The Money Mustache Community
Learning, Sharing, and Teaching => Mini Money Mustaches => Topic started by: tips^up on October 30, 2019, 04:29:59 PM
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We've got a 4-month old baby girl! We're fortunate to both have employers that have honored FMLA. My wife took her 3-months immediately. I took about 2 months of mine, and have been home with baby girl for the past month. Monday, we're both back to work full-time.
We are going to have a goal setting discussion tonight - where we are, where we're going, what we need to do to get there. We're both early 30s, both have good jobs and decent savings, we're pretty frugal. Without baby, we'd be on the path to FIRE in a few years. So far, she's eating "free" breastmilk and the hand-me-downs have been overwhelming from all our family and friends, so, to this point, she's actually been very inexpensive. But, looking to the future, even with decent public schools, I'm overwhelmed by the thought of team sports, summer camps, tutors, clothes, food, etc.
How expensive is a kid?! What are your experiences with kid finances, baby through college? Any way to get fair budget estimates? Thanks!
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IME, kids are as expensive as you make them.
For the first 4 years, they don't eat much, clothes are cheap (if not free hand-me-downs), and the most complicated toys they need are a big box of blocks, and some books from the thrift store that you don't mind being chewed/stepped on. The most expensive supply requirement are diapers/wipes (~$300 if you're willing to do cloth, or ~$50-60/month for disposables) and a car seat.
Daycare is literally the most expensive thing child-related. Price it out for your locale to see what you should expect.
We opted to go for a single-income + SAHP model, so daycare cost for us was zero. However, that requires one parent giving up their income for the first 5-6 years. Your situation may warrant different plans than ours.
My kids are 7 & 8 currently, and are eating a bit more, and asking for more crafting supplies (still, paper/glue/crayons/markers are awfully cheap), but aren't any more expensive ongoing than diapers were.
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Yeah, kids don't really cost all that much. I second the notion that diapers are the most expensive things you'll have to buy. If your daughter were formula-fed, that would also be pretty pricey but at the same time I would spend whatever amount was necessary to make sure my kid was fed.
My boys are 4 & 2 - being boys, we've needed to buy clothes (thrift and new, though at a steep discount) because of how much they wear them out and how fast thrift and consignment stores can run out of toddler/little boy clothes. Combined, they add maybe an additional $30 a month to our food budget since for the most part they eat what we eat.
Even with some of the pricier 'accessories' we've bought, I think in total we spend less than $3k a year on them. This includes preschool for the 4yo (there is no public preschool where we are), a new bed this year for 2yo, and all the relevant clothes, food, etc. for both of them.
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Congrats!! I don't think there's a specific "cost"; as APowers noted, they can be as cheap or as expensive as you want. So this is an excellent time to think about what you want for your kids, and then do the research to figure out how much those things will cost.
The big one, obviously, is college. I assume you have thought about what you want to offer, if anything, because that seems to be the first thing parents think of. ;-) So other things:
- School: school supplies are not negligible, and the kids tend to destroy backpacks/string bags (not surprised, they have so much stuff in them there's a ton of wear and tear) -- most we have gotten is two years out of a backpack. But there are also a lot of fees and extras I didn't consider -- PTA fundraisers (yours and your friends'/neighbors'), gym/band uniforms (and "spirit wear"), field trip fees, hot dogs at football games, club/activity fees, plus associated costs from those activities. For ex., my DD did the speech and debate team, which involved 2-3 weekend tournaments + nationals. Note that all of this is optional; the question is really what you want your kid to be able to do. Also, by the time they hit HS, they can often get part-time jobs to cover part of the costs.
- Sports: our rec leagues run about $100/season, plus whatever gear the sports require (basketball = nothing; baseball/softball = cleats every year or two, a new glove/bat/helmet every 2-3 years, because the stupid buggers insist on growing!) -- but there are often places that sell used equipment from everyone else's growing kids, too. YMCA swim classes are about $60/6 weeks, plus @$75 monthly family membership. Karate was around $130/mo. We limited kids to one activity at a time (plus swimming until they passed our safety standards), more for our scheduling sanity than for cost, but I also know families who filled their afternoons and weekends with practices and lessons and such. Travel teams are both more time and a lot more money, including frequent out-of-town weekend tournaments; our kids aren't that talented, and we weren't interested in the lifestyle, so that wasn't even something we considered. So this can be as minimal or epensive as you want.
- Music: our kids start band/orchestra in 5th grade, so consider instrument rental costs (we got lucky: our schools are so desperate for low brass that they give kids the use of an instrument free!). We now pay $35/week for lessons, as DS has surprised us by actually being pretty good (but we waited until 8th grade to start, because I'm not going to pay for lessons if I need to nag him to practice). There are also periodic costs to audition for things like all-county band.
- Technology: our kids' school now loans all of the kids laptops, but before that, we got DD a cheap (@$400) laptop as a birthday present one year. We gave both kids phones right around MS -- for our convenience more than theirs, because we both work in offices, and I wanted them to be able to get in touch if they had a problem home alone after school. And then of course there are the gaming systems . . . . DS is now totally besotted, and even though we make him pay for his own stuff through his allowance or extra chores, we still need to come up with that cash.
- Daycare: these costs continue until MS or so! It does get cheaper, of course, but as late as 5th grade, I was still paying @$500/mo for before- and after-school care. And I also paid a teenager to babysit DD in 6th grade until we ran into a problem and I realized DD could manage herself.
- Driving: the other big one. Expect about a 50% insurance hike for a teen driver. And of course the driving lessons cost a few hundred bucks, unless you can get it through school. Plus whatever you want to cover for costs of car, gas, etc. (for ex., I agreed to pay half of the gas, since DD spent noticeable time running errands for me).
- Clothes: we probably spend $600-800/yr at Kohl's/Target, depending on how fast the kids have grown. I totally splurge on tennis shoes (not included in that total) because of some genetic foot issues. You can obviously do much better than this if you want.
YMMV. But that's the point: you're going to have different kids than I do, and you're going to want different things for them and have different resources and priorities. I'm pretty spendy on mine, because we are already FI and have free cash and I can afford to be (plus I grew up poor, so I enjoy offering my kids opportunities I didn't have, like sports and instruments and such). You're doing the right thing to plan for these costs, but first you need to figure out how much of the above you want to do, and at what cost/involvement level. Good luck!
