Jason is an excellent videographer. Just a lovely couple. No children. And so, a couple

01:25:58.160 | years ago, they sold their RV, and they bought a sailboat. Currently, they're sailing in the South

01:26:02.000 | Pacific. Young, relatively young couple. I don't know how old they are, but young, vibrant couple,

01:26:06.640 | beautiful people, very fashionable, very fit, very healthy, very fun. They have winsome

01:26:12.640 | personalities. Just really lovely, really lovely people. Young couple, no children,

01:26:20.240 | sailing the South Pacific. Week after week after week, they produce these sailing videos,

01:26:24.800 | and they're so beautifully done. And they bore me because it's just beautiful waves, another sunset,

01:26:31.280 | and oh look, we saw this other cool thing. Now, I'm not denying that it's fun, but they're kind

01:26:34.880 | of boring. I don't really watch them. I flip to them every now and then. But there's another

01:26:39.600 | couple. There's another channel that I watch. This channel is called Sailing Zatara, Z-A-T-A-R-A.

01:26:45.680 | And this couple, or this family, is currently also in the South Pacific, sailing in the South Pacific.

01:26:51.680 | This is Keith and Renee are the parents, but they have four children. Oldest on the boat with them,

01:26:58.720 | they have another fifth child that's older, but oldest on the boat with them, I think is about

01:27:01.280 | 18, 19. Youngest is 11 or 12 at this point in time. Four beautiful children. Now, is it just

01:27:07.200 | confirmation bias? Maybe. But I find that channel so much more engaging. First, it's an actually,

01:27:13.920 | it's a family project. The children all do voiceovers on the video. I think mom's the

01:27:18.320 | primary video editor, but the children do all the family voiceovers. And I was recently comparing,

01:27:23.200 | both channels had an episode recently where they had some engine trouble. And in the one,

01:27:28.080 | in the wins, Jason is down in the engine compartment working all by himself. Where in

01:27:32.240 | the other, Keith is in the engine compartment, and he's got his two teenage children helping him,

01:27:35.760 | working with him, et cetera. The joy, the hijinks, the fun, the fulfillment of Zatara seems to me

01:27:43.680 | much more fulfilling than the wins. Now, that family with the four children has had years of

01:27:53.040 | work, but they're sailing the world with their children. They've been on the sailing full time

01:27:59.680 | for the last two years. They had to buy a much bigger boat. They've got a five bedroom, five

01:28:05.680 | bath catamaran sailboat. Jason and Nikki's boat is smaller. So they had to spend more money to

01:28:11.280 | buy a bigger boat. They had to spend more money on just about everything. Ask me to trade places,

01:28:17.920 | I'd much rather be Keith than Jason. Much rather be the father of four teenagers and have the joy

01:28:25.920 | of showing my children, my teenage children, shaping their lives, the South Pacific,

01:28:31.040 | diving with them, fishing with them, living with them, schooling with them, teaching them business

01:28:37.200 | than Jason. Both people are out sailing the South Pacific. Now, I'm sure that Keith,

01:28:48.880 | the father of four, had to make a whole lot more money than Jason, the part of the couple.

01:28:56.080 | I don't know anything about them, but Keith was a businessman, sold some businesses.

01:28:59.760 | Keith had to make a lot more money to be able to afford it. I get the impression that Jason and

01:29:06.240 | Nikki probably primarily depend on their income from their video work to provide for their

01:29:10.480 | lifestyle. I'm sure they have savings, of course, but they're not financially independent in the

01:29:14.560 | same way that I think Keith is, the father is. But there's a richness there. I think Jason and

01:29:21.520 | Nikki are enjoying themselves. But to me, their lives strike me as a little bit empty. They have

01:29:27.600 | two cats they dote on. They have friends. They're having a good time. They seem to be

01:29:31.920 | really enjoying their trip. At the end of the day, I find it boring compared to the joy of the same

01:29:39.040 | exact places, but showing those to the children, helping the children to establish themselves.

