What’s First, What’s Next

A little over a week ago, J.D. at Get Rich Slowly posted an article entitled “What Next?” The Third Stage of Personal Finance, where he discussed the fact that he had dug himself out of his financial hole and was beginning to accumulate wealth. The “problem” here is that it meant that he was having to reconsider many of his goals – for so long, his goals had revolved around straightening out his financial ship and paying off debts, but those goals had been accomplished.

What J.D. discovered, after some introspection, is that he’s reached what he called the “third stage” of personal finance: what’s next? What do you do when your basic financial needs are securely met and you still have a strong income? For him, a big part of it is moving towards a more pastoral lifestyle: working less and spending more time doing things like gardening. For him, more money is not the goal.

I enjoy reading articles like that one because, more than anything, it shows the difference between my life’s situation and the situations that others find themselves in. Much like J.D., over the last few years, I’ve come to a very stable place in my personal finance situation. I no longer worry about paying bills and I earn quite a bit more than I spend. We’ve paid off most of our debts, have a very nice emergency fund, and don’t really sweat the things life throws our way. We bought a house and I’ve moved to a career that I truly love.

And that’s the point where our paths differ.

I have a three year old son and a one year old daughter at home. Rather than filling my evenings with the types of activities I might engage in if I were single or married without children (things like reading more than I do, planning an extensive garden, volunteering at some community groups, and so on), I instead tend to fill my spare hours with things involving my children. I read books to them. I cook supper for them. I play Memory with them. I put them to bed at night. In short, my overarching goal at this stage in my life is to raise my children as well as I possibly can.

The difference here, though, is that it’s not a life goal that will sit in line with personal finance freedom. Instead, it’s quite the opposite, actually – the expenses brought on by our children actually keep us from achieving the money success we might otherwise have.

There’s a huge and vital lesson here, I think: personal finance is a tool to reach the goals you want to achieve in life. While it’s great to have a goal of debt freedom (for example), that goal in itself is actually just a precursor for other things.

Why do you want to be free from debt, after all? There are as many reasons as there are people out there, but once you start digging into that question, you quickly realize that the answer to that question points a person towards what really matters in their life – and quite often, that thing that really matters in your life is your mission in life.

Take me, for example. I was inspired by my infant son to start bringing about financial changes in my life. When I think about my life now, I don’t think about being in good financial shape or being debt free. I think about being a good parent and being a writer that reaches people. Good personal finance success just makes those things possible.

Why do you want personal finance success? Spend some time thinking about that question in your own life and you might find that it leads to what you really want to do in life.

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  1. Curt says:

    A few years ago, a good friend of mine came to the same position in life. After striving to get more money until one day he found himself with lots of money and no one to share it with.

    At 40 years old, he was married and set for life, but he was suddenly without a goal for the future because he had achieved all this financial goals. He decided to have a baby and enjoy sharing his life with their new child. He ended up spending a lot of money to have a child because of his wifes age. Perhaps he should of thought about having kids sooner. Maybe JD should consider having a few kids to share this life with. I know I wouldn’t trade my kids for the all the money in the world.

  2. RJ says:

    Two great posts.

    It just so happens that on your “one year ago today link”, you had another great article about achieving financial independence.

    The reason I find personal finance so interesting is because it’s different for everyone. Some people might want to be a millionaire, while others goal is to be a family man. However, the same principles always apply to both situations.

  3. KC says:

    My husband and I have hit that 3rd stage. He makes far more money than I do and enjoys his profession far more than I did. So our goal after paying off the debt, accumulating the emergency fund, fully funding the retirement and having ample savings was for me to quit my job. My job was pretty stressful. So I’ve seen a marked improvement in my health. But we’ve also both been happier because things get done. There is food in the clean house. There are clean clothes and a well maintained yard. My husband also appreciates the errands I run for him that he would otherwise have to do when he wasn’t working.

    So the goal of working less has been beneficial for both of us.

  4. J.D. says:

    Kids are great, and they’re a great source of meaning, but they’re not for us. Kris and I are happy to interact with our friends’ children (and with our niece and nephews), but we’ve elected not to have kids of our own.

    Trent, did you see my post about George Kinder? That’s a continuation of this line of thought. I intend to explore it deeply in the weeks and months ahead. I think that for each person, meaning comes from a different source. For many, that source is children, and that’s great. For others, it comes from spirituality, and that’s great, too. But for me, those aren’t options. But I’ll be there’s still meaning to be had.

    (Right now meaning comes from just being the best writer I can be.)

  5. Abby says:

    Interesting article. I’ve been thinking about this a lot lately – after all, it is tough to make sacrifices long-term if you don’t have a purpose.

    For my husband and I, we both definitely want to work at less demanding jobs that allow us to get home and sit down for a home-cooked dinner with our two kids every single night. We haven’t had that – ever – in the five years since our son was born.

    We’re on the brink of maybe, maybe getting there at the end of this year. We know that we can live on the reduced salary – it is just a question of finding jobs in our fields that offer that freedom.

    I agree with you – if you choose to have children (and I understand that our choice isn’t for everyone) – then raising them right becomes incredibly important – and a great motivator for financial health.