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The two big ones are daycare and college. I assume you know what daycare costs in your area, it varies a LOT depending on where you live. The shock for us was wrap care - before/after school once the kid(s) are school age. It is still a big expense. If you can adjust your schedules so that one of you starts early and gets done early enough to catch the kids after school that is ideal. A lot of couples I know have one parent who starts late and gets the kids on the bus in the morning, and the other parent starts early so they can get the kids after school. A bunch of them combine it with work from home time. This gets easier to manage when the kids are older elementary and can entertain themselves a bit while you work at the end of the day.
Now that my kids are getting a bit older I am spending $$ on lessons. Gymnastics, piano, instrument rental for school band, etc. Plus other activities - scouts, sports, dance, whatever. You can spend a lot of money on activities if you want to. Travel sports, dance or gymnastics team competitions can get expensive quick. But, this is all optional. It depends on what you can afford and what opportunities you want your kids to have.
In terms of clothes - I enjoy spending several mornings a year running around to garage sales. Not everyone's cup of tea, but it has allowed me to fill out the kids wardrobes for very little $. My oldest is just getting to the point where it is harder to find stuff her size at garage sales. I'm not sure how that will play out going forward, but my budget will likely have to increase. Shoes and coats I mostly buy new, hopefully on sale. That adds up, but it isn't a huge part of my overall budget.
Food - my kids are not huge eaters, so while groceries are a bit more than for the two of us, it isn't huge.
Travel - this is where it kills me. Yes, we share a hotel room, but flights are not cheaper for kids than adults. Kids admission tickets are generally a LITTLE cheaper than adults, but still quite a bit. Eating out at restaurants while we travel is more expensive. They can often get by with a kids meal, but not sure how much longer that will last, and kids meals are not usually free (though we try to take advantage of those deals when we can). Some trips taking the kids nearly doubles our cost. Others it is not quite so bad, but still significantly more than traveling as a couple. But again, this is optional. You don't have to travel at all. Or you can drive and camp for fairly cheap.
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Congratulations! We have three kids, now ages 8, 10, and 12. Our kids are in public school, but we make donations each year to help pay for assistant teachers, we pay for aftercare and for summer camp. Those three add up to ~$11,000/year for us (total--not per kid). We spend about $15,000-$20,000 on kid-only expenses each year (wide range--lots of factors), including the three listed above. We prepaid for state university tuition for each of them, too, which is not in that total b/c that is a current total and we did the prepay awhile back.
We both cut back from full-time employment and ramped down our careers to be able to have dinner together almost every night, to allow me to have breakfast with them, too, as well as attend every single field trip. So our income dropped from pre-baby times.
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Laura nailed it.
- Daycare
- College
Sports are what you make of them. My kids not really into sports, but we've done some swim lessons and baseball, on the order of $500/year.
Summer camps basically replace daycare. I'd say that total, once kids started school, after school care + summer camp was about half of what daycare was. A few years late, after care got cheaper. At 13, summer camp gets even cheaper (partial days) depending on which you choose.
School supplies: My kid wore through backpacks like nobody's business. I bought him an LL BEAN one because neighbor's daughters had them and they lasted longer. That one lasted a REALLY long time. 5 years? 6? We just replaced it.
Music - we basically chose free/cheap options. School band, multi-school band, and junior orchestra ($250/year).
Clothing - we still get a lot of hand me downs. Less for the 13 yo now, but he's really small so we still score sometimes. He doesn't care about clothing so he's happy with a few pairs of sweatpants and shorts and a bunch of T-shirts.
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Daycare was a pricy deal. Otherwise you find a way to cut back where you can. Hand me downs and garage sales are great until about size 4. Then the clothes actually get worn longer because they aren’t growing so fast. It was hard to find pants once we hit that size. So we learned to find good clearances and which brands held up better so we could hand them down between our own kids. Keeping extras to a minimum and buying a quality car seat that will last for years makes a difference. We breastfed and used cloth diapers which also kept our monthly outflow to a minimum.
My kids are 6 and 9 currently. They have a $100 budget line every month that gets increased on specific months (school pictures, back to school shopping, snow boots shopping). But this $100 can cover the random clothing needs, accessories for Halloween costumes, swimming lessons, milk money for school, fundraisers, art supplies, etc. We still pay for after school care so while we spend less, daycare doesn’t completely go away until they hit middle school age. I am a book nerd so we have a separate budget line for the Scholastic book orders. That should slow down soon as we will have books for all reading levels shortly.
Buying quality makes a difference. My youngest is using a lunchbox (PlanetBox) that our oldest started with. Same lunchbox in daily use for over 8 years. The oldest has now moved into a slightly bigger PlanetBox and we love them. LL Bean backpacks are fantastic. We wait for clearance prices but still get 5+ years of daily use. My 5 year old backpack is showing wear at the bottom of the straps as I adjust daily. Best $30 investment.
The other expense as they grow is groceries. This has been a big hit for us. We’ve got one with sensory issues surrounding food and his “safe” list is filled with items that aren’t very cheap.
We have some savings for college but know we should be saving more. We decided to prioritize our own retirement savings over college funding. We would be happy to help and perhaps cash flow tuition and books.
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Congratulations!
It isn't necessary to decide exactly what future kid costs you will absorb now. Some of that you'll discover later, depending on what your child's interests are. Then you get to decide whether to change your budget to include that (and potentially postpone other goals) or not.
For now, whether to fund college and daycare are your biggest decisions. (And decide whether you want to do public, private, or homeschool)
Your medical costs will likely go up. One of my kids is a ball of inherited medical issues. He had 5 or 6 surgeries on his ears and eyes from ages 4-8, at a cost of $2-3k per surgery. (He's fine now.) The year he didn't have surgery, his older sister needed TMJ treatment not covered by insurance = $5k. Then there's braces. Two rounds for one kid so far. The third kid is extremely healthy and just needs a pair of glasses every year.
We encouraged our kids to try different activities, ranging from $80/semester for local soccer to $5k/year for club vb fees, uniform costs, travel, and accessories (it's an epic tragedy if she doesn't have the exact same water bottle as everyone else on the team).
Band is its own beast - but not all kids want to play an instrument. (Two of mine did. Yay.)
