Coast FIRE with Kids: What Changes When Life Gets More Expensive (and More Meaningful)

Coast Fire with Kids: Balancing Financial Independence and Family Life

In this episode of The Retire Early Retire Now podcast, Hunter Kelly, a certified financial planner and founder of Palm Valley Wealth Management, delves into the concept of Coast FIRE, specifically addressing the challenges and strategies for parents. Kelly emphasizes that while traditional FIRE advocates for aggressive saving and minimalist living to retire early, Coast FIRE offers a balanced approach. This allows parents to achieve financial growth without sacrificing their current lifestyle and family needs. Kelly discusses the importance of flexibility, recognizing different life seasons, and understanding trade-offs in financial planning. He offers practical advice for parents on how to manage their finances responsibly, ensuring that their money works to support a meaningful, fulfilling life. Kelly also invites listeners to reach out for personalized financial planning services through his firm.

00:00 Welcome to The Retire Early Retire Now Podcast
00:25 Introduction to Coast Fire with Kids
00:50 Challenges of Coast Fire for Parents
02:43 Defining Coast Fire for Parents
04:29 Financial Realities of Parenting
06:02 Avoiding Common Mistakes
12:46 The Emotional Side of Coast Fire
14:34 Evaluating Your Coast Fire Plan
16:23 Conclusion and Next Steps

