Because my wife I do not have children, I feel that it’s important to bring in outside voices to talk about money and kids. This is a guest post from Cathy, who writes about family finances, parenting, and cooking at Chief Family Officer.
I would never in a million years want to give up my children just because they cost too much. But recently, the cost of having children hit home as I was reading J.D.’s post about the “third stage” of personal finance, which comes after one has mastered the fundamentals of living frugally, saving, and pursuing financial goals.
I have to admit: I grew a little envious reading that J.D. was beginning this third stage. I still consider myself to be firmly entrenched in the second stage — and I’ve been in this stage for years already, and will continue to remain in it for the foreseeable future.
And I realized that it’s because I have kids. J.D. doesn’t. Now that he’s paid off his non-mortgage debt and begun saving, he can think about grander things.
If my husband and I didn’t have children — if we didn’t have to provide for them now or worry about providing for them in the future — our non-mortgage debt would be completely paid off, we’d be paying a lot extra on the mortgage, and maxing out our retirement contributions, all while still having a comfortable amount left over as spending money.
Because we have kids:
- We’ve chosen to have a larger cash cushion.
- We’ve delayed paying off our debts.
- We’ve reduced our retirement contributions.
- We have greater expenses in the form of childcare, clothing, medical needs, and life insurance premiums.
I see us balancing saving for retirement and saving for college (and/or paying for private school) for the next 20 years. If we didn’t have kids and didn’t have to perform this balancing act, I think we’d be making reservations for an Alaskan cruise right about now!
I do not regret having children. You could never put a price on the intangible privilege of bringing new life into this world, the joy they bring into my life, or the way they make me a better person. I wouldn’t change a single thing about my life.
My point is simply that this is the kind of financial ramification I didn’t think about before my children were born. Sure, I knew kids were expensive. But if I’d realized how much harder reaching the third stage of personal finance would be after having kids, I think I would have been even more diligent about paying off our loans and building up savings first.
In fairness to myself, I don’t think that I could have fully realized or appreciated the financial impact of having one child — let alone two. At the moment, each child costs us about $800 per month. That’s the total amount for childcare, health insurance, and the additional life insurance policies that we took out when they were born. That’s $1600 that we spend each month before adding in the cost of food, clothing, toys, entertainment, etc.
When you add the additional “savings” cost for future education, it’s easy to see why I don’t feel we’re even remotely close to the third stage of personal finance — notwithstanding how well we’re doing and have done with the fundamentals. But I’m confident we’ll get there — eventually.
For a related discussion, check out the Get Rich Slowly forums: Staying debt free with a baby: Is it possible? Previously at GRS, Cathy explained how to save hundreds by playing the drugstore game. Don’t forget to check out her blog, Chief Family Officer.
You could say that having kids really hinders one’s ability to to amass wealth, but others might say having kids redefines what it is to be wealthy.
Thanks for running an alternative view JD, and great writing Cathy.
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Sorry to say but this post makes no sense – you lament about the amount you have to spend on your children while constantly pointing out that you don’t regret having children. And I know certain comenters will come along and start comparing having kids to having pets and this whole discussion will deteriorate from there.
My bottom line = kids are an enormous gift (just ask the couples that can’t have children how much money they would give to have children) – they should be loved and one should not be remotely remorseful about the money spent on them. If this is how one feels, then one should not have kids. Just my $.02.
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Great post. I too have noticed that many of the most acclaimed PF bloggers out there who post their financial specs monthly are childless. It is great for them to have a comfortable lifestyle, and many people decide not to have kids for a variety of good reasons. However, it is rather frustrating for those who have or plan to have children, because the laudable financial plans of these PF bloggers are not at all realistic for those with kids. To top it off, parents are often represented as irresponsible/spoiled/the relative charity cases in the families of these bloggers while the kidless are depicted as the hard-working martyrs. (I haven’t seen this on J.D.’s blog but on several others). I think this is very wrong.