We budget every year against our other priorities. When medical costs skyrocketed, the annual vacation went out the window so we could still meet our savings goals. When volleyball became a thing, H and I had a long talk about whether to make it a priority and potentially reduce our savings rate or not. We chose to treat volleyball like D's job - we will pay for it if she shows initiative and practices on her own without reminders, if she does her very best to help her teammates grow, if she continues to improve, if her grades stay high, and if she enjoys herself and has a positive attitude throughout.
The important thing is that you have those discussions regularly with your spouse so that you are working towards the same goals every year.
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Aviation can get expensive. Sometimes we not only cover the child, we pay for a family member to help with the child watching so the parents can relax some. Sometimes only 2/3rds of us go on a trip. Budget for the bigger AirBnB and car as well. We were set to rent an economy car for a road trip last week and I pretty much decided right after squeezing my knees to my chest before we got out of the parking space we were going back to the counter for an upgrade.
At home we eat out even more and have recently hired a housekeeper. Two working parents don’t have much energy for house chores and child wrangling so we hire out when we can.
If you and your spouse have fewer kids than siblings, it should be no problem to spend less money and give them a more advantaged life than you had. If you can afford to FIRE, you can afford to handle the same expenses your neighbors have and then some. I wouldn’t worry too much.
Meanwhile I’m going to slow down on trips until my daughter is a bit more manageable. We’ve had an abnormally high number the past few years.
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How we control costs:
Hand-me-downs or buy second hand hand for kids' clothes/items as much as possible;
Public school;
Way less (and less fancy) housing then we could afford;
Did not upgrade to pricey SUV or minivan;
Vacations are road trips (or, infrequently, travel hacking for flights, etc);
Lessons at the YMCA or through school/city;
Day camps at the YMCA or through city;
Rarely eat out now (it's miserable with kids anyway);
Bulk grocery shop at discount grocery (and always have a back-up frozen pizza, etc, to save your bacon when you are too pooped to pop);
Libraries rock!; and
Free kid events/activities in your city (so many if you know where to look).
Our baseline lifestyle is to look for free/frugal, so when we "need" to upgrade in a certain area or shell out for one expensive hobby/interest, we don't sweat it. Our kids want for nothing, in my book, but they are not expensive by our own design.
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There are a few moving parts around all of this and as others have said, it can be as expensive (or not) as you want it to be. This will come down to your wife and your priorities.
Some big considerations - or simply delta's vs not having kids:
A) Home location: typically nicer areas = better schools = better opportunities = more expensive area. This is a massive sweeping statement, there are a trillion exceptions but statistically pretty sound.
Remember, that if going to local public schools, location essentially dictates the demographic of your kids friends, and by extension, who you as parents are going to spend a good bit of time with. Its somewhat mute, until they start school.
B) Home size: you're going to need more space. How much more depends on you but when its raining/snowy for a week places get pretty small fast. Space = more expensive (all things being even). There are also increased benefits of having a garden. Because you're spending more time at home than in your pre-kid life, you'll probably notice point A more too. Along with more space means more "stuff". You'll obviously try and be thrifty but things like furniture, bikes, lawn mowers etc. typically go up along with utilities.
C) Activity costs - these will increase.
D) Babysitting - depending if you have family of not close by this will increase. Overall, the cost of dates typically increases if you do go a babysitting route. (e.g. a 3 hr trip to the cinema goes from $20 to $65 inc. $15/hr x 3 hrs babysitting). The cost of divorce is higher I hear however!
e) Holidays - costs increase due to needing to increasingly fly around holidays, more seats, bigger cars, car seats, more luggage and (probably) having a lower tolerance for taking a risk on accommodation. By this last point I mean that if its just you and your wife and you turn up and somewhere is grubby its not the end of the world, you head out and can make a plan. With kids you'll be spending more time in that room and so you're less likely to take risks (IMHO).
f) Cars - you may need one (vs perhaps not now). You may also need it to be safer/bigger. Generally, the argument for owning one increases.
g) Life insurance - you now need this if you don't already.
h) College....
So all of the above you can put either a zero weight on or go all out to incorporate it into your lives. The latter, generally results in lifestyle creep and I think is broadly what most here on the forum are trying to avoid (in their own way).
Everyone's path and choices are different!
Congratulations on your new arrival, the one thing that I've not touched upon is the priceless joy they bring you.
Best of luck!!
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I guess I disagree with some of the posts here...kids are VERY expensive.
It sorta drives me crazy when Dave Ramsey or someone is like, "Oh kids don't cost that much!" or someone argues that economics shouldn't be part of the decision to have kiddos.
From our experience, food costs have probably increased by 75%, medical costs by at least 50% (braces are not cheap!), vacation costs basically double (we generally take flying vacations and visit big cities as opposed to taking road trips), most clothes purchases are for the kids, not me or my wife, so I'd say clothing costs doubled, and then we also paid somewhere around $100,000 for daycare, which was actually reasonable when you break it down (6 years of FT care = at about $150/week X 2 kids = $93,600). And if one of us would have stayed home with them, it would have cost us a LOT more than that, since my wife, the lower earner, makes well over $50K and has usually carried our health insurance.
And then there are college costs, and all the tiny little additional costs like for increased entertainment, hygiene products/GM, etc. , and the issue of likely buying a bigger home than you would have had you stayed single or just coupled.
We've spent at LEAST $200,000 on our kiddos thus far, probably much more than that if I sat down and calculated it all up. And hell, we've sent our kids to public schools. I can't imagine adding private school tuition to all of that.
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I guess I disagree with some of the posts here...kids are VERY expensive.
It sorta drives me crazy when Dave Ramsey or someone is like, "Oh kids don't cost that much!" or someone argues that economics shouldn't be part of the decision to have kiddos.
From our experience, food costs have probably increased by 75%, medical costs by at least 50% (braces are not cheap!), vacation costs basically double (we generally take flying vacations and visit big cities as opposed to taking road trips), most clothes purchases are for the kids, not me or my wife, so I'd say clothing costs doubled, and then we also paid somewhere around $100,000 for daycare, which was actually reasonable when you break it down (6 years of FT care = at about $150/week X 2 kids = $93,600). And if one of us would have stayed home with them, it would have cost us a LOT more than that, since my wife, the lower earner, makes well over $50K and has usually carried our health insurance.
