The high cost of having children

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.

Saturday MorningI 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:

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.

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the weakonomist
the weakonomist
11 years ago

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.

Jimbo
Jimbo
11 years ago

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.… Read more »

Marcy
Marcy
11 years ago

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… Read more »

Melissa
Melissa
11 years ago

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.

Aaron
Aaron
11 years ago

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?

Chett
Chett
11 years ago

@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.

Jason
Jason
11 years ago

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… Read more »

Cloppy
Cloppy
5 years ago
Reply to  Jason

Sounds like your purpose in life is your kids. You’d prefer being a debt-slave rather giving up your kids. What if they suddenly died out of bad luck (plane crash, etc) ? All that emotional investment for nothing. You should really learn to be strong enough to survive such a thing if it ever happens. How shallow and purposeless your life would be if they died prematurely ? Do you really want to feel such a thing ? Life isn’t about a purpose, there is not a single purpose, as your purpose can change in a second from a day… Read more »

Britt
Britt
11 years ago

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… Read more »

Eric
Eric
11 years ago

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… Read more »

Cathy @ Chief Family Officer
Cathy @ Chief Family Officer
11 years ago

@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… Read more »

Cathy @ Chief Family Officer
Cathy @ Chief Family Officer
11 years ago

@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 🙂

Colin
Colin
11 years ago

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… Read more »

futuredrmd
futuredrmd
7 years ago
Reply to  Colin

I often hear this from parents- the end of life pay off due to having children. It is a bit absurd on some levels. NO time to address them all since I would clearly have to start at base one given your ideals, but simply put: what about the parents who have adult children that do not have the time, energy, or desire to have anything to do with them? The patients that I see ‘dying alone’ which keep in mind, everyone does, are the ones who have children that are either estranged, or too busy with their own families… Read more »

EscapeVelocity
EscapeVelocity
11 years ago

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.

sandy
sandy
11 years ago

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… Read more »

John
John
11 years ago

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.

tmk
tmk
11 years ago

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.

Jason
Jason
11 years ago

@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… Read more »

Jocelyn
Jocelyn
11 years ago

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.

J.D.
J.D.
11 years ago

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… Read more »

Baker @ ManVsDebt
Baker @ ManVsDebt
11 years ago

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.

SandyFS
SandyFS
11 years ago

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,… Read more »

Lakita
Lakita
11 years ago

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

Kate F.
Kate F.
11 years ago

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… Read more »

Gerry
Gerry
11 years ago

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,… Read more »

Cathy @ Chief Family Officer
Cathy @ Chief Family Officer
11 years ago

@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… Read more »

AD
AD
11 years ago

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… Read more »

Neal Frankle
Neal Frankle
11 years ago

My wealth is my family.

The Personal Finance Playbook
The Personal Finance Playbook
11 years ago

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… Read more »

Stefan
Stefan
11 years ago

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… Read more »

Michele
Michele
11 years ago

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… Read more »

Beth
Beth
11 years ago

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,… Read more »

Matthew144
Matthew144
11 years ago

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… Read more »

HaideeL
HaideeL
11 years ago

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… Read more »

TheOzz
TheOzz
11 years ago

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.

CindyC
CindyC
11 years ago

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… Read more »

Carmen
Carmen
11 years ago

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… Read more »

Denise
Denise
11 years ago

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… Read more »

HollyP
HollyP
11 years ago

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.

Roger - A Content Life
Roger - A Content Life
11 years ago

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.

Carmen
Carmen
11 years ago

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…

SeekingLemonade
SeekingLemonade
11 years ago

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?

Shara
Shara
11 years ago

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… Read more »

Linear Girl
Linear Girl
11 years ago

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… Read more »

Meredith from Merchant Ships
Meredith from Merchant Ships
11 years ago

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,… Read more »

Shara
Shara
11 years ago

@ 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 ;).

J.D.
J.D.
11 years ago

@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! 🙂

rdzins
rdzins
11 years ago

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… Read more »

Jon
Jon
11 years ago

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.

Moneyblogga
Moneyblogga
11 years ago

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.

Kevin
Kevin
11 years ago

@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… Read more »

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