Coffee Chats: How We Maintain a 50% Savings Rate
Once a month or so my wife and I have a money meeting. We jokingly call this meeting our monthly “Coffee Chat”. These clandestine meetings take place in the morning and under the noses of our sleeping daughters. On any given Saturday morning, we’ll make our way downstairs, cat burglar-like, to the kitchen to plot our escape from the workforce. Ironically, we treat this meeting just like one we’d have at the corporate workplace we’re trying to get away from; meeting notes, agendas, and coffee. Lots of coffee.
Living with a high savings rate can be challenging, so we find that talking about money around the house is extremely critical to our family’s FIRE success. They say that arguments about money are one of the biggest drivers of marital problems, so why not be proactive when it comes to household money? My wife and I are on the same page when it comes to frugality, for the most part, but we still find it beneficial to set up space where we can discuss money matters openly.
While we have these Coffee Chats when our kids are asleep, I find that the transparent culture about money we try to have in the home trickles down to our daughters. Especially my oldest. My hope is that our daughters can learn what they live here at home. Learn about investing and saving half their income. So later on, they can minimize the financial mistakes they’re bound to make, and “discovering” personal finance will have happened before they’re 18. By learning the basics now, they can take advantage of the most critical years of their lives when compound interest is most magical: their early twenties.
spouse
For our Coffee Chat meetings I’ll have an actual agenda printed out because it’s not a real meeting without an agenda, right? Headlining this piece of meeting gold, is our current net worth and what our net worth was when we first started pursuing FIRE.
It’s at this meeting that we discuss our current spending plans for the coming month. If something we want to buy is questionable, we ask ourselves if we really need the said item. We’re both pretty frugal and really everything we plan on buying is essential..mostly. But we still like to discuss them upfront if it’s possible. It helps us keep a focus on our end goal of financial independence and full time travel.
When we first got down to our 50% savings rate, we would go line by line down our checking account expenses. For each item that didn’t seem essential or felt excessive, we would highlight and figure out a plan on how to cut the expense down or eliminate it. By now, after a year, you would think it would be second nature to maintain a 50% savings rate, and it is, but we don’t want to get complacent nor feel deprived. So we discuss things we want to buy. And really, encourage each other to buy it if it will bring happiness to our life.
merging accounts
A huge part of what makes our plan work is our joint checking, savings, and brokerage account. We have no separate accounts other than our retirement accounts. This merging of accounts has done wonders for us since we first joined monetary forces back in 2009, the year we moved in with each other. The joint accounts have helped us form a team-like mentality. It gives us the feeling of “us against the world” and strengthens our relationship. I have a few friends that are always shocked when I tell them we share an account. I don’t think there’s a right or wrong way to do finances at home, this just works for us. We like having a single pot of gold to watch over.
Back to the coffee chats.
Lastly, after looking at our net worth, our previous month’s spending, and our forecasted spending; we’ll discuss things related to our family that aren’t completely money focused. A few months ago we both filled out our top ten bucket list together. Which I have to say was pretty fun to do during the Coffee Chat, especially since FIRE is almost required to do and see the things we have on our lists. I tacked these up in our bedroom as a reminder and motivator of all the things we want to see before we die. The lists are big and audacious, but so is our FIRE dream. We talk about upcoming vacations and weekend events to save the date.
Really, we’ve turned our monthly Coffee Chats into a husband and wife meeting with no kid distractions. It’s nice to just talk on a weekend morning over coffee, just the two of us, with a set agenda. On the weekdays we only see each other after 6 pm, and by then we’re both burnt out from work and hungry. It’s not the best time to talk about a 50% savings rate when all we want to do is eat dinner and catch up with the kids.
parents
We both grew up in families that didn’t invest in taxable accounts. I heard more about investing from movies than from my parents when I was growing up. So we’ve had to learn a lot from scratch. Money was just something not talked about in my house. Financially speaking, our parents were solely concerned with working hard, owning a house, and saving in a regular savings account; not investing in stocks. My father has a pension with the union and a 401k with a target date fund. Regular contributions over the last decades, and every ten years or so selling and upgrading to a better home, will give him a comfortable retirement in a very sought after city north of the golden gate. Very much the traditional path. His parents never talked about money with him. And so he never talked about money and investing with me.
