How to Start a Family Without Breaking the Bank

This guest post is from Nickel, author of Raising4Boys.com and FiveCentNickel.

 

I recently received an e-mail from a reader asking about the “real” cost of raising kids. In short, she's heard a lot about the high cost of raising kids, and was wondering if it's really as bad as people make it out to be. More than anything, this question seemed to have been born out of angst over what it takes to be financially “ready” to start a family.

To be honest, I've never really kept tabs on exactly how much having kids has added to our expenses. My wife and I are, however, in the relatively unique position of having four kids (all boys). Thus, I thought I'd share some insights gleaned from our experiences with starting a family on a shoestring.

First, a bit of background so you'll have an idea of where I'm coming from…

We had Son #1 (currently nine years old) when I was in graduate school and my wife was working full time. We never really considered daycare to be an option so, when he was born, my wife scaled back to half-time and we made do on her half-time salary (plus benefits) and my stipend. That meant roughly $27k in gross income and splitting shifts such that one of us was available to care for our son at all times. My wife worked early mornings while I was at home, and then shortly before lunch we swapped out so I could do my thing while she was at home. I came home late in the evening, and the next day we would start all over again.

After graduate school, we moved, I took a new job, and we added Sons #2 and #3 (currently seven and five years old). During that time, my salary was in the $25k-$35k Alex and Michaelrange and my wife started staying home full time, which she still does to this day. While we weren't making much more than our previous combined income, we felt like we were living large because we could afford to have her stay home full time.

After about three years, I was offered a job that represented a big professional step forward and which also roughly doubled my income. We moved, bought a house, and not too long thereafter we added Son #4 (currently two years old). Finally, a bit over a year ago, we moved yet again. Once again, this was a totally voluntary move that resulted in a new (and better) job along with a nearly 50% raise.

As you can see, we've faced fewer and fewer financial constraints over the years. In fact, we now have our feet squarely beneath us, and are in a position to face pretty much whatever comes our way. Nonetheless, things were very tight when we first decided to start a family. So… How did we make this all work, especially back in the early days?

We kept our living expenses really low. Perhaps the biggest thing we did in this vein was to live in university-owned family housing when we were just starting our family. It was no great shakes, but… Where some some people saw tiny apartments with cinderblock walls, we saw home. It was an incredibly convenient location on the edge of campus that allowed us to walk and/or bus to a lot of places, and since we didn't have much space, we didn't have to pay much to heat or cool it, and we also couldn't buy a lot of extraneous stuff.

We avoided childcare. As I noted above, we never really considered childcare to be an option. This wasn't really a financial decision, but it had a nice financial side effect… Since neither one of us was making very much money, putting our son in childcare would've been a major financial hit. While I realize that childcare is unavoidable in many cases, we were fortunate enough to be able to work around it. Sure, our non-overlapping work hours meant that my wife and I had to sacrifice in terms of time together, but we made it work.

We didn't break our budget buying baby stuff. Rather, we combed the flea market and local garage sales for barely worn bargains. And no, we weren't scraping the bottom of the barrel — this was nice stuff. Nicer, in fact, than we would've been able to buy if we had bought everything new. And since babies rarely wear things out, our flea-market finds later became hand-me-downs. In many cases, we threw down pocket change in return for nearly-new, high quality, name brand outfits that survived all four of our boys. We even found a barely used crib in the classified ads that served us well through all four kids, and which we were ultimately able to sell for nearly as much as we paid for it.

We minimized our medical expenses. When Son #1 was born, our health insurance provided a stipend for well-child care. The good news is that there was no deducibtle and no co-payments. The bad news was that it was a fairly limited amount of money, and once it was spent you were on your own for the rest of the year. There was more than enough to cover the regular well-baby appointments, but vaccinations were an entirely different ballgame. Had we opted to have our son vaccinated by the pediatrician, we would've blown through our well-child funds in no time. Instead, we got the orders from the pediatrician and then headed for the county health department. The beauty of the health department was that they offered a veritable buffet of vaccines for one low price. For $20 you could get all the shots you needed in a single visit.