I also wonder if this is an effect of the overly independent-mindedness of western culture, especially in the U.S. In most other group-oriented cultures money is spread around inside families to help give each other a leg up when they need it. Families with kids are helped accordingly, and they aren’t seen as being selfish/bad people/failures because they can’t do it all on their own. Something to consider.
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If I told others one of the drivers to never have children was financial concerns, I’d probably be labeled Ebenezer Scrooge. Seriously though, with the rising cost of education (and virtually everything else) these days, why not?
My parents had one child (just me!) because they didn’t want to bite off more than they could chew at the time as they both worked and couldn’t afford to drop to one salary. I knew this for the most part growing up and that never gave me a complex or made them seem cruel…just very realistic and practical.
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Even within the “I have kids” group of people, costs vary widely. I have 3 kids under 6 years old and was blown away by how much the author was spending on her two kids. Having kids doesn’t automatically mean a life of financial poverty (but it does automatically mean a life rich with love!)
And one question. Whats the reason for having life insurance on children?
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@Jimbo,
I thought the post made perfect sense. Kids cost a lot of money, and that should be considered as you plan a family.
The second part of her discussion contends that even though the price of having children is high it is well worth it.
Maybe the intent was to allow people who are thinking about starting a family, to consider where they are financially before they begin a family.
I think you should get a pet yourself, grumble at it in the morning and leave it off the blog if that’s the only reason you drop in.
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For me, it comes down to what money and wealth is for. We all tend to focus on how to build the biggest pile of money, but what good is it if you have no joy in your life?
My measure of success in my life is not how much money is in my bank account, how big my house is (or how soon it is paid off), or what kind of car I drive. My family is WHY I work and WHY I’m financially responsible. Would it be easier to save and pay off debt without a family? Of course, but what is the point?
It’s cheaper to go without a boyfriend/girlfriend or a spouse, but who wants to go through life alone?
I feel strongly about holding off on purchases until it’s financially responsible, but kids are my sole exception to this policy. There are a few clear instances when kids would break the bank, but it kills me when people keep waiting for “the time to be right” to have kids. There is no better motivation for savings! Kids are a blessing in every sense of the word. Given the choice, I would live in a cardboard box with a million in credit card debt before I would give up one day with my kids.
I look forward to getting rich slowly, but I’m more than willing to accept my course being a little *slower* than those without kids. Wealth is measured in happiness, not dollars and cents.
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Thanks for the insight. I have to say, being a parent myself, that there ARE things you don’t think about before you have kids that you have to pay for. I don’t agree with the attitude of your post however. Everyone is happy to have kids, at least any good parent is. But to say they’re the reason you can’t make headway with your financial goals is where I find issue. I don’t completely agree with “Rich Dad, Poor Dad”, I think some of it is a bit “iffy”. I do, however, think it has some solid financial tips. To paraphrase one of my favorite scenarios, poor dad would say “the reason I’m poor is because I have you kids”(sounds a lot like your post) and the rich dad would say “the reason I must be rich is because I have you kids”. Whether or not that’s a true scenario, the lesson is the same – its a matter of perspective.
I agree with Chett though, I do think you’re giving a “be prepared” caution to all who aren’t parents, to get their finances in order before hand.
Great post, even if I disagree with some of it. Thanks
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I don’t really get the point of this post.
Is the author suggesting paying off debt before having children? Is she just complaining that they are expensive? It sounds like she is simultaneously upset with the impact of children on her finances and talking about how great it is to have kids.
Overall, I think this is a topic that I would like to see discussed but perhaps with a clearer thesis and more depth. I didn’t get anything out of reading this article. My first child is due in May and I would love to hear more about what to expect financially.
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@Weakonomist – Thanks! (And thanks to J.D. for the great editing.)
@Jimbo – I’m not lamenting having kids, but rather my lack of preparation for the impact they have had on my finances. I wouldn’t have delayed having them (I had two miscarriages, I would never recommend anyone delay having kids just for financial reasons!), BUT I wish I would have focused even more on living frugally and saving as much money as possible.