01:29:44.560 | Give you another example. This is another YouTube channel that I like. This YouTube channel is

01:29:50.080 | called Epic Family Road Trip. Parents are a Canadian couple. I forget their names. They have

01:29:55.200 | three teenage children. They started off in an RV, traveled the United States in an RV. Then they

01:30:01.680 | moved to a Jeep, traveled around New Zealand for six months in a Jeep with a rooftop tent. They're

01:30:05.520 | currently in a Jeep with a rooftop tent and a little trailer with another rooftop tent,

01:30:09.280 | traveling full time as a family of five with three teenagers, traveling all in the remote areas of

01:30:15.920 | the United States and Canada. They went out to Mexico as well. But along the way, they're working

01:30:22.480 | with their children. They're volunteering with their children. Their children are running the

01:30:26.880 | YouTube stuff or editing videos, becoming great photographers. They're talking about marketing

01:30:31.440 | and branding and building brand relationships, etc. And I look at that family, and I don't think

01:30:37.200 | they're ultimately financially independent. They don't, of course, say, but being a financial

01:30:41.280 | planner, I can pick up on the clues. I think they have enough savings to keep them going for now.

01:30:46.320 | But after they were on the road for a while, they had to figure out a source of income,

01:30:48.960 | and they started to do that together. And the father does speaking and some coaching, etc.

01:30:52.960 | They're not financially independent, but they're at a phase of their life where they're with their

01:30:56.960 | children constantly at that very tender age that children and adolescents go through in their

01:31:03.760 | teenage years. And I look at the fun that they're having. The father just celebrated a birthday. I

01:31:08.560 | can't remember if it was a 50th birthday. The joy of that birthday was tremendous, at least that I

01:31:13.040 | could see in the video. There's a warmth and a love that comes through. It's palpable. It's tangible.

01:31:20.080 | And you can see the children learn and grow through their working, through their service,

01:31:24.800 | through their fun. I compare that with another YouTube channel that I watch sometimes called

01:31:29.120 | Technomadia, Chris and Cherie, who are a middle-aged couple. No idea if they're married

01:31:36.720 | or not, but they were very clear they didn't want children. They don't have any children,

01:31:39.600 | middle-aged couple. They've been living on the road full-time for a number of years. They started

01:31:43.520 | in a little trailer. Then over time, they built a business. They have a business where they provide

01:31:48.080 | basically digital tech consulting that helps for nomads, etc. They review how to stay connected

01:31:54.000 | on the road. So they do a great job, really, really good, really good job. They live part of

01:31:58.560 | the year in a bus, an old restored bus that they've restored. They live part of the year in

01:32:03.680 | a sailboat. They're doing the Great Loop, not a sailboat, sorry, a powerboat, a large powerboat.

01:32:07.440 | They're doing the Great Loop in the United States. They bought another small RV recently,

01:32:12.160 | and they do videos and such. They seem like they're having a nice time.

01:32:15.840 | They get to work together. They get independence. They can come and go as they like.

01:32:21.440 | But man, if I could trade places with one of them, either Chris or the Epic Family Road Trip father,

01:32:31.920 | put me on the road with my teenage kids. Even if it's only a few years and we can't do it forever,

01:32:38.160 | just to me, there seems like there's a joy of life that Chris and Cherie don't get access to.

01:32:45.200 | I don't think that children have to keep you from having fun. A couple other ones, big families.

01:32:53.120 | There's a family, has a YouTube channel, I think a website, called the Kellogg family. They have

01:32:57.840 | 12 children. They live in, lived, currently live sort of, well, I don't know if they live in an

01:33:03.200 | RV right now. I think they're in Europe, but they have lived in an RV. Have lived in an RV. Their

01:33:08.160 | kids love kayaking. That's their thing. And they have this beat up old redneck looking RV that they

01:33:14.880 | lived in with, I think, their younger 10 children. And they're out kayaking. It's absolute bedlam.