We made smart choices when it came to routine baby expenses. For example, my wife breast fed all of our kids for at least a year. Not only does this save you a good bit of money on formula, but there are numerous health benefits, as well. And on those rare occasions where we needed to buy formula, we went with Parent's Choice (the Wal-Mart brand, which is every bit as good as Similac and Enfamil). Similarly, we tried various brands and quickly came to realize that Sam's Club diapers worked every bit as well as name brand diapers. Sure, there were stages that each of our kids went through where a generic diaper couldn't “contain” them. But for the most part, the Sam's version worked great and saved us a ton of money. Of course, we probably could've saved even more by using cloth diapers, but we didn't have convenient laundry facilities, nor did we have the inclination to take it that far.

We steered clear of debt. Debt's a funny thing in that it's both a byproduct of and a contributor to living beyond your means. Since we lived a relatively frugal lifestyle early on (and continue to do so to a point), we were able to stay out of debt, and thus never faced the attendant finance charges, late fees, etc. In fact, aside from our mortgage, we've never carried any debt. How? Simple… If we couldn't afford to pay for something, we didn't buy it. Beyond the financial savings, this also saved us an awful lot of stress.

The bottom line here is that it is possible to start a family without breaking the bank. In fact, if you were to wait until you're financially “ready” to have kids, complete with all the trappings that new parents often view as absolute necessities, you'd probably never start a family.

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The Tim
The Tim

But for the most part, the Sam’s version worked great and saved us a ton of money. Of course, we probably could’ve saved even more by using cloth diapers, but we didn’t have convenient laundry facilities, nor did we have the inclination to take it that far. My wife and I don’t have kids yet, but we’ve talked about doing the cloth diaper thing. When we mention the idea to people, they assume it’s environmentally motivated (we live in Seattle, where it will soon be illegal not to recycle table scraps). Really it’s just because I’m a cheapskate :^) Yeah,… Read more »

JerichoHill
JerichoHill

I loved this article. I’m getting Married in a few weeks and while we don’t plan on having kids for several years, I am going to bookmark this and I’ll be calling you when it does happen

Lynnae
Lynnae

We cloth diapered our son for a while. It really wasn’t much more difficult than disposables, and it did save a lot of money.

You have some great information here. We used did a lot of the same things when our children were born. You don’t need a lot of shiny new things to have kids. Kids aren’t going to remember all the “stuff” parents buy for them. They’re going to remember the way they were loved.

JerichoHill
JerichoHill

Tim,

Some of my old friends think I’ve gone green because I suddenly grew to care for the environment. I didn’t. I still only really care about the green in my wallet, but darn if that green and the earth’s green don’t go well together.

fivecentnickel.com
fivecentnickel.com

Hi all… Glad you’re enjoying the article.

Austin
Austin

Personally, I believe that your priorities will change to accomodate any financial changes involved in having kids. It will have more of an impact on your time than on your money. If you are unwilling to give up your time or money in order to raise children, then you may need to re-evaluate your priorities and/or situation. The big thing is to not let kids be your excuse to bury yourself in debt. I know you’ll always provide everything they need. Lynnae is right, the love you give them will make more of an impact in their lives than any… Read more »

Amanda
Amanda

I’m interested in both protecting the environment *and* saving money. I stopped buying disposible feminine “hygiene products” & went to non-disposibles instead because I was tired of throwing money away. Similarly, I see no reason to throw money away on disposible diapers & baby formula, if you don’t have to.

jaygo
jaygo

We avoided childcare. As I noted above, we never really considered childcare to be an option. This wasn’t really a financial decision, but it had a nice financial side effect… Since neither one of us was making very much money, putting our son in childcare would’ve been a major financial hit. While I realize that childcare is unavoidable in many cases, we were fortunate enough to be able to work around it. Sure, our non-overlapping work hours meant that my wife and I had to sacrifice in terms of time together, but we made it work. While this may have… Read more »

plonkee
plonkee

Does avoiding childcare really save money?

Unless the lower paid of the couple don’t make enough money to cover the costs of childcare and working, it wouldn’t actually save any money to not have childcare. Or am I missing something?

Steve
Steve

Someone offered a folksy adage on this issue in the blog iMomus. When he was concerned about the expense of a child, they said: “just toss an extra potato in the pot.”