Of course my children are a priceless gift. But the point of this post is that having kids has a huge impact on finances – to say otherwise is simply wishful thinking.
@Marcy – Thanks! You make an interesting point, especially as I don’t expect (or foresee) any outside financial help. I do think it’s important to be financially independent whether or not you have children, though.
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@Aaron – That’s not life insurance on the kids, that’s life insurance on my husband and myself that we have to take care of the kids in the event something happens to one of us. And yes, it’s a lot. Visit my blog and learn something about me before you judge me though
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Wow, Cathy, I’m sorry, but you need to take a step back and take a look at your life. What are you going to remember when you are in the final days of your life? Are you going to remember that Alaskan cruise you took? Or are you going to appreciate the children and grandchildren that are taking care of you in your final moments?
My wife is a nurse and almost every week someone passes on. The ones with the most children are the most peaceful. The ones without or with children who don’t care about them, are always the most regretful.
There is so much more to life that amassing piles of money to be “safe”.
I have a passion for financial planning, but I will not let that get in the way of what life is truly about.
We need a post about the “High Cost of Not Having Children”. I think it would open your eyes Cathy.
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The flip side is that when you’re elderly, if you have kids, you’re more likely to have someone you can trust to manage your financial affairs should you become unable to, and check up on you and do minor household maintenance so you can stay in your home rather than moving to a pricey retirement community. Doesn’t always work out, obviously–sometimes they wind up hating you, or move to Peru–but I’d say it’s still the norm.
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I remember when I was pregnant 16 years ago with our first…it really jumpstarted my concerns with getting our house in order financially. Thankfully, I had read The Tightwad Gazette before we bought our house, and that was a gem when it came to raising kids on a budget. I followed many of her tips and was able to be a SAHM because of choices that we made (small but comfy house, cook from scratch, etc…)
The COL did take a hit when she was born, but it didn’t hurt quite so bad, as I anticipated buying thrift clothes and furniture for her. I saved many of her things, and when we had our second daughter, I didn’t need to spend as much for her (that was a savings!). They were 5 years apart.
Maybe that’s the ticket…have them years apart and then by getting used to the outflow, by the time #2 comes along, you barely notice an increase!
Kind of like just one car payment at a time…
My oldest is 15 1/2 and the checks you write when they are little are nothing to the checks you start writing when they are this age! Save while they are little and don’t care about stuff yet!
She’s come home from school with the “opportunity” through school to go here and there with various clubs and organizations…these run from $ 129 to $999 for a trip of just a couple days…plus driver’s ed ($329), plus summer camp, plus, plus, plus…start saving while they are young!
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It can be tough for families to pay off debt before they have kids, especially if they have a lot. For older couples, you are racing against the biological clock when it comes to having kids. Sure you can have them when you are older, but there is a greater risk of complications and other issues.
My wife and I have some debt, but we decided to go ahead and have a child. After two years of raising my son, I am so glad we did! Nothing beats the fulfillment of raising a child.
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Having kids is as expensive as you want it to be. If you want to work to pay for their daycare then thats an extra expense. The extra health insurance is as big an expense as the plan you choose. I believe that kids are wonderful and have no extra impact on our savings plans. The money I spend on them was spent on junk (clothes and stuff) before I had them. If anything kids are making me more financially responsible.
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@Aaron — The life insurance she is talking about is likely for her and her husband. My wife and I have recently upped our amounts to be able to cover paying off the house, in addition to paying for two college educations. When it was only the two of us, the insurance amount was considerably lower, since we didn’t have the college education, mortgage, etc.
Overall, though, I thought this was a pretty lightweight piece. Trent over at The Simple Dollar did a much more detailed analysis (although it, too, had flaws) about the financial implications of having children.