And then there are college costs, and all the tiny little additional costs like for increased entertainment, hygiene products/GM, etc. , and the issue of likely buying a bigger home than you would have had you stayed single or just coupled.
We've spent at LEAST $200,000 on our kiddos thus far, probably much more than that if I sat down and calculated it all up. And hell, we've sent our kids to public schools. I can't imagine adding private school tuition to all of that.
This is directionally what I was trying to imply above. I agree with you.
The combination of low flexibility, greater need for risk management in general, and greater need for cushions in decision making processes leads to higher expenses and costs.
Something that I personally think doesn't get considered is the need for a MUCH larger emergency fund.
For context, our household has one significantly larger income than the other that operates in a volatile industry. Therefore there could be a significant void between jobs or a need to relocate should I ever be fired. If I think about my pre and post kid life with regards emergency funds:
Pre kids: Plan on retrenchment would be to try and get another job ASAP and then worst case, give the keys back on the rental (1 months notice), pack everything up and go travelling for 6-12 months in a low cost of living area whilst the economic cycle worked its way through. Just to pluck a number lets say 6 months emergency fund was $10k but realistically I'd be happy running a 3 month emergency fund.
Post kids: Sole income so have instead needed a bigger lump sum for emergency fund and then also would be keen to avoid disrupting the kids lifestyles too much by moving house, schools, health care, classes. You obviously have a cost cutting list you could enact if needed but I feel greater responsibility for maintaining the status quo for the family and so realistically that $10k emergency fund is going up... a lot... probably to over $50k.
That's just one additional angle but bottom line totally agree with your comment
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I also agree that kids are much more expensive than many on here are claiming. We live in a much larger house and consume way more utilities than DH and I would've chosen if we'd opted not to have kids. One other category that hasn't been mentioned yet is medical/developmental costs.
1. Orthodontics. Both my kids will need braces. Next week I'll probably be putting a $6800 charge on my cc for the first kid's braces. Our Canadian extended health insurance plans will cover some of it, but we'll still be out a few thousand.
2. Developmental expenses. Hopefully your kid will be completely "normal". If not, it may cost. We've spend several thousand on "treatment" for dyslexia and ADHD. Treatment's in quotes because there's no cure for either of these. The therapy and programs we did were simply to help her learn workarounds. Luckily her expensive ADHD med is 100% covered by insurance, although DH and I pay double premiums to make this happen. So I guess you can add more expensive health insurance to your list of potential kid costs. Oh, and it may take her longer to complete university. Let's be conservative and add another $10K for that.
3. Glasses. If your kid needs glasses, go to a fancier shop that has a good kids warranty. Your child will destroy or lose at least one set of frames. So far, we're coming out ahead on this decision. Did I mention she's been prescribed specialized lenses that Costco and cheaper places don't carry?
4. Speaking of losing stuff. Your kid will do this too. We have a family policy of "I buy the first one, If you lose or destroy it you have to replace it." This helps, but they can still be absentminded kids.
Totally worth it though. These kids of ours are amazing.
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There are a few moving parts around all of this and as others have said, it can be as expensive (or not) as you want it to be. This will come down to your wife and your priorities.
Some big considerations - or simply delta's vs not having kids:
A) Home location: typically nicer areas = better schools = better opportunities = more expensive area. This is a massive sweeping statement, there are a trillion exceptions but statistically pretty sound.
Remember, that if going to local public schools, location essentially dictates the demographic of your kids friends, and by extension, who you as parents are going to spend a good bit of time with. Its somewhat mute, until they start school.
B) Home size: you're going to need more space. How much more depends on you but when its raining/snowy for a week places get pretty small fast. Space = more expensive (all things being even). There are also increased benefits of having a garden. Because you're spending more time at home than in your pre-kid life, you'll probably notice point A more too. Along with more space means more "stuff". You'll obviously try and be thrifty but things like furniture, bikes, lawn mowers etc. typically go up along with utilities.
C) Activity costs - these will increase.
D) Babysitting - depending if you have family of not close by this will increase. Overall, the cost of dates typically increases if you do go a babysitting route. (e.g. a 3 hr trip to the cinema goes from $20 to $65 inc. $15/hr x 3 hrs babysitting). The cost of divorce is higher I hear however!
e) Holidays - costs increase due to needing to increasingly fly around holidays, more seats, bigger cars, car seats, more luggage and (probably) having a lower tolerance for taking a risk on accommodation. By this last point I mean that if its just you and your wife and you turn up and somewhere is grubby its not the end of the world, you head out and can make a plan. With kids you'll be spending more time in that room and so you're less likely to take risks (IMHO).
f) Cars - you may need one (vs perhaps not now). You may also need it to be safer/bigger. Generally, the argument for owning one increases.
g) Life insurance - you now need this if you don't already.
h) College....
So all of the above you can put either a zero weight on or go all out to incorporate it into your lives. The latter, generally results in lifestyle creep and I think is broadly what most here on the forum are trying to avoid (in their own way).
Everyone's path and choices are different!
Congratulations on your new arrival, the one thing that I've not touched upon is the priceless joy they bring you.
Best of luck!!
Taking all of the above in to account, I just did a conservative (low end) NPV for each kid and I reckon the first one is about $350k ($750k undiscounted over 21 years) and then each additional kid is about $200k using a 7% discount rate.
To be clear this is taking into account all of the above. E.g the total cost of additional housing goes with the first kid. Equally, I'm incorporating some help for college.
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I also agree that kids are much more expensive than many on here are claiming. We live in a much larger house and consume way more utilities than DH and I would've chosen if we'd opted not to have kids. One other category that hasn't been mentioned yet is medical/developmental costs.
No one said kids don't cost money, it's just variable. You say "claiming" like other posters are making this up. In your experience, kids might be much more expensive, but for some people, they aren't.
Obviously, the conclusion is, that kids can be expensive. Some kids have expensive treatments and some don't. (Or, some people like us already have high health care costs and max a HD plan so the kids' conditions don't move the needle). Some of the variety is based on personal choices (that you may feel forced to make, I'll grant, because kids are in the picture), some are more location/personal circumstances dependent (housing and job market, living near family, etc), and some are a mix of both.