Jen
Jen

These are all really good tips, but I felt that you kind of glossed over the childcare part. You and your wife are extremely fortunate (moreso than I think you realize) to have been able to avoid that issue entirely. Where I live your basic, professional but not fancy childcare facility will run you an average of $1000 / month for an infant, and that number decreases only a tiny bit as the child ages. That’s $12,000 *per year* — $60,000 overall until the child reaches school-age — that a person in this area has to come up with, assuming… Read more »

MITBeta
MITBeta

Our 6 month old daughter has cost us very little extra money. She has been exclusively breast fed up until recently when we started feeding her solid foods — banana, avocado, oatmeal, peas, etc. All are pureed or chop very finely. We are not interested in buying formula or commercial baby foods. We have also cloth diapered her and this has turned out to be very easy. We have a high efficiency washer and dryer and use the sun to dry and bleach the diapers whenever possible. These two items alone have already saved us over $1000 by my estimates.… Read more »

Jesse Harris
Jesse Harris

Amen to not getting childcare. Most studies show that the cost of childcare is often not worth it. It usually ends up that the parent working to pay for childcare doesn’t actually increase the income of the household, spending all of the money on the childcare and getting to and from the new job. Given that you’re barely breaking even, it seems worth it to just stay home with the kids.

MoneyChangesThings
MoneyChangesThings

These is a great perspective, but of course the biggest expense of kids is college, and with all due respect, you’re not there yet. Also you are blessed with healthy, high-functioning kids, something about which there is no guarantee. This is a scary country in which to have kids with special needs.
Also, you didn’t mention where they go to school. Many people resort to private school when they see what the public schools are like where they live, even ones which are highly rated. For four kids, that would really break the bank.

Nick in Iraq
Nick in Iraq

Great article. I see families with no income raising kids just fine. Where I grew up, some families had literally zero income, and still managed to raise their kids.

I have an NCO (sergeant) that works for me with 6 kids, and makes maybe 35-37k/year. They do fine on his income, and still are able to save for retirement while she stays home. It can be done.

Nathan
Nathan

This was a good perspective on the issue. I have no intention to test it out anytime soon, but it is reassuring instead of hearing “KIDS COST 7 BAJILLION DOLLARS” that gets thrown around. I have an NCO (sergeant) that works for me with 6 kids, and makes maybe 35-37k/year. They do fine on his income, and still are able to save for retirement while she stays home. It can be done. To be perfectly fair, living in base housing, having easy access to schools (elementary at the minimum), having (usually) all inclusive/no hassle insurance for his family at rock… Read more »

fivecentnickel.com
fivecentnickel.com

Plonkee: There are a number of factors to consider… At face value, if the parent that would otherwise stay at home earns more (after taxes, of course) then there’s a net financial benefit to childcare (although it might be rather small in some cases). However, you also have to factor in the costs of commuting (perhaps the addition of a car, additional mileage, etc.) as well as other miscellaneous costs associated with working (e.g., specific wardrobe requirements). In our case, we were able to drop from two cars to one, spend less on gas, have only one car insurance bill,… Read more »

Anon
Anon

It works great, I think when there are two adults in the family. The point where kids start to really cause problems with your finances is when you are a single head of household. At that point, you don’t get to have one person stay home while the other works. Convenience items become more important because the mother or father does not have additional time to spend preparing home-made baby food or washing cloth diapers. If you’ve got two or three kids in a single head of household home, God bless you. You sure need additional help. Daycare is a… Read more »

MOnika
MOnika

Anon, I am assuming this family has life insurance, so that should help in case of the breadwinner’s death. It could be the case that the husband and wife have committed to each other “until death” and in their minds, divorce is not an option. It is definitely that way in my marriage. I am working, with 1 child in daycare, and 1 on the way, but when the day comes that my husband earns enough for me to stay home, I will gladly leave my job and stay home with my kids. I find it odd that you refer… Read more »

Seth
Seth

My wife and I recently started our family and she is now staying home. We can afford to live on one income, but to help out a little she is going to provide daycare for one child on a part-time basis. This won’t make a ton of money, but it should help!

fivecentnickel.com
fivecentnickel.com

Wow, Anon, you sure paint with broad brush strokes. In reality, my wife has plenty of marketable skills (you made your statements with no idea as to her educational background) and may be heading back into the workforce when our youngest hit school age (we still haven’t made any decisions one way or the other on this). You also say that I haven’t taken into account divorce or my death. One thing to keep in mind is that broad statistics such as a 50% overall divorce rate are only applicable to large population samples. The actual likelihood of divorce varies… Read more »

plonkee
plonkee

@five cent nickel
I hadn’t thought of the cost of illnesses and so on (clearly I don’t have children). I still think that not using childcare doesn’t have a big impact financially – whether it impacts in other ways is a separate discussion.