I will concur that I find advice from someone who is dealing with children and personal finance to be more interesting to me. Children add a lot to one’s life, both joys and challenges. If my wife and I had wisened up about personal finance a while ago, we would be in a different spot now — but we didn’t, and the kids are definitely a constraint in eliminating debt that you can’t sell off, give away or otherwise eliminate.
My advice to perspective parents would be to try and pay down as much debt as possible. Ideally you will know if you want kids when you get married, and also you should likely have a plan for what’s going to happen when the kids come. If you want to have Mom stay home, then start living like it — and use her income for paying off debt, racking up savings, etc. If you are doing daycare, find out what that costs and either use it to pay down debt or put it in savings. The worst thing to do is to start living on two incomes and get used to it, amassing debt, car loans, etc. Then when the baby comes, you already know you can handle it.
All that said, there really is truly no good time to have a kid. There are always things you want to do “one last time”, or you want to complete a degree, pay down debt, buy a car — but you are working against biology, and biology can be unreliable, so you likely need to work backwards from when you want to have the LAST kid and figure out when you need to have the first one. This may not align well with reality, but at least it’s a starting point. I guess kids are a decent reminder that you can’t have it all
And before the “I don’t like the breeders” people show up (they often do), I will say that having children was a very conscious choice on my behalf, and I do not try and impose the belief that everyone should have kids, or bring my kids out to fancy restaruants, etc. It wasn’t a *rational* choice by any means. But if we did everything rationally, the human race would have died out long ago.
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I like what weakonomist says to sum up Cathy’s post:
You could say that having kids really hinders one’s ability to to amass wealth, but others might say having kids redefines what it is to be wealthy.
I would also say that when thinking about having kids, it’s helpful to envision it as a lifestyle change, rather than as an ongoing monthly cost, or like having an extra large appliance in the house. It impacts much more than just your finances, but finances are one of the indicators that it’s creating a huge adjustment in your life.
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I don’t know. I found this piece refreshing.
It seems to me that whenever I read articles about children, they’re usually pretty black-and-white. Trent’s articles seem to conclude that kids don’t cost much at all (which goes against the studies I see everywhere else). Others conclude that kids are definitely worth it and no amount of money could make them not worth it. (To be fair, that’s basically what Cathy is saying, too.) From the other side, you sometimes see articles saying that kids cannot be worth it because of the financial and environmental costs.
I don’t think Cathy’s article pretends to be anything besides a meditation on the subject. It’s not trying to be deep or heavy. But I think that its biggest strength is that she’s honest. She’s wrestling with this question, and admitting that it’s not as clear-cut as people try to make it out to be. Obviously, she loves her children and would not change things at all, but she admits that having them requires a compromise on her part. She’s sacrificed one future for another.
What can I say? I like it!
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Wow, a this was a great perspective on the issue. Our first daughter is turning a year-old soon and shes a blast. My wife and I have decided to completely eliminate our consumer debt, before having our second which should only take a year or two. Hopefully, working towards financial independence will allow us to comfortably have many, many more.
How people view the relationship between finances and money is always fascinating to me.
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I agree with sandy, kids get more expensive as they age. I did the same things, was very frugal when they were young and thought I was pretty smart. But life happens, and with kids a lot happens that you cannot control. My two are in their 20′s now and out on their own, and we are trying to pay down debts from helping one through college as well as paying off an equity loan for years of medical expenses for the other. And in this economy sometimes they still need our help! If they ask to borrow money now, it’s not to buy a comic book, it’s to make rent or some other major bill. As everyone else has said, I love them to death and wouldn’t trade them for the world–but there’s no getting around the fact that becoming a parent is a serious lifestyle choice, not just a temporary expense. I definitely didn’t anticipate the full impact in the beginning!
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I enjoyed the article and the fact that it wasn’t “black and white”. All costs can’t be calucated with numbers.
Question for Cathy — The standard financial advice seems to be to save for your retirement before you save for college. I noticed you are balancing both. Financially is this a wise decision? Is there an emotional element that financial planners aren’t calculating?