Further up the genealogy line, my grandparents grew up in poverty in Mexico. As far back as I know, my family was always poor and lived on horse ranches in Zacatecas and the outskirt farms of Juarez. When my grandparents came over to the United States, they worked in the fields and railyards. Survival was the end goal, not wealth building. Investing in the stock market was probably as important as going to the moon to my pre-American family. Though you could make an argument that coming to the United States was a form of long term investing and wealth building for their descendants.
My wife’s parents also came over from El Salvador in the ’80s to escape the war, and they never talked about investing or finances with her either. My father-in-law has been successful at running a small business for several years. He’s shown my wife that you can take care and work for yourself if you have the will.
Our parents didn’t talk about investing with us. But they set an example through actions. What they did show us was that working hard and saving over a long period of time pays off. Which looking back and reflecting on as I write this, are pretty damn good life lessons. Investing wasn’t ingrained into me like physically working hard was. To be lazy in my family is the worst sin possible. I can distinctly remember my father telling me to never put my hands in my pockets, never walk casually, that I always would have to work twice as hard as everyone else.
Working hard set me up to take my finances to the next level. Having the internet available to both learn how to invest and utilize low and no-fee brokerage accounts really opened the door to attaining wealth for my generation.
kids
In order to right this ship, I actively discuss money with my oldest daughter. I talk about compound interest and how we maintain a 50% savings rate. For her 7th birthday, I bought her VTI (I did the same for her younger sister). We talk very generally about VTI and what it is. I try to incorporate in our discussions what companies VTI holds, like Disney or Amazon or Facebook, this seems to pique her interest most. Sometimes I’ll even open up my Stocks app on the iPhone and show her how the market has been doing if she’s in the mood to talk about it. I try not to overwhelm her with too much technical information at her age. But she knows what the stock market is if you ask her. She knows stocks are slices of companies and that she owns a bunch of companies through VTI.
I repeat so much and pop quiz her all the time about investing that it can start to feel as though I’m brainwashing her. But that’s okay. Parenting is, by its nature, brainwashing, whether we’re intentional about it or not. My kids are always watching and listening, whether I want them to or not. That’s childhood. So I don’t mind brainwashing her into becoming an investing machine.
I can honestly say that at 7 years old I had no idea what the stock market was. My 7 year old mind was filled solely with He-Man characters and watching the next episode of Thundercats…so I’m making some generational progress here.
We also talk about borrowing money from banks. How it can be good and bad. She knows I borrowed money from a bank for the house, which came as a surprise to her as she always hears us say “we own our home”. She also knows I regret borrowing money for a new car back in 2013.
Another thing we talk about with my oldest is the possibility that my wife and I will retire early and we might become nomadic when we do. She knows we are saving for retirement and her concerns are that we’ll run out of money. When she asks how much we’ll need, I tell her. She knows our FI number. For both the good and bad it entails. I heard her tell my mom our FI number a few months ago.
We also gently tell her that our plan is to travel full time. Even though it’s years away, we don’t want it to come as a surprise when the day happens. We watch Youtube videos of other families who travel full time, and on our last trip to Southeast Asia, we all only brought 1 backpack each, to show her how it’s done.
Is this the right thing to do as a parent? To be so transparent?
I have no idea.
It could all backfire on me somehow one day…or not. The funny thing about being a parent is that I wing it most of the time. There’s no detailed agenda, just a general direction. But I want her to know that saving her money is not enough. The money has to be invested. At some point, you have to stop working for the money and the money has to start working for you.
I get the feeling that it’s sinking in.
Last Christmas, when she received some money in lieu of a present from a relative, she handed the cash to me and told me to put half in the stock market for her.
“Half in the stock market?”
“Yes, in VTI.”
Any of you open with talking money with others? Did your parents talk finances or investing with you? How old were you when you “discovered” personal finance or FIRE?
I use Personal Capital to track my expenses and keep tabs on my net worth. I highly recommend using them if you are on your FIRE journey. Here’s my affiliate link.
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That is awesome what your daughter said about investing half of her gift in VTI! You are doing a great job!