  6. frugalcpa says:

    I haven’t hit the third stage yet (or, rather I left the third stage to go back to school and am back in debt because of it), but I definitely know what I want money for: providing for and raising my family, traveling the world with them, visiting friends, giving generously to worthy causes and people in need, and having security. I don’t want to ever lose sight of the fact that money is only a means to an end, and that I’m just a steward over earthly things for a short period of time.

  7. Scordo.com says:

    Good, philosophical, post!

    I enjoy being debt free because it provides:

    1. Security
    2. Peace of Mind
    3. Freedom

    Best,
    Scordo.com

  8. Sandy E. says:

    Kids are wonderful. They keep you young. I don’t know how to explain this, but people in their 50’s and 60’s who never had kids are way different than people in their 50’s and 60’s who did. The ones who did are fun and very flexible and down to earth, while those who didn’t are stiff, boring and not people I enjoy being around (in my observation). Kids break you in and you become real. The ONLY reason why I wanted to have a child was because I felt like I had a lot to offer to one, and I knew that my husband did too and would make a great father. Our daughter has given us 3 beautiful grandchildren now – a 3 yr. old boy, 2 yr. old girl and another girl born on Valentine’s Day. I can’t imagine spending my 50’s and 60’s without children. That would be so depressing to me, and it’s not even something that I thought about when I was in my 20’s and 30’s. To get older and then to have a 25 year old daughter who gets excited to see you, and to see the little grandchildren’s eyes light up and hug you hard when they see you is something that all the money in the world just cannot buy. Trent to be in a good marriage and to have a 3 year old and a 1 year old is just special, for a lack of a better word. I don’t think you’ll understand really what I’m expressing here until you too reach your 50’s.

  9. kristine says:

    Raising your children the best you can…

    Are the publics schools near you excellent? Or will you send your children to private school? Once your kids reach the first grade, they will spend more time with their teacher, than you.

    If kids don’t get top-shelf lessons, they will have a less than optimal base on which their entire learning experience is built upon. I got straight A+, and graduated with 24 college credits from HS, and cannot find a damned thing on a map. I never cracked a book, and didn’t need to. I went to a public school considered very good. My husband went to private school in the same town, same performance in school, yet I am embarrassingly ignorant compared to him. He was well-read at 15- it was required. It’s not that I could not have absorbed the info he knows- it was never taught!

    It’s not like you can relearn 12 years of subjects. It’s a one shot deal. I would put all my money into my children’s education. In fact- we have. We live like paupers in a first-rate blue ribbon district, just for the school.

    Can’t think of a single more important to put the money into.

  10. I am starting to have the same thoughts about my personal finance goals. I just turned 24, and feel like I’m still fresh out of college and poor. But truth be told, I’m making more money now, and after meeting with an accountant the other day, realized it’s time to up my retirement contribution a few percents and consider starting to save for a down payment on a house. I don’t think I’ll be buying a house for many years, but I’m realizing that it’s something that can take years to save for, and I really do need to realize I’m becoming an adult and need to shift my personal finance goals accordingly. It’s not just about scraping by anymore :)

  11. Johanna says:

    I never cease to be amazed by the lengths to which parents will go to justify their choice to have kids, and to try to make people who have made different choices feel bad about themselves. Really, what’s it to you whether somebody else decides to reproduce or not?

  12. Defining your long term goals is a great way to align your finances with achieving those goals. Many people are stuck focusing on the now, and don’t really consider a long-term goal that defines their life.
    I’m still focused on paying down debt and saving money to provide some security in my life, but I am also working to define my values. It has helped me to find my priorities in my life.

  13. I want personal finance success to be able to raise a family without having to worry about money.

    I guess my philosophy would be more in life with Trent than JD. I can’t imagine not having children. I’m still a ways away from having children but it is my overriding drive for making more money and spending less.

    -Nate

  14. tom says:

    Wow thank you for the article and link, I am actually about to dig myself out of my hole too and get on the fast lane.

  15. L says:

    Thanks Johanna for expressing what I feel- I’ve seen a few threads in PF blogs recently that have become a “children are the reason for life and financial responsibilty” lecture.
    I’m glad that so many people love their children (they should) but I don’t appreciate the suggestion that my life is less complete than theirs.
    As for people without children becoming stiff and boring (#8) that’s certainly not my experience- I have a single aunt in her late 50s- she is so much fun to be with, she travels lots and takes university classes (she was able to pay off her mortgage and retire at 54) and I personally find her a lot more entertaining than someone whose life revolves around their children.
    I’m only in my late 20s but have no debt and my savings are growing nicely- I have no intention of starting a family; right now my aunt’s life plan is looking like a great inspiration.
    I know this wasn’t really the point of Trent’s post but when comment threads take this turn it really riles me.

  16. Amy H. says:

    @Sandy E. (comment #8) —
    Gag.
    Just because you would have been bored stiff with yourself and your life in your 50’s and 60’s doesn’t mean that’s true for any of the rest of us.

    Johanna and L — hear, hear.