I am single with no kids, so I don’t know what I would do if I were in your position.
Kita
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I liked this post as well. I read it as just a reaction to J.D.’s post about the third stage and not meant to be a deep analysis of the impact of children on finances.
I also found it helpful to keep in mind the impact that additional costs due to changes in lifestyle can have on debt elimination. I was recently told my my doctor “You’re eggs are getting old – if you want kids you should have them soon.” Not only was it somewhat rude of her, but she didn’t take the time to find out our life situation first. While I understand that it will always feel like there’s not enough money to have a child, I also don’t think that it would be right to bring a child into a home already saddled with a lot of debt. How could I start to save for their college education when I’m still paying for my own?
All to say – I found the post interesting and Cathy refreshingly honest.
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Interesting post. Here’s my situation, yours may differ…
My wife and I have 3 kids (age 5 and under). We started having kids when we had some debt plus the mortgage. We dropped to one income with the arrival of the first baby, and continue to this day on one income. It’s a professional grade salary, but certainly “south” of $100K. Today, we are debt free except the mortgage, have a 6 month emergency fund, making accelerated payments on the mortgage, and saving 15% in our 401K. And there is some money left over to save for the kids college, replacement vehicles, etc. After that, there is not much extra, so we’re not going on cruises or such. I suspect the “cost of kids” will rise as they get older (extracurricular activities and “stuff”). But all in all, I feel we are doing quite well. But that’s just us.
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@Kita – That’s definitely the standard financial advice, and yes, I’d say that there’s an emotional component to it as well. However, I do prioritize retirement over college savings – it’s just that once the “minimum” retirement savings have been achieved, then it becomes a balancing act for me. It doesn’t feel right to me to throw ALL of our savings into retirement and save nothing for college.
@Kate – Like Jason (#17) said, there is no good time to have a kid. And as a woman who had two miscarriages and took them very badly, I’ll say that if you want kids and then experience infertility, it can be emotionally devastating. So if you’re financially responsible, even if it’s not the *ideal* time to have kids, you may not want to put it off. The emotional impact of infertility is incalculable. I’m not trying to be hypocritical – like J.D. said, there is no clear cut answer to any of this!
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I think some of the other commenters read too much into her post. Her point was that it can be hard to look at where someone like J.D. is at in his finances and compare them to her own. She knows she’ll get there more slowly than he; she’s okay with it because she gets so much from being a parent.
As a 27-(okay, okay, 20 days from being a 28-year old woman), I think it’s a good reminder of yet another benefit to my husband and I working so hard to pay our non-mortgage debt last year. And the possiblility of children is another reason for us to have a healthy savings.
Of course no one should wait to have kids until everything is perfect, because that day will never come. But I’m not ready for children just yet. I feel like we are in a great position to do all of the right things for the next couple of years to prepare ourselves financially, and maybe give ourselves the option for me to be a SAHM or maybe freelance from home.
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My wealth is my family.
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My wife and I plan on having children, but wrestle with two questions (1) when? and (2) how many?
We have plenty of time, but she wants to have children sooner rather than later. She’s a doctor (as of May, 2009) and she would really like to have any and all the children she’ll have before she turns 35 – because of the well documented health risks. On the other hand, she’d like to finish residency and perhaps a fellowship before having kids. That will give us a small window for having kids – especially multiple kids. It’s something that we currently discuss almost daily.
Cathy – I enjoyed the post. It’s just your thoughts, and that’s probably blogging at its purest. Don’t let the naysayers bring you down. You’ll never please everyone in an audience as big as GRS’s.
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JD, I read your blog because you don’t have children. It’s certainly interesting to see someone else’s take on them, but we’re not planning on having any so it’s hard to care a lot.
I agree that it doesn’t seem reasonable to wait to have kids for personal finance reasons, but I strongly encouraging anyone thinking about having kids to really consider adoption, and to read over some of the critical reasoning at vhemt.org detailing why it’s not so great an idea socially to keep pumping out kids, especially when there are so many that need better care than they can ever hope to receive at present.
