After publishing my post, “When To Stop Contributing To A 529 Plan,” I felt a sense of emptiness. For years, I had been trying to find a logical way to decide when to stop saving for my children’s college education. When I finally figured out the answer to my financial obligation, I lost some purpose.
I’m not sure if I’m going through a mid-life crisis at 47, but I feel like I’m entering an existential crisis as a parent. Once all the financial obligations for your children are met, or you know they will eventually be met, what else is left? Our number one responsibility as parents is to ensure our children’s survival. Once we know they can survive, our purpose for existence declines.
The last time I felt this hollowness was a week after publishing my bestseller, Buy This Not That. It took two years to write and six months to market during a pandemic with screaming children at home. I put so much effort into my book that once it was finally out, I entered a “trough of sorrow” where I felt sad for no longer having an audacious goal to struggle toward.
The previous time I felt this way was in April 2012, the month I left my finance job for good. After 13 years of getting into the office by 6:30 am, I felt weirdly empty that I no longer had to work 60 hours a week. My identity was ripped away with my one decision to negotiate a severance.
A Parent’s Financial Obligations To Their Children
Being a parent is one of the toughest jobs you will ever have, maybe even the toughest.
It’s usually only when parents are in their mid-50s or older that they finally get the reprieve of no longer having to take care of their children. They’ve either graduated high school or college and are now on their own. Of course, there is also a growing percentage of parents who help their adult children financially.
But if you’ve focused on your personal finances since a young age, you may find yourself on an accelerated path to fulfilling your financial responsibilities to your children. If so, you might start wondering, “What’s next for me to do?”
Here are the main financial responsibilities parents have for their children. Of course, you don’t have to accomplish them all. But if you are a personal finance enthusiast, these are the responsibilities to consider. Further, if you want to achieve FIRE and don’t have children yet, these goals may motivate you to get a head start.
1) Rent or own a stable home where a family can stay for years
Routine and stability are important for children. I should know since I moved around every 2-4 years from ages 0 – 14, and look how odd I turned out.
Parents have a responsibility to rent or own a suitable home in a safe neighborhood for their children. Most parents, if they can afford to, buy their primary residence when they have kids because it increases the chances of stability.
When you rent, you are at the mercy of the landlord’s desires. Once you’ve purchased your primary residence, you may long to upgrade to a nicer home as your family size grows.
After a while, you’ll also know more of what you want in a home. As a result, you’ll need to come up with a new down payment and take on a likely larger mortgage. Ultimately, you might find your perfect dream house to raise your kids, which will cost even more money. After all, the best time to own the nicest house you can afford is when your kids are at home.
As a result, you’ve got to come up with even more cash for the down payment. Finally, your financial responsibility is over once you’ve fully paid off your home. This ensures your family will never have to move.
2) Buy one rental property for each child (stretch goal for parents)
To invest for retirement and protect your kids against a cruel world, buy one rental property for each child. If you do, by the time they graduate high school or college, a large part of the property, if not all of it, will be paid off.
These rental properties can act as affordable housing for your children. They can also act as income sources that give them something to do as property managers. If you want your children to live in the same city as you after graduation, these rental properties can act as magnets for them to come home to.
Owning a rental property for each child is one goal real estate investors should have. Hopefully, you also teach your children everything there is to know about rental property investing and management as they grow up.
3) Save up enough in a 529 plan to fully pay for college education
College is debilitatingly expensive, yet it is also important for our children to get good jobs and become financially independent. As a result, saving for college is a must.
The people angriest about the absurd cost of college are likely those with the most student loan debt. This debt forces some graduates to pursue careers they don’t want to pursue, mainly for the money. Meanwhile, student debt can also block graduates from taking on more career and lifestyle risk.
If your children are not above-average intelligence, not particularly hard workers, and are not part of an identity group that gets favorable treatment, it is recommended to save up enough in a 529 plan to fully fund their college education. This way, you are less at the mercy of the gatekeepers.
4) Own a safe and reliable car that’s paid off
Owning a car is a necessity for most families. Without a car, it’s not efficient to pick up and drop off kids at school and for extracurricular activities. My annual car mileage has doubled from 4,000 a year before having kids to 8,000 a year after having kids.
Every parent must own the safest car they can afford while following a car-buying guideline, like my 1/10th rule. The last thing you want to do is get into a terrible accident that causes significant injury, which may have been avoided if you spent more on a safer car.
