When I wrote my last article about being a single person on this journey, I focused a bit more on hedging off loneliness and received a lot of good feedback from the community.
My friend, Military Dollar, sent me some questions that singles are faced with when calculating their Financial Independence (FI) numbers. Miltary Dollar pointed out that these questions pose choices that committed couples already have the answer to. Up for the challenge? I am! Let’s go deep.
#1 Do you declare yourself FI once you have enough money to support only yourself, or do you wait until you could theoretically support a family?
Um, this is a tough one and I was really convicted to think hard on this rather than just going with my current plan. So I’ve had a FI number but it’s based off my living expenses as a single person. It does not take into account a family.
The reason I’m so convicted is that one of my life goals is to have a family. Now I know biologically this may not happen in the traditional sense (I’m currently 45), heck it may not even happen in the non-traditional sense. BUT, I want to be open to it so I need to consider how this would affect the math.
I don’t plan on adopting kids as a single person so I’m pretty sure the only way children would enter into the picture is if I marry a man with kids or I marry a man and we adopt.
Not knowing what kind of wealth or income this theoretical husband will have makes the iterations on my FI number a challenge. But, I came up with something that works…
The Pillars of Single FI
My three financial independence pillars are based on the generally accepted definition of FI which is 25 times my annual expenses. They do include healthy dollar amounts for travel and skiing so if I ever needed to scale back I could. The iterations include increasingly more people in my life 🙂
- Single FI – this is my financial independence number if I remain a single woman. With my current salary and savings rate (and the beauty of compound interest) I should be able to hit this number in 14.4 years. Not super extreme but I’m happy with it as I do allocate money to enjoy the ride. If I want to get more intense I can always tighten the belt.
- Joint FI – this is my financial independence number if I gain a husband. I factored in some additional expenses for two (more travel, a second car, double groceries, 2-person health insurance, etc.). While this FI number is higher, there will be additional income. Since the husband currently is just a theory, I don’t know his income or wealth. Therefore, I calculated how long it would take me to get to this number on my own (18.4 years). I think it is safe to say a second income would allow us both to get to Joint FI faster than I can get to single FI on my own.
- Family FI – this is my financial independence number if I gain a husband and kids. I factored in things like more groceries, extracurriculars, increased travel cost, family health insurance, and college funds. That being said, there are a lot of unknown variables here – like how many kids does this theoretical man have? Do the kids have a college fund started? How many kids would we want to adopt if any? I settled on factoring increased cost for 2 kids with no college fund started. I budgeted to send these 2 theoretical kids to an in-state college. It would take me 24.4 years to get to this number on my own.
That was a fun little experiment. Like I’ve said before I don’t know what the future holds for me but it’s nice to know how much money each possibility costs.
#2 Do you know how more people would affect your FI number?
I created three tabs on my excel sheet to calculate annual expenses for the three pillars. Adding a spouse increased my annual expenses by 51.5%.
A spouse and 2 kids increased my monthly expenses by 167.7%. Keep in mind, I made the assumption that the 2 kids come with no college savings. It does seem that more kids would increase that FI number at a slower rate because you can buy things, like food, in bulk and keep the unit costs down. With more kids, certain factors might have to change, like how much we could contribute to each kid’s college savings.
#3 Should you assume a future partner would come into the relationship with assets to support themselves?
I am making the assumption that a future partner would be bringing some type of income to the table. After all, he has been supporting himself (and potentially his children) before meeting me!
I understand life happens and I do hear of couples having to live on one income due to unforeseen circumstances. I am okay with that because after all, I take the vows, “for better or worse, for richer or poorer” seriously.
Most likely adding a second wage earner to the equation will truncate the time in which I/we can achieve FI.
#4 Are you willing to date a person who isn’t interested in FI, or who has considerable debt or trouble with money?
Yeah, here is the question that separates the women from the girls and the men from the boys. To be honest, I’ll give you my opinion here but I know that love can trump it all.
The concept of FI is not mainstream (dramatic pause) yet. So I’m okay with him not knowing about FI or even being interested in FI. What I am concerned with is financial literacy. I cannot imagine being attracted to someone who has no financial awareness.
I’m okay with debt. Heck, it took me 3.5 years to dig my way out of my own financial wreckage. Why would I not be willing to love someone who has made past mistakes with their finances? Let me answer that, I am. What I’m not accepting of is someone who has no desire to become better.
Feeback From the Community
This has been my first experience in polling the community on social media and I have some interesting results:
My Twitter poll resulted in an even split. Technically one of the single voters disclosed that her FI number would be enough to support a family if needed because it’s sufficiently fat. Another voter chose family to include support for her niece and nephew.
Next, I polled the Facebook community in the private group, Singles In Pursuit Of Financial Independence. Pardon the crude blacking out of profile pics.
This one definitely was more skewed towards people saving to only support themselves. I did receive some flack (deservedly so) for not taking into account that there are many single people who have kids. I added that as an option in the poll late and got some votes here.
If you haven’t calculated your post-retirement budget yet, do so. I was fortunate to go to CampFI Mid-Atlantic this year and heard Justin from Root of Good give a talk on how to do so. He was gracious and shared the link to his presentation so check it out!
After Justin’s presentation, I realized I had not accounted for everything. For example, I had to add in healthcare premium since currently, my employer pays for mine. I went to Liberty HealthShare and was able to get quotes for all the iterations.
For now, I’m going to aim for my single FI number but I’m now acutely aware of the math in supporting a family. I will welcome the blessing of having to adjust my FI number and prolong the achievement date if my family unit grows.
How about you? Are you accounting for unknown future variables into your FI number?