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I am 41, am married, have 3 kids and am well in JD’s “third stage.” I don’t think having kids, or having a spouse, or going to a private college, or having a sick parent should be the blame of what stage a person is in. If people start their financial planning early, taking into consideration their lifestyle and goals, they should be able to meet them. I mean unless suddenly someone has sextuplets that they weren’t planning or a spouse suddenly gets very ill, most of the decisions we make are not made hastily and should be part of the financial plan. I knew I was going to have children and wanted to stay home with them. My husband and I saved for that to be a reality. We’ve never been in debt and have saved a good deal for retirement. The fact that we have kids doesn’t change that.
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Sure, I get that kids are expensive but as a former teacher, I’ve seen the incredible disconnect between what parents think their children need and what they actually do need.
Kids don’t need the fancy clothes, the latest gadgets, music, fancy vacations, etc. If you can afford them, that’s great.
What children don’t need is parents working ridiculous hours to afford this “stuff”. They need their parents to spend time with them, to care about their progress in school, to discipline them, to teach them good moral values, and to teach them life skills — like balancing a check book, budgeting, cleaning the house and cooking decent meals.
If your kids have to do without the “stuff” they want that’s even better because they are learning about money management and learning to set priorities and wait for what they want.
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1. There is no better thing to spend your money on than your kids. They are the ultimate luxury good.
2. Kids like anything in life worth anything are hard work. If you don’t work hard, or if you work dumb, they become brats and a scourge on your existance.
3. When you are old and in a nursing home, your money won’t come to visit you and it won’t look out for your best interest.
4. Your money won’t give you grandkids, truly the ultimate luxury good.
5. Kids increase a Father’s ambition, and thus his earning power, especially in his younger years.
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I was glad to see this post. We have two kids (3 and 5), and I would not give them up for anything. That said, staying home with them for 3 years put a big dent in finances. Now that I am back at work and paying for childcare — it’s very expensive and you can’t write all of your childcare off — it depends on income. The cost of childcare also depends location. Those who are lucky enough to have family that can help out with childcare have a great gift… make the most of it. We simply don’t have that option.
Now I’m trying to figure out how to eliminate debt and save more for retirement, I’m stressed and scared and not sure where to start. I like this blog but the fact that JD doesn’t have kids makes a difference. I’m glad to see the costs of having children acknowledged.
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All I can say is that there are plenty more views on parenting and finances than this one.
I am much richer as a result of having kids.
If your only gauge of riches is a money stick then your definition of rich will be limited.
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When we first had our child, I couldn’t understand all the hoopla about how much they cost. So we buy some extra clothes and food — big whoop — but now I see the situation much clearer. Having children means someone needs to take care of them. That is usually the first five years if they will be going to public school. So either you are paying for someone else to care for them or you are doing it yourself.
I know some parents can give up one job, make some adjustments, and their lifestyle doesn’t change much. However, that wasn’t true for us. Going down to one income meant we had to dig into our savings until we could cut expenses (it’s hard to go cold turkey).
Talk about expensive and now we’ve decided to homeschool. Homeschooling meant that our earning potential would be greatly reduced in the short term.
But to spend more time with our child every day is definitely worth it.
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Wow! Your kids are a bargain. We pay over $2500/month – and that’s just day care/pre-school for three! Maybe it is just the part of the country we live in. Add in food, clothing, college savings, sports, health insurance and doctor co-pays and I would estimate our 3 kids cost us about $4500/month.
I can’t agree more with the sentiment of this post. If only I had managed my money better BEFORE I had kids, it would have prepared me much better for these expensive times.
But, as others have stated, it is totally worth the cost to me. The joy of their life is priceless.
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I liked Cathy’s post and to me her point was that it can take longer to get thru that third stage when you have others who rely on your finances.