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Transcript

0:00

and welcome back to The Retire Early Retire Now podcast. The podcast where we help high income earners build financial freedom without sacrificing the life they actually are living and. And if you're new here, my name's Hunter Kelly. I'm a certified financial planner and founder of Palm Valley Wealth Management. I work primarily with families in their late thirties and forties who are doing well financially, but still feel stretched or stressed and want some peace of mind. Today we're talking all about Coast Fire with kids. This is a topic that I have touched on, in a handful of episodes, specifically toward the end of last year. And. it did really well. People enjoyed it. So I want to continue expanding on it and adding that variable of kids. How do we plan, for this Coast Fire idea, when my kids are so darn expensive, right? What's addressed? The elephant in the room. Most of the coast fire content that I read online. It sounds like it's written for single people or dinks or dual income couples that have no kids, or people that just haven't priced out youth sports lately. Right. Uh, kids are expensive. And so parents, that listen to this and they think That sounds nice, but that's not our reality. This podcast is gonna be for you. because once kid kids enter the picture, life gets more expensive, it gets more complex and more emotionally meaningful. I can just, if you have kids myself, included, you know how rewarding. Parenting can be, but also how stressful, how expensive and how complex it makes things. And so today's episode is. about what actually changes when you want to pursue that coast fire idea, and lifestyle as a parent and how to do it responsibly without guilt. Like you're, like, you're leaving your kids out or not being, there as a parent, and without blowing. Up your family's life, right? And there, there's that fine balance and that's why I like coast fire. It's finding that balance between now, and later where the traditional idea of fire is let's save all. We can live on rice and beans for as long as we can. and then at some point in the future we'll be able to retire a little bit earlier. but for most people, I don't know that's, necessarily desirable or realistic. And so this Coast Fire idea says, Hey, let's do all of those things similarly, but let's find a balance to where we have our future set, but we can live a little bit now or maybe do some things that are more fulfilling, like changing careers, starting businesses, spend more time with our family or kids, whatever that may be for you. Right? And what Coast Fire really means for parents. Okay, so let's level set. First Coast fire does not mean quitting your job tomorrow. Ignoring future needs. Hoping it all works out at its core. Coast Fire means You've saved enough early that your future growth does the heavy lifting, right? So we've done the heavy lifting up front. Now we're gonna let that compound interest start to work and do. What it's supposed to do, allowing you to redirect time, resources, energy, instead of constantly trying to save more, earn more and all those sorts of things, right? So for parents, the definition changes slightly because you're not just planning for you. You're not just planning for you and your spouse, you're planning for 1, 2, 3, in some cases, five kids. And so you're planning for your kids, you're planning for unpredictability, you're planning for the youth sports that you don't know that are coming up soon, right? Or activities. Doesn't necessarily have to be sports, could be piano, could be band lessons, whatever the case may be, right? And you're planning for responsibilities that. Don't pause when the markets are down. So Coast Fire with Kids becomes less about stopping and more about changing the role your money plays. And the more and more I talk about this, the more and more, I believe in it. And I've always thought this, but I'm just, expressing it in words through this podcast. Your money is just a tool, alright? And we need to understand what that role is for that money, that tool. what is the job that, that, that money needs to take place. And in some parts of your life, it may be one thing. In other parts of your life, it's another. So let's talk about the obvious part First. Kids cost money. right outta the womb, literally and figuratively. They cost money. You have hospital bills and things of that nature. Doctor's visits, all that, right? But some of the more obvious things, right? Childre healthcare education. But there are other subtle ways that they can be more expensive and more complex. Bigger housing needs, activity, inflation, convenience spending, opportunity costs, sports, all those sorts of things, right? And again, this is not to say that you shouldn't have kids or they're not rewarding and all that they are, but we also have to balance these expenses with our lifestyle so that we can still achieve. Financial independence if that is something that is important to us, right? What often happens is parents feel like we're making good progress. We have kids, and now it feels like we're moving slower. The slowdown is not necessarily fail failure, right? It's just reallocation, right? Finding that new job for that money, right? Money is moving from abstract future goals into real, tangible, meaningful life experiences now, and that's not a setback. What it's supposed to do. The mistake is interpreting this phase as falling behind instead of recognizing it as a planned season or something that you expect it to do. Right. here's the biggest mistake that I see parents make when they discover the idea of Coast fire. whether they discover that particular term or not, or just something that they want to achieve, they think we can't. Save aggressively anymore, we must be doing something wrong. so they respond by over restricting, feeling guilty about spending or going on vacations or whatever their thing is saying and saying no to experiences that they actually could afford. And so this creates two problems. Sometimes it creates resentment toward the plan itself. Or more commonly I see burnout before flexibility ever really arrives, right? Because this stuff doesn't happen overnight. It does take time, but you can build flexibility, you can build freedom into your life, but it's not gonna happen overnight. When I'm talking about this right now, I think of, like a whole life salesman, right? you know, you get these guys from X, Y, Z mutual company and they come in and they try to sell you whole life because it builds cash value. You're gonna have life insurance, but you're also gonna have your own bank, essentially. Right. And they sell it like it's gonna happen overnight. But these policies, even if they're written correctly, do take time to build. You're not just gonna have your own bank overnight. Just like in an investment account. Which I would argue would be a, a better path to do this. But just like in an investment account, you're not gonna have the half a million dollars that you need right away, or the million dollars that you need right away. It's going to take time, And burnout can't happen before this flexibility arrives. So you're gonna have to be patient and know where you're at, know your limitations, know your trade offs, So it's all about sequencing. There are seasons where savings slows a bit because maybe it's daycare, maybe it's sports, maybe it's complex health needs, whatever that may be, spending increases and flexibility matters more than optimizing your plan for whatever it may be, retirement. so trying to fight reality only creates more stress and as I talked about last week, we talked about the three bucket system and. What I've noticed in my client's life, in my life that where you have kids and you see these funds start to, you see your money start to have a new job, your buckets change a little bit. And so what I've noticed in my personal life and a lot of my client's life is that your spending bucket gets bigger and it's on purpose for parenting. Spending naturally increases, right? it's not because lifestyle creep, it's because kids add complexity. Time becomes more valuable. And to be honest, convenience becomes sanity. Right? How many times have you gotten home from work, gotten home from being out with the kids all all day? And the last thing you wanna do is cook, right? You say, oh, let's go to a Chipotle, or let's, let's get an