@Anon (comment 12)
I think you raise a good point, especially regarding the career of the stay at home parent. I reckon nickel has a death plan (that sounds ridiculously ominous) sorted out but if not it certainly needs doing.

Angie
Angie

We’ve got 2 kids (3 and 6 years old) and our financial story is pretty similar. It is possible to live within your means with kids! I can count on the fingers of my hands the number of garments–excluding socks and underwear–that have been bought new for my kids. More than once I have bought a year’s worth of clothes for both kids for less than $50 at Value Village’s half-price sale. We did a fair bit of cloth diapering, and it is less expensive than disposables in the long run, but there’s a whole lot of YMMV in how… Read more »

fivecentnickel.com
fivecentnickel.com

I should add that I agree with Anon’s assertion that these other topics (“death plans” as plonkee put it, and so on) would be good fodder to write about, but they’re only tangentially related to what I was tacking here. Keep an eye out over at Raising4Boys, as I’ll try to put something together sometime soon. @plonkee: I think people should actually turn the question around and ask if working whilst putting kids in daycare has a big financial upside. In many cases it does, but in others cases it’s nearly a push, and in some cases it’s actually a… Read more »

Diatryma
Diatryma

I may be pointing people toward this article when they say that kids aren’t always expensive if you’re responsible. A lot of the money-saving things are good, common sense tips– garage sale baby clothes, hand-me-downs, cheap diapers as long as they’re actually good– but things like housing and vaccinations are things someone else paid for. I’m all in favor of being able to take kids to the county health department for cheaper vaccinations because it’s responsible on a lot of levels. As far as the wife staying home, that’s probably not going to be an option for me. If my… Read more »

fivecentnickel.com
fivecentnickel.com

@MoneyChangesThings: Our kids go to public schools. That was actually a consideration when choosing our current home. Along with the positive career move and additional salary, we moved to an area with fantastic schools. As an aside, if you have kids, it’s often more economical to pay a bit more to live in a better school district than it is to buy a house in a cheaper area and then end up having to go the private school route.

fivecentnickel.com
fivecentnickel.com

Oh, and as for college, this article is about *starting* a family. Yes, college is a major expense, but you also have 18 years to prepare for it. Moreover, not everyone feels the need to pay for their kids’ college (we almost certainly will, as long as they’re applying themselves, but others don’t).

beth
beth

I think an ideal scenario would allow both partners work at least a little, to keep their respective toes in their chosen career fields, and also because I think it’s a wonderful thing when each parent is fully able to take care of the kids independently.

My mom always said, there’s no convenient time to get pregnant, and you’ll never be fully ready. I think she was right, though I haven’t put it to the test myself!

Dan
Dan

“While I realize that childcare is unavoidable in many cases, we were fortunate enough to be able to work around it.” – is an attitude you should consider adjusting; it’s inflammatory and ignorant of other well-qualified thoughts on the subject. Of course everyone has an opinion on the subject, and as many of the commenters have stated, the solution depends on the situation. Money factors aside, statistics have shown that kids do just as well in good childcare settings as they do in good homes. A book that addresses this question well: http://www.amazon.com/Whats-Going-There-Brain-Develop/dp/0553378252/ And some extremely interesting peripheral knowledge on… Read more »

Pinyo
Pinyo

This is an excellent article that is just reassuring for someone who is about to have his first child.