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There are a few moving parts around all of this and as others have said, it can be as expensive (or not) as you want it to be. This will come down to your wife and your priorities.
Some big considerations - or simply delta's vs not having kids:
A) Home location: typically nicer areas = better schools = better opportunities = more expensive area. This is a massive sweeping statement, there are a trillion exceptions but statistically pretty sound.
Remember, that if going to local public schools, location essentially dictates the demographic of your kids friends, and by extension, who you as parents are going to spend a good bit of time with. Its somewhat mute, until they start school.
B) Home size: you're going to need more space. How much more depends on you but when its raining/snowy for a week places get pretty small fast. Space = more expensive (all things being even). There are also increased benefits of having a garden. Because you're spending more time at home than in your pre-kid life, you'll probably notice point A more too. Along with more space means more "stuff". You'll obviously try and be thrifty but things like furniture, bikes, lawn mowers etc. typically go up along with utilities.
C) Activity costs - these will increase.
D) Babysitting - depending if you have family of not close by this will increase. Overall, the cost of dates typically increases if you do go a babysitting route. (e.g. a 3 hr trip to the cinema goes from $20 to $65 inc. $15/hr x 3 hrs babysitting). The cost of divorce is higher I hear however!
e) Holidays - costs increase due to needing to increasingly fly around holidays, more seats, bigger cars, car seats, more luggage and (probably) having a lower tolerance for taking a risk on accommodation. By this last point I mean that if its just you and your wife and you turn up and somewhere is grubby its not the end of the world, you head out and can make a plan. With kids you'll be spending more time in that room and so you're less likely to take risks (IMHO).
f) Cars - you may need one (vs perhaps not now). You may also need it to be safer/bigger. Generally, the argument for owning one increases.
g) Life insurance - you now need this if you don't already.
h) College....
So all of the above you can put either a zero weight on or go all out to incorporate it into your lives. The latter, generally results in lifestyle creep and I think is broadly what most here on the forum are trying to avoid (in their own way).
Everyone's path and choices are different!
Congratulations on your new arrival, the one thing that I've not touched upon is the priceless joy they bring you.
Best of luck!!
Taking all of the above in to account, I just did a conservative (low end) NPV for each kid and I reckon the first one is about $350k ($750k undiscounted over 21 years) and then each additional kid is about $200k using a 7% discount rate.
To be clear this is taking into account all of the above. E.g the total cost of additional housing goes with the first kid. Equally, I'm incorporating some help for college.
Yeah honestly that sounds probably more accurate than my back-of-the-napkin $200K guestimate.
I'd go so far as to say that the choice whether or not to have kids, and if so, how many, could be the single most important decision they make effecting their ability to FIRE.
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I guess I disagree with some of the posts here...kids are VERY expensive.
It sorta drives me crazy when Dave Ramsey or someone is like, "Oh kids don't cost that much!" or someone argues that economics shouldn't be part of the decision to have kiddos.
From our experience, food costs have probably increased by 75%, medical costs by at least 50% (braces are not cheap!), vacation costs basically double (we generally take flying vacations and visit big cities as opposed to taking road trips), most clothes purchases are for the kids, not me or my wife, so I'd say clothing costs doubled, and then we also paid somewhere around $100,000 for daycare, which was actually reasonable when you break it down (6 years of FT care = at about $150/week X 2 kids = $93,600). And if one of us would have stayed home with them, it would have cost us a LOT more than that, since my wife, the lower earner, makes well over $50K and has usually carried our health insurance.
And then there are college costs, and all the tiny little additional costs like for increased entertainment, hygiene products/GM, etc. , and the issue of likely buying a bigger home than you would have had you stayed single or just coupled.
We've spent at LEAST $200,000 on our kiddos thus far, probably much more than that if I sat down and calculated it all up. And hell, we've sent our kids to public schools. I can't imagine adding private school tuition to all of that.
Honestly, it drives me crazy when I hear that kids cost hundreds of thousands of dollars. Because it really is a choice. Yes, some version of daycare/SAH is non-optional (although there are a number of people who work different shifts to manage without kids), and health insurance and food and clothing costs will go up somewhat. But college costs are optional. A bigger house is optional. Braces and upgraded glasses are optional. Sending kids to all sorts of friends' birthday parties and lessons and sports and the like is all optional. Eating out and travel are certainly optional.
Now, the reality is that I have made all of these choices, and more -- they are expenses I was more than happy to incur, because it suited the lifestyle I wanted. But that was my choice -- no one was putting a gun to my head, and no one was going to call CPS on me if I didn't get my kid tuba lessons.
I really, really hate the trope that kids have to cost a quarter million dollars and up, because that is the kind of conventional wisdom/groupthink that this board in particular takes to task. It is the kind of thinking that takes both the power and the responsibility out of our own hands -- oh, gee, well, I had to get the bigger house/bigger car with safety features/fancy stroller/etc. etc. etc. It's the same kind of thinking that leads people to buy big houses in the 'burbs (the kids need a yard and a great school district!) and a Beemer and a Lexus (look at the safety features!) and take European vacations in the summer (it's educational! all the other families are doing it!) and suddenly find themselves 10 years down the road with no savings and exhausted by 2-hr daily commutes.
Look, if you want a UMC lifestyle for you and your kids, by all means, go for it -- I am the last person to criticize that choice. But for the love of Pete, take responsibility for that choice. I spend ridiculous amounts of money on my kids, and I do it proudly and unashamedly, because I have worked my ass off for a lot of years, and I did so specifically so I could offer my kids more choices than I had. I don't want my kids to have to choose their eyeglasses off the rack of "cheap ugly options covered by insurance," or to have to commute to the dental school for braces (where I literally got mugged waiting for the bus), or to be the weirdo at school for wearing shoes from Goodwill. But each and every one of those decisions is my own -- they are luxuries that I am privileged to be able to offer my kids, not necessities that I or my kids or anyone else is entitled to expect.
The reality is that there are millions of kids who grow up without a house with a lawn/paid-for college education/airplane travel/etc. and turn out to be happy, successful, well-adjusted adults. Are their parents bad parents if they didn't have hundreds of thousands of dollars to put toward extras? The only things kids really need are a safe home, sufficient food and clothing, a decent education, and loving-but-not-pushover parents. Anything beyond that is a want, not a need. And we all have both the right and the responsibility to choose which additional "wants" we value, and to make sure those fit within our overall financial plan.
