If you are a childless individual or family, your financial planning has a different basis than most. For those unfamiliar, child-free means you have no children and do not plan to have children. If you have chosen a childless life, you have chosen a different way of life than most people. It’s not better or worse, it’s just different. Being child-free means you have more choices, which is both liberating and a bit scary. You can choose your future with a freedom few could ever have. You can choose what «wealth» means to you. You can live a life of child-free prosperity.
Child-free wealth involves achieving your personal, professional, and financial goals when you plan to do so. Childfree fortune differs in many ways, but here are the top 7 to consider:
- You are in full control of your future.
- Flexibility requires planning.
- Financial BINGOs happen.
- Investing has different goals, and FIRE is possible.
- Long-term care needs to be planned.
- Their estate and legacy are different.
- The situation is quite different when it comes to child-free financial planning.
You are in full control of your future.
The truth is that your future as a childless person is 100% in your hands. We have a choice to do what we want, but again that’s something that makes us «weird». If you’ve always wanted to open a cupcake shop, you can do it. If you want to travel the world, do it. If you want to be the best person in your field, go ahead! If you want to live a true minimalist life in a van, no problem. They can live on less, live in areas without a «good school system» and enjoy life as a whole.
The problem is the paradox of choice. The core of the paradox, popularized by psychologist Barry Schwartz in his book The Paradox of Choice – Why More is Less, is that the more options we have, the less happy we are. Parents of children made their decisions through standard «life events.» Their choices are now limited and based largely on the needs of their children. You can’t take this new job halfway across the world. They don’t even get to choose how they want to spend their free time. As childless individuals, our only limits are set by ourselves. Limitless possibilities can lead to depression and feelings of loneliness. We need to recognize that and take control.
Flexibility requires planning.
The classic model of “adulthood” has us going through life transitions related to children. There is a belief that after the first child you «grow up». While that’s not always true, it does make people see the world differently. As individuals and families without children, we are often able to “rest” for long periods of time. It’s easier to «get over your stupid mistakes» when you don’t have kids. At some point we have to start planning our future, even if we don’t have the «normal» life transitions.
Planning (both for life and finances) is the difference between dreaming about our goals and achieving them. Planning sets priorities and moves us forward. Those who want to run a marathon (not me. ) don’t just get up and run a marathon. You work with a trainer and set a training schedule. They follow their training schedule and make adjustments when things don’t go as planned. If you want to run the perfect cupcake shop, planning involves both personal and business budgeting, marketing, and more. Whatever you want to achieve, you need a plan (and possibly a coach) to get you there.
Financial bingos happen.
I assume we’ve all experienced bingo at some point. My personal favorite was when one of my co-workers (who had 3 kids) stopped me in the stairwell and said «I’ve been thinking about you and your wife… you’re both smart and should have kids why not…» gotta love it, when one of your co-workers stays up at night thinking about your childless life.
A financial bingo is an extension of our childless lives. It goes like this: «You don’t have any children, so you can afford it…» or «Since you don’t have any children, you should help me pay for mine…» If you haven’t had financial bingo before, it’s coming. It’s amazing that family and friends have plans on how to spend your money (especially after the success of your cupcake shop). If you give in even once, you become a bank for everyone. The problem with giving people money is they ALWAYS come back for more.
Investing has different goals and FIRE is possible.
As a childless individual or family, you have different financial goals. You are not saving for your child’s college or to pass down a fortune to your children. You can set a path towards FIRE. FIRE stands for Financial Independence, Retire Early. The FIRE movement has grown in popularity, ranging from Barista FIRE (Retire early and work as a barista or similar interaction/healthcare aka Lean FIRE) to Fat FIRE (Retire early with lots of money and a live fat lives) and somewhere in between. I personally like to think of it as Financial Independence, Live Early (FILE?), but that’s not as sexy as FIRE.
Long-term care needs to be planned.
Your long-term care as a childless person (or family) needs to be planned. People with children often assume (and often get it wrong) that their children will take care of them as they age. This has led to an entire «sandwich generation» of people taking care of their children and their parents at the same time. You know you can’t rely on anyone else to take care of you, so you need a plan.
You must have long-term care insurance up to the age of 50 (younger if you have a reason). Long-term care is expensive. It’s cheaper to live year-round on a cruise ship than in most qualified care facilities. Good long-term care insurance (LTC) should provide options for both home care and skilled institutional care. You want to stay in your house if you can. Your LTC policy may even help fund modifications needed to allow you to stay at home (such as a ramp or special bed). LTC plans don’t come cheap, but unless you have an extra million to self-insure, you need a plan.
You should also contact a professional who will act as your healthcare representative and possibly a power of attorney if necessary. You will need a living will detailing your medical wishes and who your healthcare officer is. It is this person who decides about your care. The classic healthcare model puts that decision in the hands of the children, and you don’t want the hospital to be on the fly trying to figure out who to listen to when you’re incapacitated.
Their estate and legacy are different.
Nobody wants to talk about dying, but it will happen to all of us. You need a will and an estate plan. If you don’t have a will or probate plan, it’s up to your state to decide what happens to all of your belongings. Depending on the state, your hard-earned money may go to a relative or simply be given to the state if it cannot find a descendant. The system is designed for those who have children, so you need a plan.
The first step is to determine what you want your legacy to look like. Since you have no children, you have planned well, invested well and may have considerable wealth. There’s nothing wrong with deciding that you’ll spend it all on your way out. After all, it’s your money. If you knew your date of death, it would be a simple equation to determine what you can spend (perhaps living on a cruise ship year-round is a good long-term care plan 🙂 ). The reality is that you need a plan for what you are leaving behind, which is your legacy.
Child-free financial planning looks completely different.
The bottom line is that child-free financial planning looks very different. The «normal» financial (and life) plan is based on assumptions about family structure and milestones that just don’t apply to you. I am a child-free, fee-based, fiduciary CERTIFIED FINANCIAL PLANNER™. In my entire education (requirements include a BS, 6 additional courses, 3 years of experience, an exam and more) it was never mentioned that plans for childless families are different. In fact, all planning either involved children or planned for them.