However, I do have to agree with the last comment. Although, having a spouse stay at home might make sense short term, losing marketable skills is too big of a risk that I would never subject my wife to. What happens when the bread winner can no longer work or die?

guinness416
guinness416

Beth, it’s been suggested that career-relevant volunteering (someone who works in construction preparing renovation budgets for a local not-for-profit, for example) can help that ease back in to the workforce after more than a minimal period at home with children, because Anon is right, it is genuinely difficult for a lot of at-home parents (usually women) to get back in, and certainly to get back in at a comparative salary. It’s not always easy to get that holy grail of part-time work either, I have a couple of friends who tried and eventually had to go back full time.

Chris
Chris

My parents struggled with this when I was born, but once my brother came along my mom decided to stay instead of keeping the baby sitter. When they worked it out she only made $6000 more per year and she didn’t think it was worth 40 hours a week to essentially make $6000. She maintained her license (nutritionist) and was able to work on projects from home as she liked, and once we were both in middle school she was able to go back to work. It still is a personal decision and it really depends on your view point… Read more »

Stacey
Stacey

I worry about your wife. She has no career to speak of, no contributions to social security or 401K that are hers alone, and she has invested a lot of time into your career, that should you leave for a newer model or die, would be worthless to her. I think you didn’t cover any of the non-monetary benefits of going with childcare, such as the security a dual income offers if something happens to one of the earners, future earning potential etc. These things cannot be ignored so blithely as you have done here.

Sam
Sam

Good stuff and I think its important to realize that kids are not as expensive as most are lead to believe, assuming that you have good health insurance and child care options (which is sounds like you do). We recently visited with friends who just had a baby and they were telling us that they had hardly spent a dime b/c of gifts from friends and family, they are breastfeeding the baby (or the mom is) and her parents are watching the baby when she is at work. I read another intersting article from MSNBC money about stay at home… Read more »

Duncan Beevers
Duncan Beevers

Excellent post, and timely!

Even less expensive than cloth diapers is raising your child diaper-free.

Check out http://www.diaperfreebaby.org/ for information on a trend that saves you money and brings your family closer together at the same time.

Jenn
Jenn

Re: Stacy The entire “dual income = financial security” is pure propaganda. When you have two incomes, do you put one spouse’s income into savings in case of emergency or need, or do you live on both incomes? It’s human nature to do the latter. Then, if one spouse cannot work, you’re stuck with one income and no way to make up the difference because the other spouse is already working. Whereas if there is only one breadwinner, and something happens where he/she cannot work, the other parent can step-up and fill the gap. Also, on a side note, his… Read more »

bree
bree

While it sounds nice to postpone having a family until you’ve got all your ducks in a row, as someone else mentioned, you’ll never feel ‘ready’ and there will always be one more reason to put off making that baby. It would have been nice if our finances had been in better shape when we learned we were pregnant, but really, for us the pregnancy itself was the catalyst to get ourselves in order. I don’t think we would have been as motivated to take the steps we did (ambitious debt repayment, building a savings buffer, cutting back on frills… Read more »

Stacey
Stacey

I urge you to read “The Feminine Mistake” if you think stay at home motherhood is a remunerative career option that will lead to financial security should her husband die, become disabled, or leave her. Most women find it extremely difficult to re-enter the workforce after absences as short as two years. It sounds like this woman has been out for 8-10 years. And you expect her to jump back in somewhere near his pay scale if he for some reason either can’t or won’t provide? Career = independence and options. Relying on someone else to provide is purely a… Read more »

Stacey
Stacey

re:Jenn
“Don’t you think supporting and caring for her husband makes him happier and more productive at work? Which means more financial security.”

This was exactly my point in the first post I made. She’s contributing to his career in all these ways you mentioned, but if he leaves her that career belongs to him NOT her. If he dies, that career is gone. If he can no longer work, again, her efforts vanish into thin air. How is that financial security? Putting all your eggs in one basket is nearly the definition of financial insecurity.

Jenn
Jenn

Re: Stacy “I urge you to read “The Feminine Mistake” if you think stay at home motherhood is a remunerative career option that will lead to financial security should her husband die, become disabled, or leave her.” I did not mention this in my previous comment, but it should go without saying that if one spouse is going to be the breadwinner, then there needs to be an adequate emergency fund, disability insurance, and life insurance, etc. In other words, solid financial and emergency planning can meet and/or supplement financial needs that arise if something happens to the breadwinner. No,… Read more »

Jenn
Jenn

Whoops. I hit the submit button by mistake.

