Financial Coaching Blog

BabyFI/RE Strategy…FI/RE Part 3

We hope that you’ve enjoyed our latest mini-series on the different strategies of the FI/RE Movement so far. Today, we have an excuse to post another cute picture of our baby girl, Eleanor! Continuing with part 3, we’re talking about “Baby FI/RE”. Can you believe that? A whole financial independence strategy dedicated to having a baby. Yep. That’s undoubtedly the fun part of the FI/RE movement…getting to choose your FI/RE.

Ok so what is Baby FI/RE?

To put it simply, it’s all in the name. For many couples, starting a family is not only scary and life changing, but it’s extremely costly. In fact, according to a survey done by NY Times, the number one reason people don’t want to have kids is because “child care is too expensive”. Third on that survey is “worried about the economy” and number 5 is “Because of financial instability”. Now, I won’t get into the deep end on how unfortunate it is to be in a 1st world country where starting a family could end up being a financial hardship, so I’ll discuss who pursues Baby FI/RE instead.

Pursuing Baby FI/RE…

Gives couples financial stability to start a family. Much like FatFIRE and LeanFIRE, this particular strategy focuses on costs associated with OB appointments, delivery costs, & monthly baby expenses. Just like the 4% withdrawal rate at retirement for other FIRE strategies, couples saving for baby will designate a particular percentage to cover expenses and medical bills. This lessens the amount of stress from a financial standpoint when bringing home baby and caring for mom post partum.

So what happens if you’ve covered all expenses and bills with a surplus of funds saved?

INVEST it in a Brokerage Account or Tax advantaged 529 Plan for baby’s future college expenses, or for them to start their own business, maybe even a down payment on their future home. Or Save it to account for monthly costs associated with baby. Whatever you do, don’t blow it on toys, fancy baby shoes, or anything that you may toss out or donate later. Yes, babies are expensive, but you can curb those costs by planning, saving, & setting a realistic budget!

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