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I guess I disagree with some of the posts here...kids are VERY expensive.
It sorta drives me crazy when Dave Ramsey or someone is like, "Oh kids don't cost that much!" or someone argues that economics shouldn't be part of the decision to have kiddos.
From our experience, food costs have probably increased by 75%, medical costs by at least 50% (braces are not cheap!), vacation costs basically double (we generally take flying vacations and visit big cities as opposed to taking road trips), most clothes purchases are for the kids, not me or my wife, so I'd say clothing costs doubled, and then we also paid somewhere around $100,000 for daycare, which was actually reasonable when you break it down (6 years of FT care = at about $150/week X 2 kids = $93,600). And if one of us would have stayed home with them, it would have cost us a LOT more than that, since my wife, the lower earner, makes well over $50K and has usually carried our health insurance.
And then there are college costs, and all the tiny little additional costs like for increased entertainment, hygiene products/GM, etc. , and the issue of likely buying a bigger home than you would have had you stayed single or just coupled.
We've spent at LEAST $200,000 on our kiddos thus far, probably much more than that if I sat down and calculated it all up. And hell, we've sent our kids to public schools. I can't imagine adding private school tuition to all of that.
Honestly, it drives me crazy when I hear that kids cost hundreds of thousands of dollars. Because it really is a choice. Yes, some version of daycare/SAH is non-optional (although there are a number of people who work different shifts to manage without kids), and health insurance and food and clothing costs will go up somewhat. But college costs are optional. A bigger house is optional. Braces and upgraded glasses are optional. Sending kids to all sorts of friends' birthday parties and lessons and sports and the like is all optional. Eating out and travel are certainly optional.
Now, the reality is that I have made all of these choices, and more -- they are expenses I was more than happy to incur, because it suited the lifestyle I wanted. But that was my choice -- no one was putting a gun to my head, and no one was going to call CPS on me if I didn't get my kid tuba lessons.
I really, really hate the trope that kids have to cost a quarter million dollars and up, because that is the kind of conventional wisdom/groupthink that this board in particular takes to task. It is the kind of thinking that takes both the power and the responsibility out of our own hands -- oh, gee, well, I had to get the bigger house/bigger car with safety features/fancy stroller/etc. etc. etc. It's the same kind of thinking that leads people to buy big houses in the 'burbs (the kids need a yard and a great school district!) and a Beemer and a Lexus (look at the safety features!) and take European vacations in the summer (it's educational! all the other families are doing it!) and suddenly find themselves 10 years down the road with no savings and exhausted by 2-hr daily commutes.
Look, if you want a UMC lifestyle for you and your kids, by all means, go for it -- I am the last person to criticize that choice. But for the love of Pete, take responsibility for that choice. I spend ridiculous amounts of money on my kids, and I do it proudly and unashamedly, because I have worked my ass off for a lot of years, and I did so specifically so I could offer my kids more choices than I had. I don't want my kids to have to choose their eyeglasses off the rack of "cheap ugly options covered by insurance," or to have to commute to the dental school for braces (where I literally got mugged waiting for the bus), or to be the weirdo at school for wearing shoes from Goodwill. But each and every one of those decisions is my own -- they are luxuries that I am privileged to be able to offer my kids, not necessities that I or my kids or anyone else is entitled to expect.
The reality is that there are millions of kids who grow up without a house with a lawn/paid-for college education/airplane travel/etc. and turn out to be happy, successful, well-adjusted adults. Are their parents bad parents if they didn't have hundreds of thousands of dollars to put toward extras? The only things kids really need are a safe home, sufficient food and clothing, a decent education, and loving-but-not-pushover parents. Anything beyond that is a want, not a need. And we all have both the right and the responsibility to choose which additional "wants" we value, and to make sure those fit within our overall financial plan.
+1. You said it better than I could. I was a pretty cheap kid. I grew up rural, wore all hand me downs, only had one birthday party, didn't play an instrument (except one year attempting to play my older sister's 20 yo clarinet). Our house didn't get any bigger, nor did our cars. For crying out loud, at one point we had TWO Fiats. My mom didn't work, so no daycare costs. We didn't vacation really. When I was 7, we took one family vacation down south - drove 2 days, stayed with an uncle, so that trip incurred two nights in a hotel, during travel. I didn't get braces (they weren't necessary. Yes, I have an obvious overbite and a big gap in my teeth. But otherwise, good teeth!)
On the flip side, here we are. We've endeavored to be frugal, but we needed childcare. We put our kids in summer camp, though technically we could leave them alone, together ? (Shudder, 13 and 7 yo boys.) We have not upgraded our house (2BR, 1BA, 1100sf, no garage. I'd love a 2nd bathroom). We have not upgraded our cars (Matrix and Civic). I went a few years with no new clothing, my kids get a lot of hand me downs, and my husband currently owns one pair of jeans and one pair of sneakers. So he's going to make a trip to Target to get another pair of each.
Our food costs have gone up, yes (and...it's a bit of a mystery why so much, since they both get free lunch at their public school). We make choices to be frugal every day, but we own the other non-frugal choices. We took 'em to Europe this summer (first time we'd been in 17 years, it was about $7k all told). That's only $500 more expensive than kid #1's braces - which we probably optional. His only problem is that he has his mother's overbite. Neither one wears glasses (yet), strange, as hubby and I had them by age 9/10. We've already paid for next year's vacation (by plane) to Hawaii. But for the MOST part, our trips are road trips, and they are short.
For sure the biggest cost is going to be college, unless in the next 4 years we are successful in convincing the 13 yo do to a cost-benefit analysis on doing 2 free years at the local CC and then transferring to a UC. If he stayed at the local UC, we could keep his total college costs to about $30k (in today's dollars). If he makes other choices, it could be 10x that. In today's dollars.
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Well, OP, I'd say you are getting a robust collection of answers from across the spectrum. I'd say do your best to be intentional about things, identify your priorities, and try to agree with your spouse about trade-offs.
People in the thread don't agree, but really as long as you and your spouse are on the same page and have a united front, that's what matters!
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I guess I disagree with some of the posts here...kids are VERY expensive.
It sorta drives me crazy when Dave Ramsey or someone is like, "Oh kids don't cost that much!" or someone argues that economics shouldn't be part of the decision to have kiddos.