I’ve been feeling frustrated that our financial goals seem to be moving slowly, but when I stop and realize why it’s usually something to do with my kids or my aging parents or a friend in need….we were going great in February and then hit an illness with my daughter, a death in a friend’s family, and some issues with my parents….all things out of our control (and yes, most of the expenses come out of our emergency fund, but then we have to take time to rebuild the fund).
Life happens for everyone, but the more people in your family/friends the more chances of “life” and emergencies happening.
Thanks Cathy for your point of view!
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Great to see a different perspective.
I too find the prospect of paying for college has significantly slowed down my progress towards FI. OTOH, there will be two competent, well-educated women to find me a good nursing home when that day comes.
One analysis I’d love to see here (or elsewhere) is a lifetime comparison of the costs of being a SAH parent versus a working-outside-the-home parent. Taking ten or more years out of the workforce can have a tremendous impact on financial security later in life.
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Having a family in the United States is very expensive, but it’s also been money well spent for me. I’m happier for having children.
Health and education really does cost more that it should in the United States. I’m spending a total of $200,000 for college educating my two sons. All of society benefits from the creation of new, healthy, educated citizens. I don’t think society should have to pay all the burdens. But other countries with nationalized health care and low cost college education are paying for their fair share of creating new citizens.
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Also, just want to say regarding tmk’s comment. I don’t think I would have started managing the money if it weren’t for the kids. So, if they “cost” so much, there existence has prompted all my saving instead of wasting. So, I think I’ll make out in the end…
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Explosive topic!
All I can say is my father is 89 and dying of lung cancer. He had three children, my two sisters and I. I feel the tug of relationship despite my living three thousand miles away.
I have no children. Aside from my wife, I wonder who will feel that tug of relationship when my times gets near?
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I think Beth @30 hit it on the head. One thing I’ve noticed with people having kids is that they can be a huge sink for waste. In other words there are so many more decisions of what to buy that many people who make good decisions elsewhere make bad decisions spending on their kids and wind up holding themselves back financially.
My kids need to be safe, feel safe and loved, need a roof over their heads, need healthy food, and need warm clothes. They DON’T need huge personal spaces, the latest designers, the latest toys, or fresh organic OJ with breakfast.
A HUGE part of this is the peers you surround your children with. Currently DH and I are struggling with where to move when we leave our house. We know we will leave before our oldest reaches junior high because the schools are bad, but the best schools have the most materialistic kids that we don’t want our kids to emulate. We don’t want our kids laughed at because they dress *poor*, but we won’t spend the money to make them like their spoiled classmates.
Ultimately I think many American parents need to get over their own guilt. It’s natural to feel guilty when you can’t give your child everything he/she wants, but often that’s best for them and character building, as well as what is best for your pocket book. It’s amazing how resilient the human spirit is, and the lessons you can learn around every corner, even if we have to share a bedroom with a sibling and don’t wear designer duds or have a Wii.
Kids are expensive, but not as expensive as many of us make them.
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I’d be interested to know how much that $1,600 per month actually costs you. Since it’s tax time, the tax benefits the IRS gives for children are foremost in my mind when I read an article like this.
As an example, I’ll assume that you and your husband are in the 25% bracket (using the marginal rate to keep it simple, this is very informal). Your $1,600/mo equates to $19,200/year. Off the top of my head:
Personal deductions for each child is $3,500. This translates to $875 per child (3500*0.25), total savings $1,750.
Child tax credit of $1,000 per child translates to total savings $2,000.
With these two items we’ve identified $3,750 in tax savings. There are other items that are harder to put a number on, but can save significant money. Two that come to mind are:
Child and dependent care credit – I can’t estimate because I don’t know what portion of your expense goes here.
Medical deductions, if you itemize, for the increased health insurance. Can’t give a number because it has too many variables.