01:33:19.840 | But there's also just a joy and a liveliness to their lives. Now they're in Europe traveling all

01:33:26.640 | over. Don't tell me it can't be done. They got 12 children. Can't discern that they have a lot

01:33:32.000 | of money. I think that as a programmer, again, kind of a redneck looking RV, but you go back

01:33:36.560 | and you watch those videos and is it bedlam? Absolutely. Is it hugely stressful? I'm sure it

01:33:42.960 | is. Is it fun? The kids are having a ball. The parents are having fun. There's another channel,

01:33:50.720 | Norpin South, nine children, I think five adopted, four biological, something like that. Nine

01:33:55.520 | children, traveled in an RV, traveled around Europe, et cetera. Are they financially independent

01:34:00.160 | living on savings? Nope. Their income. But there's a sense of joy in the life. There's a sense of

01:34:07.360 | liveliness. Just because you have children and it costs you a lot of money doesn't mean that you

01:34:11.120 | automatically can't do anything fun. I was like Greg Denny's work. He's been on the show in the

01:34:16.240 | past, world schooling family. Six children, travel the world, working on the road. There

01:34:24.080 | were lots and lots of inspirational, none of those YouTube channels that I mentioned are necessarily

01:34:29.440 | financially independent, although they range. Probably the most financially independent would

01:34:33.440 | be the sailing family, sailing Zatarra, ranging down to the Kellogg show. They're not financially

01:34:39.280 | independent. I would guess not. They don't have a lot of money. They're just making it work,

01:34:42.480 | living and working on the road. But you could find inspirational stories of families who've

01:34:47.200 | become financially independent. Amy Decision, founder of the Tightwad Gazette. I think she and

01:34:53.200 | her husband had either five or six children. I forget now. He retired from the Navy, had a small

01:34:57.520 | Navy pension. Then she built the newsletter business, Tightwad Gazette. He became Mr. Dad,

01:35:03.040 | did all the dad things while she built the business. But because of their hardcore frugality,

01:35:08.320 | they were able to raise their children, healthy, successful children, but also become financially

01:35:13.280 | independent. She retired from public life. I tried to get her on the show, talked to her on

01:35:16.320 | the phone for a while. She wouldn't come on. She didn't want to. She didn't see the reason to it.

01:35:20.320 | There are other people too. Charles Long wrote the book How to Survive Without a Salary.

01:35:25.600 | He told such fun and interesting stories about his

01:35:27.840 | conserver lifestyle, but also doing it with children, traveled the world with his children.

01:35:33.600 | I compare him to, I think, Ernie Zelinsky. There's a difference in writing. I don't know if Ernie has

01:35:37.680 | kids or not, but you read it and the point is that there are lots of people who can become

01:35:42.480 | financially independent with children and without children. And yet, with children,

01:35:48.240 | I think children can be a source of tremendous joy and satisfaction. I don't believe that children

01:35:54.640 | necessarily solve anything in life. They don't make it easier to become financially independent.

01:35:59.600 | Children are tough. A lot of work. A lot, a lot of work. They can tire you out. They can wear you

01:36:06.400 | out. I have nowhere near the amount of energy, creativity, time to work that I once had. I wish

01:36:13.440 | I had been more productive before I had children. But I don't think that children doom you to a life

01:36:18.720 | of poverty, either financially or emotionally. On the contrary, I think it's very possible

01:36:28.320 | to build great financial abundance and to enjoy the joy that comes with people.

01:36:32.320 | Yes, your life will be different. I have no interest in forcing anyone to have children.

01:36:38.560 | That's a very personal decision. I don't think it's anybody's business but you and your spouse.

01:36:45.040 | But if you choose to have children, or you want to have children,

01:36:52.320 | I don't believe that you should think that means that you can't be financially independent.

01:36:58.240 | It doesn't. When you start to think about the phases of life, recognize that children are in

01:37:06.080 | your life for a relatively short period of time. Probably about 20 years per child,

01:37:12.240 | depending on how many years you're having babies. That 20 years, if you have babies for 10 years,

01:37:16.560 | maybe it's 30 years that you're planning on. But in reality, those years are not all the same.