From our experience, food costs have probably increased by 75%, medical costs by at least 50% (braces are not cheap!), vacation costs basically double (we generally take flying vacations and visit big cities as opposed to taking road trips), most clothes purchases are for the kids, not me or my wife, so I'd say clothing costs doubled, and then we also paid somewhere around $100,000 for daycare, which was actually reasonable when you break it down (6 years of FT care = at about $150/week X 2 kids = $93,600). And if one of us would have stayed home with them, it would have cost us a LOT more than that, since my wife, the lower earner, makes well over $50K and has usually carried our health insurance.
And then there are college costs, and all the tiny little additional costs like for increased entertainment, hygiene products/GM, etc. , and the issue of likely buying a bigger home than you would have had you stayed single or just coupled.
We've spent at LEAST $200,000 on our kiddos thus far, probably much more than that if I sat down and calculated it all up. And hell, we've sent our kids to public schools. I can't imagine adding private school tuition to all of that.
Honestly, it drives me crazy when I hear that kids cost hundreds of thousands of dollars. Because it really is a choice. Yes, some version of daycare/SAH is non-optional (although there are a number of people who work different shifts to manage without kids), and health insurance and food and clothing costs will go up somewhat. But college costs are optional. A bigger house is optional. Braces and upgraded glasses are optional. Sending kids to all sorts of friends' birthday parties and lessons and sports and the like is all optional. Eating out and travel are certainly optional.
Now, the reality is that I have made all of these choices, and more -- they are expenses I was more than happy to incur, because it suited the lifestyle I wanted. But that was my choice -- no one was putting a gun to my head, and no one was going to call CPS on me if I didn't get my kid tuba lessons.
I really, really hate the trope that kids have to cost a quarter million dollars and up, because that is the kind of conventional wisdom/groupthink that this board in particular takes to task. It is the kind of thinking that takes both the power and the responsibility out of our own hands -- oh, gee, well, I had to get the bigger house/bigger car with safety features/fancy stroller/etc. etc. etc. It's the same kind of thinking that leads people to buy big houses in the 'burbs (the kids need a yard and a great school district!) and a Beemer and a Lexus (look at the safety features!) and take European vacations in the summer (it's educational! all the other families are doing it!) and suddenly find themselves 10 years down the road with no savings and exhausted by 2-hr daily commutes.
Look, if you want a UMC lifestyle for you and your kids, by all means, go for it -- I am the last person to criticize that choice. But for the love of Pete, take responsibility for that choice. I spend ridiculous amounts of money on my kids, and I do it proudly and unashamedly, because I have worked my ass off for a lot of years, and I did so specifically so I could offer my kids more choices than I had. I don't want my kids to have to choose their eyeglasses off the rack of "cheap ugly options covered by insurance," or to have to commute to the dental school for braces (where I literally got mugged waiting for the bus), or to be the weirdo at school for wearing shoes from Goodwill. But each and every one of those decisions is my own -- they are luxuries that I am privileged to be able to offer my kids, not necessities that I or my kids or anyone else is entitled to expect.
The reality is that there are millions of kids who grow up without a house with a lawn/paid-for college education/airplane travel/etc. and turn out to be happy, successful, well-adjusted adults. Are their parents bad parents if they didn't have hundreds of thousands of dollars to put toward extras? The only things kids really need are a safe home, sufficient food and clothing, a decent education, and loving-but-not-pushover parents. Anything beyond that is a want, not a need. And we all have both the right and the responsibility to choose which additional "wants" we value, and to make sure those fit within our overall financial plan.
So to summize:
1) Everyone will make their own choices - I tried to highlight that point myself by saying "This will come down to your and your wife's priorities"
2) You assessed the world, made your decisions and priorities and the conclusion you came down to was....
.... drum roll....
to increase your costs substantially.
Out of interest, how much do you think your cost base increased pre and post kids?
I would suggest that my wife and my costs increased by 1.3x to be honest (e.g. $10k became $23k.... unfortunately on bigger numbers). In a similar boat to you, this was down to the choices that my wife and I have made.
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I guess I disagree with some of the posts here...kids are VERY expensive.
It sorta drives me crazy when Dave Ramsey or someone is like, "Oh kids don't cost that much!" or someone argues that economics shouldn't be part of the decision to have kiddos.
From our experience, food costs have probably increased by 75%, medical costs by at least 50% (braces are not cheap!), vacation costs basically double (we generally take flying vacations and visit big cities as opposed to taking road trips), most clothes purchases are for the kids, not me or my wife, so I'd say clothing costs doubled, and then we also paid somewhere around $100,000 for daycare, which was actually reasonable when you break it down (6 years of FT care = at about $150/week X 2 kids = $93,600). And if one of us would have stayed home with them, it would have cost us a LOT more than that, since my wife, the lower earner, makes well over $50K and has usually carried our health insurance.
And then there are college costs, and all the tiny little additional costs like for increased entertainment, hygiene products/GM, etc. , and the issue of likely buying a bigger home than you would have had you stayed single or just coupled.
We've spent at LEAST $200,000 on our kiddos thus far, probably much more than that if I sat down and calculated it all up. And hell, we've sent our kids to public schools. I can't imagine adding private school tuition to all of that.
Honestly, it drives me crazy when I hear that kids cost hundreds of thousands of dollars. Because it really is a choice. Yes, some version of daycare/SAH is non-optional (although there are a number of people who work different shifts to manage without kids), and health insurance and food and clothing costs will go up somewhat. But college costs are optional. A bigger house is optional. Braces and upgraded glasses are optional. Sending kids to all sorts of friends' birthday parties and lessons and sports and the like is all optional. Eating out and travel are certainly optional.
Now, the reality is that I have made all of these choices, and more -- they are expenses I was more than happy to incur, because it suited the lifestyle I wanted. But that was my choice -- no one was putting a gun to my head, and no one was going to call CPS on me if I didn't get my kid tuba lessons.