easy dinner. Let's DoorDash this or that, right? and while that is convenient, it generally is more expensive and so. Not saying that that's wrong. We do it. We do that quite often, probably a little bit too much. Uh, but it does give you your sanity and your, and your time back, because nobody wants to be cooking dinner after a long day, at work and sports and all those sorts of things. And sometimes you just need to, to DoorDash that, that, that dinner, right? And so, uh, and when it's intentional, the guilt, and so this bucket grows by design or it should grow by design. All right, you should understand why, why are we spending more, right? Um, and then once you get more intentional about this, that guilt or that stress disappears. And that doesn't mean necessarily that we're forgetting about building flexibility or getting, forgetting about building freedom or, or working toward retirement. It just means that we're being more intentional about. Uh, having a little bit more for now, because we again have kids. We have to do some of these things, uh, and we want to do some of these things because we only have one life, right? And so parents need flexibility more than anyone. Flexibility means absorbing job changes, handling, handling unexpected expenses.'cause Lord knows that, kids can bring those on. And then adapting to your kids' needs, as they evolve, right? So you can think about your kids' needs when they're. A newborn or in that toddler phase, maybe, maybe their biggest need is daycare because you have to go to work or childcare, whatever they may, whatever that may be for you. And then as they grow older, they go to school. It may be more sports related or activity related. Or even school related, if they need, tutoring or whatever that may be. And so you have to have that flexibility to be able to adapt to it. And if all of your money is locked up in retirement accounts or being spent in the spending bucket, well then you're gonna have, you're not going to have the flexibility that you may need. And then on top of that, this idea of coast fire may feel impossible. But when flexibility is funded, if you have, that bucket funded or if you're working on funding that bucket parent, it allows you to gain confidence. And not have as much fear. And so candidly, in my own situation, right, like I started this, I started Palm Valley Wealth Management about three years ago, and when I started it, my, my flexibility bucket, my brokerage account, took a hit, right? I had to start this business. I took basically no pay for about six months to get the business running and. Mentally caused stress because, I was in a good spot and then it was not as a good spot. And once the business got running, I was able to start, build that bucket back up. And now we have that freedom. So if there's a vacation I want, or emergency or things that we need for the kids. It, it's there. And I have confidence that, my flexibility bucket is going to allow me to con, continue to save for retirement, and allow for the spending that, that our family, has each month and year and those sorts of things. having this bucket is, I. And then lastly, that freedom bucket. again, retirement matters, but parents often over optimize for this bucket too early, and you kind of feel retirement poor, right? And so you have to find that fine, delicate balance of, am I saving enough, am I saving too much? is the juice worth the squeeze? And so next thing I want to touch on is the emotional side of Coast fire with kids. Here's the part, the spreadsheets don't capture. Parents don't just worry about money. They worry about are they doing enough, are they providing the right experiences? Are they. Molding their kids into the people that they want them to be. Am I not screwing this up? Right? So coast fire can trigger, should I be pushing harder financially to give my kids the life that I want to give them, right? But here's how we should reframe this. If your plan is already on track, pushing harder may cost more than it gives. We talked about this with, saving, right? at some point Saving more has the diminishing rate of return. Right? and are you trading off something for now to save for something later when the benefit of saving that extra two or 3% would actually be more beneficial to spend that now? And so the same thing here. If you're already on track for Coast Fire, then pushing harder or saving more, may not have, a material difference later on down the road. then it. Than the impact that it could have now. So kids don't benefit from parents who chronically stress, and these are things that are obvious, chronically stress, consistently working, and always waiting for later. They benefit from presence energy. Emotional availability. And these are things that you probably already know, but I just wanna say that and so that you can understand that money should be supporting this, it should have a role in this, and not just replace these things, right? And so how do we actually know if Coast Fire is realistic with our family? Right? So here are a few questions that I walk parents through or you can kind of walk through yourself. Have we already done enough saving that time can help us? Are we to a point where saving an extra 3, 4, 5, 6%. Is that enough? Do we need to save more or is that diminishing rate of return at a point where, it would actually make more sense for us to spend that now, or maybe even put it in our flexibility bucket. Do we have flexibility outside of retirement accounts? Can we take time off of work to do the activities or travel or whatever you want to do with your kids, and still be able to, Reach our goals or spend what we wanna spend, things of that nature. Does our plan survive imperfect markets or imperfect life or unexpected expenses? Are we clear on the trade-offs? And this is the most important part. Like I say, financial planning is all about trade-offs, right? What is the trade off? If we do this, we're gonna trade off that. And so does that make sense for our family or our situation? So are these trade offs clear? And not just numbers that we're trying to achieve. and again, that I can make a whole podcast on that and I, I've talked about that in the last few weeks, quite a bit as well. And so if the answer to these are mostly yes, then Coast Fire necessarily isn't reckless, that's responsible. and acknowledging that life isn't linear and family shouldn't be planned. Uh, for like spreadsheets. They're seasons. And so can your plan weather, different seasons, different ups and downs? And if it can, you're doing a great job. And if you feel uneasy about that, then maybe you need to make some changes or find some help, right? So Coast Fire with Kids isn't about quitting, it's about relieving pressure. It's about recognizing that some seasons cost more. Some seasons save less, and some seasons are about presence and not progress. All while keeping the main thing, the main thing, right? Understanding that yes, maybe we may not make progress as fast as possible, but we're doing the best that we can. If your financial plan only works when life is quiet and predictable, that's not the best plan. If it works because life is full, that's when you've done it right. If you want help figuring out whether Coast Fire makes sense for your family, if you're on the right track, understanding the trade offs of what decisions you're making financially, that's exactly what I do at Palm Valley Wealth Management. You can go to my website, Palm Valley wm.com. You can look on the Palm Valley Pathway tab. This is the. Process that I have generated to help families reach, retirement, and reach and achieve their financial goals. You can schedule a call with me. it's free for that first call and we can talk about how, we can help you and if there's value to be added there. So this episode helps you, breathe a little bit easier or understand your situation, or at least ask the proper questions. I'd appreciate it if you would share this with another parent and then another friend. That you think would find this interesting and leave a five star review on your favorite podcast syn app, so other parents can find this show as well. So as always, this is educational. It's not meant to be financial or investment advice. Do not make decisions solely based on this podcast alone. Please seek a professional in making decisions about your own situation. So thanks for listening, and we'll see you next week.