As a financially responsible parent, your goal is to achieve the highest house-to-car ratio possible—30 or higher is recommended. This way, you maximize your capital towards a potentially appreciating asset while minimizing capital towards a guaranteed depreciating asset.
Not only will you have to spend regularly on maintenance to keep the car safe, but you should pay off your car. It’s suboptimal to take out a loan on a depreciating asset.
5) Earn or save up enough to pay for vacations and summer activities
When school is out, your kids are with you. If you are working full-time, the main solution is to send your kids to summer camp or summer school. These activities will cost thousands of dollars over a three-month summer. A financially responsible parent must have the income and savings to pay for these costs for 15+ years.
Meanwhile, family vacations become more meaningful because they are also educational opportunities for your children. Family vacations are also much more expensive given kids over two have to pay the same price for an airline ticket. Meanwhile, it’s harder/less comfortable to just rent a standard hotel room when you’ve got three or more people.
Hence, one of the biggest challenges for parents is to regularly come up with $10,000+ a year to pay for vacations and activities. Follow my vacation spending guide so you don’t overspend on vacation and regret it.
6) Locking down an affordable life insurance policy
Parents with debt who are not financially independent yet should get matching term life insurance policies. At least the primary income earner must get a life insurance policy in case they pass prematurely. You don’t want to be forced to sell assets at an inopportune time or disrupt your financial and personal life in case of a death.
After my wife and I got matching life insurance policies in 2022, we both felt a tremendous amount of relief. My 10-year term policy I took out at 35 in 2012 was expiring. It cost me only $39 a month, but I made the mistake of not getting a 30-year policy because I didn’t predict having my first child in 2017. When I tried to renew in 2019, 2020, and 2021, my quoted cost from USAA was over $400/month!
My wife also had a more expensive policy through USAA, but it was expiring in seven years. It made no sense to have mismatching term life insurance policies since we are equal partners and stay-at-home parents. So we used Policygenius to find us affordable, matching 20-year term life insurance policies with the same death benefit. I got a quote for $130 a month from SBLI with a $750,000 death benefit and took it. Phew.
Please don’t go to the doctor for anything non-life-threatening before applying for life insurance. All doctor visits and treatments will be recorded and reviewed by insurance underwriting. Learn from my mistake of going to a sleep doctor in 2017 before beefing out my life insurance.
7) Getting your estate in order with a revocable living trust
As parents, you don’t want your children to go through expensive probate court to figure out what you own and who gets what. Instead, you need to sit down with an estate planning lawyer to establish a revocable living trust. This way, there is a clear directive regarding how you want your assets to be spent and transferred if you were to die.
A revocable living trust will likely cost you between $2,000 – $5,000 to set up. But the sooner you set it up, the more peace you will feel as a parent. Not only should you set up a revocable living trust, but you should also create a written will, a video will, and a death file to share all your user accounts and passwords.
Give your loved ones the gift of clear instructions and an orderly pass down of assets.
8) Spend as much time with your kids before they leave home
Once all the financial obligations are in progress or met, the most important obligation is spending as much time with your children as possible. This way, you can build a better bond and impart more of your wisdom onto them so they can better launch.
Young kids really don’t care how much money you have or how senior your job title is. They care about spending quality time with mom and dad before they just want to spend time with their friends. This window of quality time will likely last for the first 10-12 years of their lives. After that, your kids will likely want to spend most of their time hanging out with their friends.
The difficulty with this situation is that parents are usually not as wealthy in the first 12 years of a child’s life than they are when their kids are 12-18. By the time parents are ready to give up their careers and spend more time with their kids at 12, it may be too late.
Hence, to minimize regret and disappointment, it may be best for parents to alternate not working during their children’s first five years of life before they attend kindergarten full-time. If alternating being a full-time parent doesn’t work, then at least one parent can take a more flexible job or do part-time consulting.
Let’s not miss our small window of opportunity to be with our kids!
The End Of My Parental Financial Obligations Is Nearing
One of the reasons I’m experiencing an existential crisis is that I have only two remaining financial obligations as a parent:
- Pay off two rental properties
- Fully fund my daughter’s 529 plan
I will fully fund my daughter’s 529 plan within three years, barring a bear market. Paying off the two rental properties will likely take five to ten years. My goal is to complete both obligations before my children graduate high school in 11-13 years, so I’m not overly concerned. Additionally, the mortgage rates on these properties are so low that there’s no urgency to pay them off quickly.