01:37:23.040 | And financially, they don't have to look like the standard American or Australian model.

01:37:26.880 | As I've talked about, babies have certain needs, young children have certain needs,

01:37:31.760 | teenagers have certain needs, and then they're gone.

01:37:38.000 | And then your life changes again. So you might require a more creative approach.

01:37:42.640 | You might not be able to come, maybe if you didn't have children from 20 to 25, you could

01:37:47.360 | become financially independent. But if you have three children for 20 to 25,

01:37:51.040 | your financial independence plans change. But don't think that having children means

01:37:57.040 | you can't become financially independent. I believe that parents with children can become

01:38:04.160 | financially independent. But those people who choose not to have children may become...

01:38:10.400 | Parents with children can become financially independent, and they'll have the joys and the

01:38:17.600 | fun of financial independence, and they'll also have the experience of having children.

01:38:22.240 | Whereas those people who choose not to have children may become financially independent

01:38:29.840 | and experience the fun and the joy of that process. But they will never experience

01:38:34.960 | the joy and the trials of having children. Which one is better? I'm biased. I don't know how to

01:38:44.720 | differentiate between my confirmation bias to want to tell myself I did the right thing,

01:38:51.600 | I had the right solution. There have been many times I have thought, "This would be a lot easier

01:38:56.000 | if I didn't have children." I don't know how I'll ever be able to Jeep around the world.

01:39:02.080 | I can't fit my family into a Jeep. I've thought about, "Okay, I'll build a six-door Jeep. I'll

01:39:06.720 | need $100,000." I don't know how I'll do those things. But where I'm at today, in the thick of

01:39:12.480 | it, if I were making the same decision, if I had the decision to make over again,

01:39:15.920 | I wouldn't change a thing about having children. I'd change a few things of how hard I worked

01:39:22.800 | before I had children. I'd change a few things about my financial productivity before having

01:39:26.560 | children. I will not deny that I do experience a bit of envy of those parents who were able to

01:39:34.000 | capture the vision of FI and build financial independence before they have children.

01:39:40.320 | I don't know how, I don't think there's a parent out there that wouldn't say, "It doesn't seem like

01:39:43.840 | it'd be easier if I didn't have to simultaneously be financially productive and care for young

01:39:47.920 | children." But I can't change that. All I can do is try to help other people do differently,

01:39:52.800 | but I can't change that for myself. But I wouldn't change it. So you have to make your

01:39:56.960 | own decisions. Hope this was helpful to you. Hope it was a little bit inspiring to you.

01:40:00.080 | Thank you for listening to today's show. I'll record separately a kind of conversation on the

01:40:06.880 | future of the show. I am excited about things. The last, I'll tell you, I mean, you've noticed

01:40:14.160 | there can be some heavy costs to having children. Last month's have been very difficult.

01:40:18.720 | We had a sick baby, a colicky baby for three months. Man, that makes it hard to work.

01:40:22.800 | It's just a tremendous burden on your wife, on you. It's really, really challenging. And it does

01:40:30.560 | make things less productive. And I thank you for sticking with me through the difficult times.

01:40:34.480 | At the moment though, we're in a good work phase and I've got a lot of plans and I've got a lot of

01:40:40.000 | clarity on the future of Radical Personal Finance, which I will share with you in the future.

01:40:44.560 | For now, though, if you haven't bought either my credit card course or my

01:40:47.920 | How to Survive and Thrive During the Coming Economic Crisis course, and you want to help

01:40:53.200 | me be able to buy food for my children, please, please, please, I need food for my children.

01:40:56.880 | Kidding. RadicalPersonalFinance.com/store helps you do that. And I had a great response to many

01:41:01.520 | of you who reached out to me for consulting work. Continue to take some private consulting clients

01:41:05.520 | if you'd like information on that. Email me, Joshua@RadicalPersonalFinance.com. Email me,

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