In December 2021, my wife and I found out that we were expecting our first child. We were both working, me as your favorite financial advisor, and her as a medical assistant at a colon and rectal clinic. We had always talked about both of us working, her going to school to become a nurse, and then shortly thereafter to get her license to practice as a NP or CRNA. However, by the end of the first trimester she was done with the clinic, done with work, and she was 100% on the "I'm going to be a stay-at-home mom" path. We didn't really have a ton of time to plan for that...
But fortunately, we did.
Since I began my career over a decade ago, I began accumulating savings and a number of different assets/accounts. I always wanted to have a certain number in savings at all points in time - $50k - for emergencies and opportunities, and always worked towards saving a certain percentage of my income. Some years we saved a lot more, and other years like this one, we probably won't save my target percentage (two kids, overnight nanny, farm (we'll get to that later), excuses, excuses, I know). It's just life, and I'm not perfect, that's ok. We had built the liquidity so that if something like my wife puking as she comes in the door because she's 3 months pregnant and looking at - colon and rectal stuff - all day, we have a buffer as a safety net. We had also made a plan to save 100% of her income, which gets me to my next point...
We managed our cash flow. What most people have set up for their cash flow is detrimental to their financial well-being. You may make enough money to not notice it, but some day you will. Everyone has cash flow struggles. You might not feel like you're living paycheck to paycheck, but what happens when there's a $50,000 tax bill, or you have $15,000 per month of attorney fees, you decide to go out on your own and start your own business, or your spouse decides they are going to stay home with the kids. You manage your cash flow or your cash flow manages you, and once that habit gets built, it's tough to change. That's why the first two weeks in January every year the gym is packed and by the third week it dies down - it takes 21 days to build a habit. Now because we saved part of my income, and all of Kayla's income, it gave us a buffer with cash flow each month. Her income went away, however our cash flow was not interrupted. We were still saving, albeit at a much lower rate, however we could still invest and build assets.
We also made (most of) our insurance and asset protection decisions while we were in our mid-20s. Not many 26-year-olds are thinking about their auto, home, umbrella, life, and disability insurance, and who can blame them? It's not a fun thing to think about - spending money on something you hope never happens. Fortunately we did. We bought millions of dollars of life insurance in our 20s. We bought thousands of dollars a month in disability insurance benefits in our 20s. We had millions of liability protection in our 20s. And we weren't going broke doing it. We were young and healthy, and it was super cheap when the "need" isn't there for insurance. That's the time to get it, not when you "need" it. It's supply and demand, basic economics. So we had locked in all this coverage at a price that doesn't change unless we increase it. There is no inflation on a properly designed insurance policy. The cost literally gets cheaper over time due to inflation and the time value of money. We're paying the same $500 per month that we were paying 10 years ago, no increases.
Now the anomaly we had, that most families won't have, is they won't have a spouse who decides two months before the first baby arrives to go out and buy cows and start a farm. Probably terrible timing on my part, however the opportunity presented itself and I took it. No, my wife was not happy, and yes, it was incredibly stressful. That first year I had to put in around $60,000 of my own money to get cows, land, fencing, water, hay, a tractor, and equipment. And not included in that number is my time. Every weekend I was at the farm for some period of time, while Kayla and the baby were at home. We had a lot of conversations, some more exciting than others, many where I was in trouble, but we communicated and worked through it. She understood the mission and I would have much rather been at home than building fences when it was 6 degrees outside that December.
I say all of that because we went from a two income household to a one income household with a child (now two), 40 more mouths to feed (cattle), and a lot more expenses. And we made it work. This year is the first year that the farm will start being profitable, so for the last 2 years there have only been outflows from the farm business.
Having a spouse stay at home can be the best thing ever for your family, if it works for what your values are. It works for us. We like not only the life we've built, but also the lifestyle we have, and we've met some amazing friends and neighbors who are in the exact same situation. The key is you need to make plans with flexibility. I didn't realize at 26 years old that having a bunch of money in savings would afford my family the flexibility to be a single income household. Honestly, I thought it would allow me to buy more real estate or distressed businesses to grow assets. My priorities have shifted, though, and we have had flexibility the entire way because your priorities will shift too.
I'd love to be an advisor in your life to help your family through these decisions and help design a financial life that is flexible as your values and priorities develop over time. Feel free to reach out to me by email - blakemiller@ashfordadvisors.net - or book a meeting directly on my calendar here.