What We Can Learn from r/financialindependence Users

Robert M
Robert M
Nov 7 · 5 min read

In 2016, users of the subreddit r/financialindependence responded to a battery of questions that delve into topics ranging from career choices to political outlooks to childhood experiences. Of those surveyed, 1,377 released their answers in a publicly available dataset, which gives a unique view into the demographics of the some of the most savings-obsessed people on the web.

With this information, I want to explore 3 questions:

1) How do financial goals change with age?

2) How does upbringing affect users’ financial well-being in adulthood?

3) How does a given person compare to this group of users?

Moving goalposts

Although this survey only contains responses from users at one point in time (instead of looking at the same users over time), we can still use this data to extract to correlations in how they might change with age.

In fact, we see some clear trends in how users respond based on their trips ‘round the sun. First, we can look at how “FI numbers”, the total amount in assets a person needs in order to consider themselves financially independent, varies with age:

The trend is clear though not enormous: as people get older, they think they need a larger amount stashed away. Whether this is due to lifestyle creep, unforeseen obligations (such as children), or increasing healthcare costs as they get older, it seems that the goals might shift from the beginning of the FI journey to the end.

Digging deeper into the role that children might play in this change, we examine how attitudes and expectations change with age:

We see that as people get older, the percent who are undecided (green) declines sharply as people figure out what they want — some will decide to have children, and some will realize they don’t want them.

Planning to have children becomes more and more common as people approach the age of 24 (teal), and then steadily declines as they (seemingly) go and have them, pushing the percentage who have them up (red).

One would expect that as family plans solidify, people will adjust their projected financial needs accordingly. This may help explain why goals change over time.

Parental influence

You might guess that having affluent and financially literate parents can give people an advantage. But how much impact do these factors have?

The data show that those who have wealthier parents tend to receive more, and increasingly sophisticated, financial education than those who grew up poorer:

Poor and lower-middle class parents are rated as financially savvy a much lower percentage of the time, and therefore have less wisdom in this area pass along. Conversely, those who are wealthy or extremely wealth are the most likely to teach their kids about topics like investing and planning for retirement.

But how much impact does this additional education have?

We can inspect the average net worth of users, bucketed by the type of instruction their parents gave them:

While there are plenty of examples (each circle represents a user) of people without financially savvy parents with impressive net worth values, we can see that there are meaningful differences in the average net worth (represented by the horizontal lines).

Although it’s far from the only factor determining someone’s net worth, financial education makes a difference.

Furthermore, the data show that children from more affluent families tend to say they became financially literate a few years before their less affluent peers.

Due to the magic of compound interest, these small differences can make a large difference. Getting your act together a few years earlier, or merely avoiding pitfalls such as high-interest credit card debt, can lead to drastic differences later in life — an ounce of prevention is worth many £’s of cure.

If you have children, take the time to pass along the financial wisdom you’ve acquired.

Benchmarking: how do you compare?

If comparison is the thief of joy, it’s time to steal some happiness.

As one would expect, users in this group are more dedicated to saving and investing than the general population. They also tend to be more highly compensated and well educated, which is associated with, or perhaps enables, extreme savings.

However, despite what many of the “how I got here” posts in the sub might lead you to believe, not everyone there is a 23-year-old software engineer pulling $250K annually at a FAANG company either.

The link to the interactive dashboard here.

After entering your total income and current net worth, you can see how your you stack up against the community.

Use the filters to change the ages, education level, gender, etc. of the users you want to include.

But whether you happen to be a tycoon or struggling artist, one of the most valuable things to learn from examining the r/financialindependence users and their philosophy is the importance of thinking critically about the things you find fulfilling in life, and ensuring your resources are helping you pursue them, both now and in the future.

This, after all, is the ultimate measure of success.

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