So you’re on the path to financial independence, and you’re wondering what details to share with your family.
Your connections with family members are different than friends or co-workers. They probably forgive you for things that friends might not. But they might also expect more in return. And, as we all know, family is forever.
So it’s important to make firm decisions about how open to be regarding your own financial independence. Given a situation, everyone has their own opinion and course of action that works for them: there’s no one-size-fits-all answer. For example, I’m not going to be completely honest with my employer regarding my reasons for leaving, preferring to withhold the RE details, but Brave New Life revealed all on his way out. Even though our decisions are different, we’re each making the choice that works best for us given our respective personalities and circumstances.
- Revealing major life goals with other people has the potential to significantly change your relationship with them — maybe for better, maybe for worse.
- If you tell a friend and things get incredibly awkward, there’s always the last-resort-option of terminating the friendship. But if you tell a family member and something similar happens, you’re in a pickle. Your brother is going to remain your brother for your entire life, and chances are good you’ll want a working relationship in one form or another.
- In many families, there are no secrets. Asking one person to keep some information on the down low is, in many cases, setting them up for failure. Telling your chatty mom you’re retiring is probably the same as telling everyone, no matter how much she assures you otherwise.
- Some families are full of well-off professionals — doctors, lawyers, engineers — while others might trend the other way, consisting of people with a history of debt, employment problems, or worse. The makeup of your family matters a great deal here.
- If you are at the point of actually retiring early (i.e. quitting your formal 9-5 job), will your parents be worried about you? Are they the type to ask you how you are possibly going to fill those hours, and get concerned about your ability to make ends meet, and are you comfortable having these conversations with them?
- Many finance sites recommend never sharing how much you make with anyone. While I think there are some exceptions (e.g. a very close friend) it’s a good guideline to follow.
- It’s generally considered to be rude to talk about net worth and finances. Is your family an exception?
- If you have family members who are not well-off financially it is likely that they will be hurt that you’re not “helping them out.” Why wouldn’t you want to pick up poor old grandma’s cable bill, seeing as how you’re all set in life? What kind of horrible monster wouldn’t help out gram-grams?
- Even if they don’t actively ask for funds, expectations may change. For example, when you eat a meal at a restaurant, they may wait for you to pick up the whole tab instead of immediately doing the math to split it. And they may be disappointed when you don’t.
- Many people equate retirement with being rich. Do you want people in your family to think you’re loaded? You’re now living off of a modest amount of passively generated income, with set budgets and restrictions. Will they understand this?
- Do you want to be viewed as your family’s personal bank? People may come to you for loans and other monetary emergencies if they know you’re doing very well. Be prepared to deal with this.
- Your relationship with family will be more honest and open. You won’t feel as though you’re keeping anything from them.
- Some people may ask for techniques and tips to improve their own lives financially, giving you the opportunity to help them help themselves. This is, incidentally, the number one reason that most people want to divulge their financial health. It isn’t to brag or bloat your ego — it’s to say “Look, I did this, and you can do it too.” The sharing comes out of a desire to improve the lives of others — in this case, of people that you care very deeply about.
- Revealing details about your stash or plans for RE could stop parents from worrying about you financially.
- I’ll say it: Maybe you just want to gloat. If that’s your drive, own it and enjoy the ride.
Telling Them Anyway
By this time you have a good handle on whether you should be telling your family. I personally think that for most people, it’s better to err on the side of caution and keep things to yourself. This is a slippery cat to get back in the bag once it’s been let out.
But still, you might tell them anyways, because hey, they’re your fracking family and you’re just not comfortable keeping the FI part of you a secret forever.
In this case, consider having a more detailed conversation with them to set expectations. Explain up front that just because you’re retiring super early doesn’t mean you have money to spare. Go over your financial model — particularly the fact that the entire structure is built on a plan of predictable, low spending and you got to the place you are in by virtue of an extremely high savings rate. Tell Dad that you’re going to be plenty busy without work, that you’ll still be exercising and volunteering and flexing your skills in other ways. Assure your sister that if she’s literally on death’s door that yes, you, M. Moneybags, will open your wallet and save her.
Personal Story Time
My family is, as a rule, poor, and they make bad financial decisions. Stating this fact makes it sound as though I don’t love them, which couldn’t be further from the truth. But love and money don’t mix.
Early in my career, I made the mistake of revealing my income — about 70K in 2000. Let’s call that Mistake #1.
My sister asked me for money to fund a trip to Europe. I gave her two thousand dollars. Mistake #2.
My out of work brother asked me for money to cover rent just until he could get his feet back under him. I started floating him $400 a month. Mistake #3.
My mother started to need extra money for home repairs. A broken furnace. Sagging gutters. Never mind the fact that she was eating out a lot and buying antiques at consignment shops. I supported her home repairs and even found myself saying yes to requests for personal entertainment, tickets to performers, trips to New York to see her sister. Mistakes 4, 5, and 6.
The first month or two of granting these favors, my family was extremely grateful. It made me feel terrific to be helping out in this way. But it turns quickly. Something that’s special the first month becomes just okay the second month and by the third, those generous acts are now taken for granted. Your family becomes hedonically adapted to the change.
Six months into all of this, I realized I couldn’t do it anymore. I grew bitter about the new obligations. When I cut it all off, I was met with first bewilderment (don’t you love me?) then anger (what do you need that money for anyway? I supported you for 18 years and you can’t give a little back now?) with some denial thrown in for good measure. (What about a loan? I’ll pay you back in a few months!)
It was a mess, but I held my ground. It took years of standing tall and continually repeating myself in order to get my family’s expectations back in line. Five years later I got the last request for money from a family member, a plea from my sister to give her three thousand dollars for reiki massage training. I denied it the way I had denied everyone for years. No now and No forever. Stop asking.
I had to do the Right Thing — denying money to my family — hundreds of times over half a decade to correct the six measly mistakes I made in just a few months. My mother clung to her idea of me as her personal vault so stubbornly that I resorted to telling her I was in bad investment debt. Debt was something she understood, and she stopped pressuring me so much.
These experiences have made one thing very clear to me: when I quit my job, I can’t say a word to them about it. They’ve left me with no choice but to conceal the truth. As far as they know I’m still working. After all, they really have no way of knowing that I’m not. This way, we’re all still a functioning happy family with a few secrets thrown in the mix.
Works for me. Might not work for you. Everyone’s family is different. Everyone’s family is not like mine.
Geeking it up
Fact: The dynamics of your relationships change when you start telling secrets.
Take Star Wars. There’s a movie with a ton of secrets.
When Luke found out that Vader was his father, he no longer wanted to fight him — a big problem for the Rebellion and the forces of Good.
When Han found out that Leia was royalty, he wanted a ton of money from her. Because, Princesses have cash and rogue pirates tend to like that sort of thing.
And when Leia found out that Luke was her brother… Well, let’s just say there would be no more making out in their future.
So examine your circumstances carefully before having these conversations. Poke around your motives for sharing.
Is it for your own good or theirs? What’s driving you to want to tell them? Try to project the outcome. Imagine a future where you tell one person in confidence but the trust is broken and then everyone knows — what will happen?
Think it through carefully, and be prepared for the consequences. There will be change coming, and not all change is good.