Feels Bad Knowing We’ll Never Get Our Special Time Back
My biggest concern is realizing my time being a full-time father to my daughter is ending in September 2024. I’m sad she has grown up so quickly. I’m also concerned about how I’m going to fill the void when she is in school for 8+ hours a day with her brother. There’s only so much tennis, pickleball, and writing I can do.
The problem with going all-in on something is that once it’s over, the free time can feel extremely uncomfortable. This impending dread forces me to reinvent myself as a father, like I’m forced to reinvest the proceeds after selling a home for a large gain — not easy.
As a parent, I think it’s good to stay on the ball with all your financial obligations to your family. However, if you get these financial obligations done quickly, you might be left feeling empty as you lose your purpose with each target achieved.
So, perhaps a better parenting strategy is to take your time meeting all your financial responsibilities. This way, you might feel less stressed and enjoy the journey over a longer period of time.
Perhaps The Most Important Parental Obligation Remaining
After writing this post, I feel reassured knowing that I still have a couple of clear financial objectives to complete for my children. Don’t you?
However, perhaps the most important parental obligation is to stay as fit and healthy as possible for our children. By doing so, we increase our chances of living to our maximum lifespan.
- Our first goal should be to live long enough to see our children reach adulthood. This way, we can teach them as much as possible before they might need to be independent.
- The second goal is to live until after they graduate from college (if they choose to attend) and secure employment. This will allow us to rest easier knowing they are both educated and employed.
- The final goal is to live long enough to see our children find loving partners. This way, we can leave this world knowing they won’t be alone.
As a son who dreads the day his parents will pass, I feel it’s my responsibility to help minimize this dread in my own children by living an active, healthy, and purposeful life. Time to get moving!
Tips To Deal With Your Parental Existential Crisis
Dealing with a parental existential crisis after meeting financial obligations is a complex but not uncommon challenge. Here are some strategies to help navigate this transition:
- Redefine your purpose:
- Shift focus from financial goals to personal growth, relationships, health and experiences.
- Explore new ways to contribute to your children’s lives beyond financial support.
- Invest in personal development:
- Take up new hobbies or skills you’ve always wanted to pursue.
- Consider further education, professional development, or therapy.
- Explore mentorship opportunities:
- Share your financial knowledge with others, perhaps through community programs.
- Consider mentoring your children in areas beyond finances.
- Set new goals:
- Establish non-financial objectives for yourself and your family, such as travel, music, sports, business.
- Consider philanthropic goals or ways to give back to your community.
- Practice mindfulness and gratitude:
- Reflect on your achievements and practice gratitude for your current situation.
- Consider meditation or journaling to process your emotions.
- Redefine your role as a parent:
- Focus on being a guide and emotional support for your children as they grow.
- Explore ways to teach life skills beyond financial management.
- Plan for the future:
- Consider long-term family goals, like multi-generational wealth planning or family business ventures.
- Discuss and plan for your children’s adult lives and your potential role as a grandparent.
This transition is an opportunity for growth and redefinition. It’s normal to feel unsettled, but with time and intention, you can find new purpose and fulfillment in your role as a parent.
Reader Questions and Suggestions
What are some other financial obligations parents have to their children? Perhaps this post highlights too many parental obligations, which may leave parents feeling overly stressed. If so, which are the 3-5 main financial obligations parents should meet before their children leave home?
If you are a stay-at-home parent, did you feel dread knowing you’ll never get to spend all day with your children again once they attend school full-time? How did you overcome the hollow feeling inside once your kids started going to school full-time?
To better manage your finances, use Empower, a remarkable wealth management tool I’ve trusted since 2012. Empower goes beyond basic budgeting, offering insights into investment fees and retirement planning. It’s free for all to use. Don’t leave your money up to chance. To build greater wealth, you must diligently track your money.
To expedite your journey to financial freedom, join over 60,000 others and subscribe to the free Financial Samurai newsletter. Financial Samurai is among the largest independently-owned personal finance websites, established in 2009. A Parent’s Existential Crisis is a Financial Samurai original post.
Read the full article here