Anyway, I was going to say that the point is that you can be financially secure on one income if something happens to the breadwinner. It just takes planning.

Jenn
Jenn

“This was exactly my point in the first post I made. She’s contributing to his career in all these ways you mentioned, but if he leaves her that career belongs to him NOT her. If he dies, that career is gone. If he can no longer work, again, her efforts vanish into thin air. How is that financial security? Putting all your eggs in one basket is nearly the definition of financial insecurity.” Again, it’s called financial planning. You don’t count on him living until he’s 90. You make sure there are things in place to ensure you can make… Read more »

Angie
Angie

Oh, wouldn’t you just know it, that we’d break out in another skirmish of the Mommy Wars? Sigh. Jenn @ 40 says, “The problem is, you can’t have it both ways. You can’t stay at home, living a supportive role, and expect to be equal with your husband as far as career and income.” Um, that is exactly what the people you’re arguing against are saying… The GRS philosopy is more or less “do what works for you”. Each family is going to have to make their own choices, based on their individual circumstances, of how to navigate the tricky… Read more »

Holli
Holli

Re: Stacy and Jen’s dialog – I can see both your view points. Without siding in one direction or the other, let me share where I’ve landed. I’m married and have a one year old son. I decided I wanted to stay at home with our son, but 4 months into Mommyhood, I found myself wanting mental stimulation beyond parenting books, and my family/friends circle. So, I started free-lancing utilizing my writing and web skills. This has kept me content, and boosted my confidence for re-entering the work place in the future as I’m keeping my skills up to date.… Read more »

Holli
Holli

p.s. Yes, I’m able to be a Stay-At-Home-Mom while free-lancing.

SJean
SJean

Good article overall.

I did find the “staying at home is best for the kids, and usually financially as well!” assumption a bit irksome (its a personal choice each family will have to make on their own, with a lot of factors to consider!)

Once the kids are in school, then I don’t see how it can make *financial* sense to stay home (but perhaps there would be other reasons)

The tips are great, I’m far from kids, but it is nice to have encouragement that while things will change, I will be ok!

Stacey
Stacey

I guess I’m not sick of the mommy wars yet, as it’s an entirely new topic for me. On the subject of financial planning for stay at home mothers, how exactly does one financially plan for a divorce? Of course we have pre-nups, but most young couples don’t bother. And I can almost guarantee the fivecentnickel and his wife didn’t bother with one. What his wife recieves in child support/alimony will be left to the discretion of a judge and, having recently witnessed the antics of the family judge presiding over the Anna Nicole Smith/custody trial, I’d prefer to take… Read more »

Andrea >> Become a Consultant
Andrea >> Become a Consultant

I’m not sure that modern women who stay home abandon their careers. For the women who stayed home in the 50s, college was a rare thing. If women did go to college, they dropped out half-way through or barely graduated before getting married. They had no work experience. Most had babies (and lots of them) pretty soon after getting married — often less than 40 weeks later. For women in the 60s/70s, education was much more common. More women attended college, but a huge number dropped out to get married and many more got married right after graduating or perhaps… Read more »

Angie
Angie

I’ll definitely grant you that last paragraph, Andrea. Live within (or below) your means on one income, and your family will be in good shape when you start bringing in a second. The “home for a few years” idea presumes that you’ve got one kid, or two closely spaced. (My brain started to smoke imagining running a small business with two toddlers underfoot…) But in 5centnickel’s case, there is a 7-year gap between oldest and youngest. That’s 12 years from the birth of the eldest until the youngest hits kindergarten…approximately 1/6th of a person’s total lifespan, or something like a… Read more »

Andrea >> Become a Consultant
Andrea >> Become a Consultant

When I say “home for a few years”, I don’t mean 2 or 3 years. I’m talking about being home for 7 years or so — the amount of time needed to get two kids into kindergarten. (Most people don’t have four kids, but I’m sure Nickel and partner have worked this out.) As for running a small business with two kids, I don’t think it’s going to be brutal. I’ve managed very well with one child up till now and I’ve got another on the way in a less than 3 months. Even if I earn half what I’m… Read more »

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