Thank you so much. That was an awesome moment!
I think you are doing a great thing with your family and being open and honest about money. Teaching your daughter all about the stock market now is really going to help throughout her life.
My parents never talked about money in a positive way and it was always what they fought about. When they had it they spent. They didn’t know how to manage it and were not educated on investing which ultimately cost my Dad to go bankrupt. I was young at the time, but I remember something about the selling of shares and not having enough money to cover the tax on capital gains. This might have been when I started paying attention, even though I was still in my pre-teens.
Thank you. I sure hope my ramblings about investing to her make some percentage of an impact on her later on.
I can see how that can shift perceptions about money growing up. Appreciate you sharing your story. My parents struggled with debt when I was really young, and I remember them always talking about how they were sacrificing to pay down their credit card debt. They were secretive about it though too. Really turned me off towards credit cards till just recently when I started to try my hand a travel hacking.
Appreciate you stopping by to read and comment!
Only my opinion, but I think you’re doing it right. Educating your kids about how the world “really works” is a good thing. A lot of the time parents shield children from reality and I think that causes more problems down the road. But that’s just me and I don’t have any kids.
My family never talked about money growing up. It wasn’t until they were in their fifties that they started paying attention. Luckily they had been saving and this allowed them to retire at 67 and 65. But they are what I call the “lucky type.” They never really paid attention and honestly just lucked out that they lived a modest lifestyle and put enough savings away. I learned mostly from watching them, what it looked like to live within your means.
I personally don’t talk money that much, it’s mostly with my wife. My family knows I’m financially savvy and will ask questions on occasion, but that’s about it. Money is just such a weird topic with people, that if I’m asked for my advice, I give it. But if someone isn’t asking, they probably don’t want to hear how you think they could improve their life.
I’d always been a saver my entire life but first got into stocks in my mid-twenties. I lucked out and found an older guy at work that took me under his wing when I started asking questions about our 401K. But first time I really learned about the FIRE Movement was MMM on the Tim Ferris Podcast – maybe 2017? I remember I was listening to it on my 1.5 hour commute home and was like – this drive blows, I need to look into this shit more. Maybe my retirement is closer than I think? And honestly for me, I’d never contemplated early retirement before because I thought you couldn’t access the 401K early and healthcare would be too expensive.
And then I learned otherwise…
Thank you Q-FI. I think transparency is important and key. I had a fantastic childhood, but as a parent now, I try to think back to my childhood and see if there are ways it could have improved so that I can do so for my child. Money transparency and investing are a few things that could have been better. The continuous improvement mindset. I’ll have to see how this experiment works out in 20 years or so haha.
Living modestly and not above your means does so many good things. I’m happy your parents were able to retire right. My parents are sort of in the same category. They’ve accumulated a bunch without thinking about it or having a solid plan. Now they’re scrambling to set everything up and learn safe withdrawal rate type stuff. They’ll be fine, but again it’s a lesson learned for me.
Yeah the money talk thing is hard. My friends and family don’t know too much about my secret personal finance nerd life, we just haven’t talked about it. When the money topic does come around I find myself sometimes using terms not familiar to people and it turns them off. I’m not at finding that simple middle ground. So now I just say “low fee index funds” and leave it at that. Hate that it’s awkward, but that’s also why so many struggle with money, it’s just so hard to talk comfortably about.
That’s cool. I’ve listened to that podcast. Funny a podcast turned me onto FIRE too, it was Mad Fientist interviewing Jim Collins. Same deal. Caught up in traffic and boom my awakening occurred. Maybe we should be grateful for the California commuter traffic? Life changing stuff going on on those freeways in the afternoon lol
Hitting and staying at 50% savings rate is nice accomplishment.
Thanks! We were lucky in that we had no real debt (other than a mortgage and tiny student loans)holding us back when we decided to up the savings rate. I won’t lie and say it hasn’t been a challenge…especially with kids.
Printing out an agenda? Wow, that’s hardcore. Kidding aside, I think your family’s openness about money is fantastic. Being on the same page as your wife is critical to a solid marriage, and teaching your daughters about money early is equally as important.