I admit I’m a geek for this kind of math. I always do my boyfriend’s and my taxes twice – once for real and once as if we were married. Most years we’d save a bundle if we were married, in a few we would have paid a little more. I’m not the marrying kind so it’s just an exercise, but I think it’s valuable info to have because it gives me another perspective on my choices and my government’s values. In your case, if you did your taxes a second time as if you had no children, you could see how much of your out-of-pocket expense actually comes from your own pockets.
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I love Cathy’s blog and have been a loyal reader for years. She strikes me as a careful spender who lives well within her means and below most of her peers.
That’s why I’m so surprised to read that her kids cost $800 a month. Wow! I don’t pay anywhere near that much for mine, and I’d say at this point, we have a similar quality of life.
I think the key difference here is that Cathy and her family choose to live in a much more expensive part of the country. Though her kids *cost* more in daily care, she also *earns* much more as a professional mom than I do.
We’re also not saving as much for their educations as we are to pay off our mortgage within the next five years (our only debt).
Point being, kids do cost–but it’s really the choices you make about how you will live as a family that determine those costs, not the children themselves.
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@ Linear Girl
I do the same thing. I do our taxes, and then again as if we WEREN’T married. I should have divorced him a while ago
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@The Geeks in #43 and #45
Kris and I do the same thing — sort of. When I did our taxes by hand, I always did them “married-joint” and “married-separate”. For the past few years, my accountant has done them for me, and it’s now a reflex for him to just work up both scenarios. (Which for him, I think, just means some toggle button in his computer program.) I like seeing how things break out. Plus, that’s how we used to divide our tax refund when we got one!
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I have alot of kids, (6 of them) they are required to help around the house and with family chores, it is part of being in a family. I find this generation is not taught to work hard and help others which I think is sad. So many families are so busy running to structured activities, rotating around schedules and what the neighbors are doing.
I never have a dull moment in my house and it seems like I always have a few “extra” kids.
I find the costs are not as high as the authors but that could be because of maybe were I live. We have disability and life insurance, (which I didn’t put a whole lot of thought in to till after I had kids) Childcare is expensive, but I have found you can price around for some things, and some things are not worth pricing around for.
I find ways to save alot of money when it comes to clothing and feeding my family, I would say that I probably feed and clothe my kids for less than what many spend on one or two of there kids. My kids do not have or get the latest and greatest toys but there sure have more toys and “stuff” than I had growing up. And I don’t believe I was deprived.
I am able to save and pay debt down and having kids around had made me more aware of my spending. I guess you could say it has forced me to be more mind full of my money.
Are kids expensive, of course they can be. I provide food, shelter, clothing and a good environment for my kids, which I feel is a necessity, everyone has different ideas of what kids “need”. My kids provide themselves with there own vehicle and vehicle insurance if they see it a necessity to drive, which teaches them that everything has a cost to it. I will help them with schooling but I refuse to pay for all of it, I had to pay for my own, many arguments can be made over this but I feel a child that has to pay for a portion of there education will value it more, it should never be an expectation.
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Seriously? $800/month per child? I’ve got two kids I we spend $200-$300/month for them combined. Kids don’t have to be expensive.
Also, you should come what you make to what you on the kids. A few years ago MSNBC did a piece on who families with two working parents actually lose money. The money gained by a mother working outside the home in nearly all cases does not offset the cost of more professional clothing, child-care, more prepared foods, increased transportation costs etc.
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I completely agree with comment #1 by the weakonomist. I have made huge sacrifices for my children but I take it in stride and feel very blessed with their presence in my life. If I had it to do all over again, I would not change a thing.
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@Colin (#12)
“Are you going to remember that Alaskan cruise you took?”
Uh, yeah, actually, that’s the plan. I hope to have a long, fulfilling life full of rich experiences and memories with my loving wife.
“Or are you going to appreciate the children and grandchildren that are taking care of you in your final moments?”
Would I rather die with happy memories of being independent and traveling the world with my wife, or would I rather die knowing I was a burden to my family right up to the very end? Is that seriously what you’re asking? This has got to be a trick question.
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