Last week I listened to Sylvia’s story on the FIRE Drill Podcast. Sylvia is a lawyer who has already hit her financial independence number, but is working for a few more years so that she has the flexibility to provide financial support to family members after she retires.
I’ve seen plenty of discussion in the personal finance world about parents providing economic aid to their grown children. But the opposite scenario – wanting to help parents or siblings – is not something I’ve seen covered much in the FIRE community. Is Sylvia somewhat unique, or are there others who want to have the flexibility to do the same?
This episode hit home for me. I do not worry about my husband’s parents’ financial situation; his dad is living comfortably on a railroad retirement pension, and I believe his mom’s husband will have a pension when he retires in the next couple of years as well. But my family is a different story.
My Family Story
I grew up in a rural area. My dad was a farmer and my mom stayed at home. When I was ten my mom, a nurse, went back to work part-time. There aren’t a lot of job opportunities in the immediate area. She could have chosen to commute an hour to a larger city where she could work 12-hour shifts and earn more money. But it was important to her to have the flexibility to be close to home for our after-school activities.
At some point my mom went back to work full time, while my dad continued to farm. In addition to farming, my dad also took on side jobs, including selling seed and appraising and selling real estate. My parents always worked hard, but the hard work did not result in lucrative financial gains.
Twelve years ago, my dad died unexpectedly. He had life insurance and his affairs were kept in good order. But there was still a financial impact. My mom sold off some of the farm equipment, but there were loans against the farm from the lean years that needed to be paid down.
I am thankful that my mom had been working for many years by this point so she didn’t have to worry about finding a job. But despite being at the same employer for coming up on 30 years, she still does not get paid a high wage. Though she manages her money well, there just isn’t a lot of it to go around. And maintaining a home and farm occasionally requires significant outlays of cash.
My Philosophy on Family Support
Honestly, I do worry about my mom’s financial situation. So when I have an opportunity to help in small ways, I do so. My brother and I both went to college, then moved to large cities and got jobs that pay substantially more than any jobs in the area where we grew up. So we have the luxury of being able to pay for things that are a small burden to us but a much larger burden for her. For example, we bought her a new washer and dryer two years ago for Christmas.
There has never been an expectation that we provide things for my mom. And my mom is not the kind of person who would ever take advantage of us for financial gain, either. But she has always been a great mom, and a role model for hard work and sacrifice. Why wouldn’t we share our financial abundance when it makes sense to do so?
While providing family support is not an explicit part of our FI journey, having extra money to help my mom whenever it’s needed is definitely a consideration in our long-term financial decision making.
I do think there are some rules to abide by when it comes to sharing your financial resources with family, whether it is a child or a parent or another family member:
- Take care of yourself first. Sylvia referred to this as the airplane method: you can’t help someone else if you don’t take care of yourself first. Make sure your own financial house is in order before you offer to help family.
- Only provide money or resources willingly, not out of forced obligation. My mom would never have an expectation that we “give” her things, but others may have a different family dynamic. Providing money without creating a cycle of dependence can be tricky.
- Be cautious in loaning money. I have never loaned money, but if I were in that situation, I would treat it as a gift so as not to create resentment should the money not be paid back.
- Consider non-monetary gifts. Sylvia mentioned that she shares frequent flier miles with her family. I think this is a great idea! My mom said Hawaii is the one place she really wants to visit, so in the next few years we are planning to do a trip there – and I plan for us to pay for most, if not all, of the trip on her behalf.