My wife and I certainly have disagreements (who doesn’t?), but it’s almost never about finances. She’s as frugal as they come, and I’ve adapted to her mindset over the years, which is very much aligned with the FI pursuit. We also plan to be very open with our kids about money and saving. Our daughter turns 4 this year, so maybe pretty soon we’ll set up a mock bank account for her and begin to teach her about saving and interest. Great stuff Noel!
Haha yea it’s hard core. We do the agenda more to take notes on and might be cool to look back on years from now.
I agree with you 100% about being on the same page with your partner. I’m lucky too in that regard. I can proudly say we spar over dish duty more than money. I’m happy for you to share the money stuff with your kids! Such a good feeling.
Thanks for stopping by to comment Adam.
One question–what kind of coffee?
I am so envious of your seven-year-old to have that kind of financial education! What a gift that will be.
As someone who is single and creeping up in the 30s, joint accounts would be a difficult concept for me should the time come. I’ve worked so hard individually to get things in order that it would be quite a leap, but probably a necessary one for a successful partnership.
Haha great question. Medium roast Costco brand. I’m a self-admitted coffee snob, but my taste buds are sacrificing for the greater good of frugality. Once and a while I’ll splurge and go to a hipster store in the city to buy some organic single sourced good stuff. But man its way too pricy.
Yeah I’m envious of her too. There should be children’s books talking about the wonders of investing.
The joint account thing just works for us. There surely isn’t a right or wrong way to do it. You bring up a good point that the older you are the harder it might be. We were both broke in our mid-twenties when we joined forces, so sharing an account was like a boost to the ego to see more money in there.
sounds like a really good tradition especially in a busy household with a couple of little ones to care for. we never met much in our house or calculated our savings rate but just sort of knew we were saving enough and investing it. we do discuss major purchases like anything over $1000 or so. we spend so little with a paid off house that mostly we just have the luxury to buy what we want (within reason). that never turns out to be much somehow.
i grew up with hard working parents but in the same kind of look forward to a state and military pension some day. it worked fine for them but i would have done very well to learn the investing part much younger. i’m glad you’re setting your kids up for success.
That’s cool you guys were really in sync to be able to do that. Our house is crazy like you can probably imagine, so we have to set aside time for ourselves or else we’d go crazy. Having the house paid off seems like such a huge weight to have off the chest. I wish our public school system could do a better job at teaching investing and compound interest. Maybe at an earlier age than they do now. When kids are younger they’re more eager to learn and seeds planted then might be better served than to rowdy teens. Thanks for commenting Freddy!
Fantastic, fan-freaking-tastic!!
Love your story, Noel. Keep up the – to repeat a word I’ve already used twice before in this comment – FANTASTIC work.
We’ve had similar financial and investing conversations with our child and I should sometime publish a list of businesses they “own”.
One last thing: I couldn’t find a subscribe (to the blog, not just a single post) button here. Am I missing something?
Thanks NWA! Glad you’re having those conversations with your kid too. Talking finance with the next generation always makes me feel like I’m doing something right. Especially when they bring up things like price on their own.
Haha no, you aren’t missing anything about the subscriptions. I’m the one lacking. I haven’t made subscriptions a priority yet. To be honest I didn’t think anyone would want to sign up. I’ll have to get one for the sidebar now that you mention it. Thanks for stopping by and taking the time to leave a comment, I appreciate it.
I’m fascinated that you are able to get up before your kids and have your coffee chats. Our kids are up at the crack of dawn before I even realize that the world still exists.
Love how you and your wife speak about money freely with your kids. We do the same. In previous generations, money was so taboo. Couples barely even talked about money together much less their kids.
It was no different in my home. I didn’t learn much which is why I am so determined to course correct.
Very inspirational that you save 50% of income. Can’t wait until we can get there, hopefully by the top of 2022. Thank you for continuing to inspire.
Thanks. Yeah as they get older they sleep in more and more. My 4 year older is still an early bird, but my 7 year old will now sleep till 10 or so if we let her. And they both go to bed earlyish.
Yeah talking about money is the key to our kids success we feel.
Good luck in your savings journey. I know you guys will do it easy peasy, especially with your sharpened discipline used for knocking out your debt.