Today I have something special for you: an interview with Emily aka babyfireby30! Emily is a teacher and has come up with a really cool twist on the Barista FIRE concept – BabyFIRE. She is building passive investment income so she can one day start a family without having to worry about going back to work full-time until/unless she wants to. In this interview, we chat about her “why” behind Baby FIRE, what Emily’s portfolio consists of, teaching kids about money and the “finfluencer” movement.
The FIRE Community on Instagram
A little while ago I created an Instagram profile (after many months of being told I need one). I had always had a certain image of influencers in my head, so I was quite sceptical when I first signed up. And while there certainly are a lot of very questionable accounts, there is also a FIRE community full of open, friendly and very helpful people on Instagram. I was really surprised by how useful and thoughtful some of the content is. There are lots of Australians sharing their personal finance stories in a way that really benefits others.
One of these accounts I really like is Emily’s. I realise that a lot of readers don’t use this platform, so I am really excited to share this interview on Baby FIRE here on the blog!
A Quick Refresher: What is Barista FI?
Baby FIRE is based on Barista FI principles. Here is a quick summary for those who don’t know this concept:
With Barista FI, you don’t save and invest until you reach your FIRE number. Instead, once your portfolio has reached a certain size, you draw an income from your investments and cover the shortfall you need for your ongoing expenses by working (part-time).
The big benefit of Barista FI is that it doesn’t take that long to get there (because the nest egg required is smaller). However, his means that you will likely have to continue working part-time indefinitely. In that sense, Barista FI is more of a perpetual semi-retirement strategy rather than a Financial Independence strategy.
Please note that Barista FI is not the same as Coast FI. I have written in detail about the differences between these two approaches here.
Let’s get into the interview!
Q1: Hi Emily, can you tell us a little about yourself?
I’m a 30-year-old teacher from Brisbane. I live with my partner, Matt, but our finances are separate at the moment. I first found the idea of FIRE when I was at uni, and stumbled upon Mr Money Mustache’s blog. That was 10 years ago, and I’ve been saving and investing since then.
Q2: What is Baby FIRE and when did you decide to pursue this goal?
Baby FIRE is essentially the same as Barista FIRE but it’s driven by the desire to spend as much time as possible with my future children while they’re young.
I’ve had my BabyFIRE plan for years, since my very early 20s, and I aimed to have $300k invested before I have kids. At a 4% withdrawal rate, this would mean my portfolio would cover $12k of expenses.
Q3) Tell us a little more about your “why” behind Baby FIRE!
I wanted to save and invest before starting a family so that there is no need to return to full-time work afterwards. I like the freedom for both parents to work part-time and both take an active parenting role.
I grew up with my mum as the parent and my dad as the traditional ‘breadwinner’ who spent much of his time working outside the house.
Everyone says how hard parenting is, and I don’t want finances to be added to that burden. So the more we can save and invest before having kids the better!
Q 4: One issue with Barista FIRE is that you theoretically need to continue working part-time indefinitely. Is this your plan or will you change your strategy later on?
Who knows what will happen with kids! Some parents say they can’t wait to return to the workplace, and others love being stay-at-home parents. I don’t know which camp we’ll fall into when the time comes. But I do like the idea of both of us working part-time so we can get the best of both worlds.
I know a lot of families do have one of the parents stay home or work part-time while their kids are young, but I think our plan is a little different because we both want to be part-time forever, and not just for a few years.
Q5: As a teacher, what is the best way to teach kids about money?
As I don’t have young children myself, so I can’t speak for younger kids. But for high schoolers, my personal favourites are compounding interest and annuity calculators. Finance doesn’t mean much to students until they get their first job but then showing them how their savings can grow is so motivating.
I remember teaching a Year 9 class compound interest for the first time and showing them the MoneySmart annuity calculator. The students were hooked. There was one boy, James, who was then totally distracted and on his phone for the rest of the lesson. I went over to him, and he was simply playing around with the calculator to see what sort of savings he’d have by the time he graduated school. I hope I changed his life with that one maths lesson!
We’re lucky that the Australian curriculum does have financial mathematics in it, but parents also need to take a role in teaching their kids about money.
Q6: What does your portfolio look like?
My portfolio is around 75% Australian and 25% international shares. Most of my investments are in ETFs, but I do have some individual shares. I really only have the individual shares because my parents were old school bluechip investors and they didn’t understand ETFs, so they kept encouraging me to invest their way. I now regret all these little parcels of shares so I hope to sell them someday soon and concentrate my portfolio on ETFs. I like ETFs because I don’t need to constantly research companies and keep on top of all the big decisions. I can just keep DCA-ing into ETFs and avoid some of the mental load of investing.
And we can’t forget about super! Inside super, I’ve got my investments split 50:50 with Australian and international shares.
Q7: Do you own your home?
I don’t own a home yet, but the plan is to buy one mid-next year. We’re hoping to buy a townhouse in a nearby suburb, for under $600k. We’ll have a hefty deposit, so we’ll have an offset account for the excess.
Q8: What do you wish you’d known five years ago that you know now about money and investing?
I think the common refrain is that people wished they’d saved more and invested earlier. I don’t really have these regrets, and I’m quite proud of the money and lifestyle decisions that I made in my early-mid-20s. My advice to others about money is to choose a lifestyle that you’re happy with, and there’s no problem being frugal and carving your own way through life!
Q9: The “finfluencer” movement on Instagram is quite controversial. What is your view on this topic?
I’m a fan of finfluencers! Money and investing are such taboo topics for some people, and some families and friend groups never talk about finances! It’s incredibly hard to know what you’re meant to know if no one you know knows it! Having money topics talked about openly on social media is necessary for some people to feel confident about getting their money under control.
I’ve had people message me on Instagram thanking me for sharing my story as they’ve never known anyone in real life who’s invested in shares, and this gave them the confidence to look into investing themselves. That’s the real positive of finfluencers.
On the other side of the coin, we do need to be aware that some people are not simply sharing their stories and are trying to influence people towards certain products (usually because they’re getting kickbacks!). And that’s bad. I unfollow people like that because they shouldn’t be given an audience.
Thank you so much for sharing your story with us, Emily!
I have to say that I really love this Baby FIRE concept for anyone who is planning to start a family in the next few years. I wish I’d had so much foresight in my early 20s!
Having a level of financial freedom before you start a family – even if it just means that you can work part-time for a few years without any pressure – is priceless. I often write about how important it is to at least get to Coast FI before having kids. Once you have a baby, life gets busy (and expensive!). So looking after your financial future beforehand makes so much sense.
While Mr. Flamingo and I did manage to get in a comfortable financial position by the time we had kids it was a bumpy road and definitely less elegant than the way Emily approaches this topic.
Emily will have so many options when she eventually has kids. And having options is what it is all about at the end of the day. What I really like about BabyFIRE (and Barista FIRE in general) is that it provides an income stream and takes a lot more pressure off one’s earned/active income compared to other strategies (like Coast FI). And while comparing Barista FI and “real” FIRE (or versions of it) is a bit like comparing apples and oranges it certainly is a great position to be in.
Emily could easily start drawing a small income from her portfolio and work part-time to cover the rest. But since she has quite a high savings rate already, so it is also entirely possible that she won’t even need to touch her investments during that time. That would mean that her portfolio could continue compounding in the background and lead her to FIRE and full retirement eventually.
I really enjoy following Emily’s progress towards her goals. If you are interested in her approach, make sure to follow her on Instagram!
What do you think about Baby FIRE? If you don’t have kids yet, how are you preparing financially?