  17. L, I have to agree with you. I also think it is great that people love and cherish their children, but I don’t have any plans in the near future to have any of my own. I don’t think that my life is any less complete or meaningful than someone who has children. Actually, I am quite happy being able to have my freedom to be spontaneous, which I wouldn’t be able to have if I had children.

    Different priorities and values for different people. It is what makes the world go ’round! :)

  18. Jason says:

    You are indeed correct – money, and personal finance in general, can be best to be thought of as tools to help you sustain what you really want in life, and what means the most to you. Money is not the end-all-be-all, instead, I feel that striving toward the overall wise management of it just makes the other things and priorities and life much easier to enjoy with less worry on the mind.

  19. Carmen says:

    Interesting comments. I have two children and can see both sides of the debate in this area. Parenting is by far the most challenging thing I will ever have to do in my life; no question. And I’m sure a lot of people would rethink their choice if they knew what was involved beforehand. I certainly didn’t understand the first thing about guilt and worry before having children! The bottom line for me personally is I always knew I would have them and could not imagine growing old without them.

    But it’s not for everyone; I understand that too. In fact there are far too many bad parents and horrible children around to advertise the case for not having children, let’s be honest. Although it needn’t be like that. I also occasionally get jealous of couples with endless sleep-ins and purely adult entertainment based weekends. But they will come again (after all our hard earned money has gone!) The world is too crowded so we can’t cope with everyone reproducing. No big deal.

    Camp Pitt/Jolie is full enough though!

  20. Trent–

    Simply put, kids get big fast and quality of life has a value too . . . follow your heart on this one.

  21. Ken says:

    Great post! You get to the point of why we do what we do. I work a job that gives me satisfaction. I don’t want to do that job forever, though. I want to eliminate debt so I’ll have more choices and control later in my life. One look into my son’s eyes reminds me of the joys and responsibilities I have in my life. It’s important to ask why I do what I do. It’s also important to decide on goals and work hard to reach them.

  22. Neal Frankle says:

    Trent,

    Thought provoking and right on. I came to the conclusion even before I hit stage 3. I started to focus on my values long before I could afford it. As a result, it took me longer to achieve my goals – but so what? I got to spend lots of time with my children and wife throughout the years.

    Don’t wait.

  23. Samira says:

    In my 2009 goals, I wrote:

    Stop reading books/websites about how to get out of debt, declutter your office/home/life, or find your dream job. None of these conditions exist.

    What next? Maintaining my financial security and independence while enjoying life!

  24. reulte says:

    Johanna (#11), L (#15)… I don’t see any comments trying to make child-free by choice people feel bad about their choices. I do see enthusing about kids as well as commenting on how they affect your financial choices (and boy do they EVER affect finances!) Yes, kids keep you young or else they age you prematurely – usually both. No, you’ll never figure it out until you experience it; but then you’ll never figure out being single for ages until you experience it or being divorced or married or widowed or having a 2nd romance in your 60’s until you experience it.

    It’s not my concern whether or not someone has kids and believe me, I will not try to convince anyone to have kids or that they’re the most wonderful thing in the world (even though mine is *grin*) and I will certainly try to convince them otherwise if they are over the age of 40!! But if finances and kids are mentioned, there will be people who say kids are worth the financial burden – generally (hopefully!) parents and others who do not find them worth the potential financial burden (usually child-free). Please take enthusiasm such as Sandy’s (#8) simply as that – enthusiam – and not as a condemnation of anyone’s choices.

  25. Haha… love Samira’s goal:
    “Stop reading books/websites about how to get out of debt, declutter your office/home/life, or find your dream job. None of these conditions exist.”

    I need to stop that too… I’m out of debt, building savings, and saving for retirement. I have a compulsion to declutter and I’m doing it regularly, and I have my dream job (though financially it hasn’t taken off yet, which I’m working on).

    Yet for some reason I’m still reading those books, blogs, and articles! What the crap?

  26. SP says:

    Trents financial turnaround came when he had his first child, so I think it is natural for him to think of those without children as not needing/desiring the same level of financial stability as he now desires. (Well, that is how I see it at least.)

    Right now I still feel financially insecure enough that I do the pf stuff for security, stability and freedom.

    There is nothing more comforting in times like this than knowing you can live X months without an income. I also do it for the freedom tomake different choices later. Kids? Maybe. If I want them some day, I’d like to be free to do so. Same with a house. I don’t want one anytime soon, but if I change my mind, I want to be free to do so.

    And I want to be free to explore life, to travel, to have new experiences. I don’t want to be held back by poor financial decision. I want to keep all my options open.

  27. SP says:

    Trents financial turnaround came when he had his first child, so I think it is natural for him to think of those without children as not needing/desiring the same level of financial stability as he now desires. (Well, that is how I see it at least.)

    Right now I still feel financially insecure enough that I do the pf stuff for security, stability and freedom.

    There is nothing more comforting in times like this than knowing you can live X months without an income. I also do it for the freedom tomake different choices later. Kids? Maybe. If I want them some day, I’d like to be free to do so. Same with a house. I don’t want one anytime soon, but if I change my mind, I want to be free to do so.

    And I want to be free to explore life, to travel, to have new experiences. I don’t want to be held back by poor financial decision. I want to keep all my options open.

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