Financial expert and mother of two, Farnoosh Torabi, shares practical advice on raising children and achieving financial independence. Topics include the life-cycle model of consumption and saving, maintaining a high savings rate, the impact of family expenses on financial independence, investing in oneself, and overcoming fear to make informed financial decisions.
Planning for financial challenges when starting a family is crucial and involves considering income, expenses, and long-term goals.
Delegating and outsourcing tasks can reduce the time and energy burden on parents, allowing them to focus on activities aligned with their values and goals.
Addressing and overcoming financial fears is vital, and fear can be used as a motivator to save, invest, and make smarter financial decisions.
Deep dives
Planning for Financial Challenges
The podcast episode discusses the importance of planning for financial challenges that come with having children. It advises listeners to consider their income, expenses, and long-term goals when making financial decisions. The episode emphasizes the need to prioritize saving and investing before starting a family, as well as the importance of outsourcing certain tasks to free up time and reduce stress. It also highlights the concept of the life cycle model of consumption and saving, which suggests that expenses tend to rise when income is higher. The episode provides examples of how different families have navigated these financial challenges and offers practical strategies for finding a balance between work and family life.
Delegating and Outsourcing
The episode explores the benefits of delegating and outsourcing tasks to reduce the time and energy burden on parents. It highlights the importance of assessing one's priorities and financial resources to determine which tasks can be outsourced. The episode mentions examples such as hiring a nanny or babysitter, utilizing after-school care programs, and outsourcing home cleaning and meal preparation. By delegating certain responsibilities, parents can create more free time for themselves and focus on activities that align with their values and long-term goals.
Facing Financial Fear
The podcast episode acknowledges the presence of financial fears and emphasizes the importance of addressing and overcoming them. It encourages listeners to view fear as an opportunity to assess and protect their financial priorities. The episode suggests asking oneself tough questions, such as imagining worst-case scenarios and developing action plans to mitigate financial risks. It highlights the power of fear in motivating individuals to save, invest, and make smarter financial decisions. The episode also touches on the concept of marginal utility of money and the value of taking action to alleviate anxiety and uncertainty.
The Evolution of Expenses
The episode discusses the life cycle model of consumption and saving, which suggests that expenses tend to peak during specific phases of life. It highlights that the first five years of raising children are often the most expensive, but expenses may decrease as children grow older. The episode encourages individuals to plan and budget for these evolving expenses, taking into account factors such as childcare costs, education expenses, and changes in housing needs. It also recognizes that the financial landscape may vary depending on individual circumstances, such as location and personal financial goals.
Balancing Career and Family
The episode explores the challenges of balancing career and family responsibilities. It emphasizes the importance of setting boundaries and creating a career path that allows flexibility and autonomy. The episode shares personal anecdotes and strategies from the guest, who is a working mother, on how she managed her career and parenting responsibilities. It emphasizes the long-term perspective of investing in one's career early on to gain leverage and flexibility in the future. The episode encourages individuals to explore options for work-life integration, such as remote work, and to have open conversations with partners and employers about their needs and priorities.
Everyone says the first five years of your kid’s life will be the most expensive. But do things really get easier? Well, kind of. Financial expert and mother of two, Farnoosh Torabi (@farnooshtorabi), brought some practical advice to the show this week for people who know they want to be parents, but I think it also applies more broadly to setting yourself up to get what you want out of life.