I really, really hate the trope that kids have to cost a quarter million dollars and up, because that is the kind of conventional wisdom/groupthink that this board in particular takes to task. It is the kind of thinking that takes both the power and the responsibility out of our own hands -- oh, gee, well, I had to get the bigger house/bigger car with safety features/fancy stroller/etc. etc. etc. It's the same kind of thinking that leads people to buy big houses in the 'burbs (the kids need a yard and a great school district!) and a Beemer and a Lexus (look at the safety features!) and take European vacations in the summer (it's educational! all the other families are doing it!) and suddenly find themselves 10 years down the road with no savings and exhausted by 2-hr daily commutes.
Look, if you want a UMC lifestyle for you and your kids, by all means, go for it -- I am the last person to criticize that choice. But for the love of Pete, take responsibility for that choice. I spend ridiculous amounts of money on my kids, and I do it proudly and unashamedly, because I have worked my ass off for a lot of years, and I did so specifically so I could offer my kids more choices than I had. I don't want my kids to have to choose their eyeglasses off the rack of "cheap ugly options covered by insurance," or to have to commute to the dental school for braces (where I literally got mugged waiting for the bus), or to be the weirdo at school for wearing shoes from Goodwill. But each and every one of those decisions is my own -- they are luxuries that I am privileged to be able to offer my kids, not necessities that I or my kids or anyone else is entitled to expect.
The reality is that there are millions of kids who grow up without a house with a lawn/paid-for college education/airplane travel/etc. and turn out to be happy, successful, well-adjusted adults. Are their parents bad parents if they didn't have hundreds of thousands of dollars to put toward extras? The only things kids really need are a safe home, sufficient food and clothing, a decent education, and loving-but-not-pushover parents. Anything beyond that is a want, not a need. And we all have both the right and the responsibility to choose which additional "wants" we value, and to make sure those fit within our overall financial plan.
+1. You said it better than I could. I was a pretty cheap kid. I grew up rural, wore all hand me downs, only had one birthday party, didn't play an instrument (except one year attempting to play my older sister's 20 yo clarinet). Our house didn't get any bigger, nor did our cars. For crying out loud, at one point we had TWO Fiats. My mom didn't work, so no daycare costs. We didn't vacation really. When I was 7, we took one family vacation down south - drove 2 days, stayed with an uncle, so that trip incurred two nights in a hotel, during travel. I didn't get braces (they weren't necessary. Yes, I have an obvious overbite and a big gap in my teeth. But otherwise, good teeth!)
On the flip side, here we are. We've endeavored to be frugal, but we needed childcare. We put our kids in summer camp, though technically we could leave them alone, together ? (Shudder, 13 and 7 yo boys.) We have not upgraded our house (2BR, 1BA, 1100sf, no garage. I'd love a 2nd bathroom). We have not upgraded our cars (Matrix and Civic). I went a few years with no new clothing, my kids get a lot of hand me downs, and my husband currently owns one pair of jeans and one pair of sneakers. So he's going to make a trip to Target to get another pair of each.
Our food costs have gone up, yes (and...it's a bit of a mystery why so much, since they both get free lunch at their public school). We make choices to be frugal every day, but we own the other non-frugal choices. We took 'em to Europe this summer (first time we'd been in 17 years, it was about $7k all told). That's only $500 more expensive than kid #1's braces - which we probably optional. His only problem is that he has his mother's overbite. Neither one wears glasses (yet), strange, as hubby and I had them by age 9/10. We've already paid for next year's vacation (by plane) to Hawaii. But for the MOST part, our trips are road trips, and they are short.
For sure the biggest cost is going to be college, unless in the next 4 years we are successful in convincing the 13 yo do to a cost-benefit analysis on doing 2 free years at the local CC and then transferring to a UC. If he stayed at the local UC, we could keep his total college costs to about $30k (in today's dollars). If he makes other choices, it could be 10x that. In today's dollars.
I think that you make great points and are reinforcing the point that most agree with - that it comes down to choices.
I suppose the OP question, and one we hear frequently, is more to do with how much higher your cost base is with the two kids as opposed to if you were a frugal couple.
e.g. would you perhaps have one/no cars? You wouldn't be paying for braces and that trip to Europe probably would have looked different in terms of timing (not school holidays perhaps), room arrangements, locations, meals etc.
You comment on college and its totally up to you as parents if you want to contribute to that or not - shows the range of outcomes. This stems from zero (which would be the same cost as if you didn't have kids) to something greater than zero; which is obviously an increase.
My personal experience was that there is minimal cost increase when there is one child under the age of 3... but after that point (and assuming that other kids come along - which again is a big assumption) costs start to increase as lifestyle choices need to be made.
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Well, OP, I'd say you are getting a robust collection of answers from across the spectrum. I'd say do your best to be intentional about things, identify your priorities, and try to agree with your spouse about trade-offs.
People in the thread don't agree, but really as long as you and your spouse are on the same page and have a united front, that's what matters!
I agree! Great responses in here from a wide variety of parents. This has been an eye opener, guess I better keep working!
Monday was the first day wife and I have both been back to work full-time, with baby girl at the babysitter's. So far so good, its actually been a relief to have productive lunch breaks home alone or the gym. Since the house is empty, I've been able to do all the dishes, laundry, clean bottles and pump parts and yard work. Then, today, I met a buddy at the gym and had a great hour, feeling like my old self, except with a little parental guilt. But now I've got my workout in and will be focused on baby tonight and making dinner for my wife.
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FYI - in our small mountain town, HCOL area, with minimal options available, we've found an amazing stay at home Mom offering day care out of her house. She home schools her 4 kids, and had availability for both our infant and her 2 year old cousin. The sitter and her kids (ages 2-9) seem to legitimately like our daughter, and she comes home happy and healthy every day. We're very happy with the arrangement for now. Cost is $45/day, only on days when baby is there. This seems like a great deal for our area.
Wife and I are both back to work full-time. I know this is the early retirement forum, but we're not there yet. We're early 30s, both in jobs we like with decent pay (especially wife, making more than me). Both jobs have good benefits. Mine offers a childcare FSA for $5k/yr. Basically, they pull $5k out of my paycheck, split between 26 periods, I provide the childcare receipts and get reimbursed tax-free. So it shields $5k; at 22% tax rate, that's $1100.
A similar program is offered for healthcare FSA, up to $2700 (*22%=$594). This would cover a large chunk of our deductible/OPM tax free. It is use it or lose it, so I would be out $2700 if we didn't need it in 2020. Wife and I have traditionally been very healthy with little to no healthcare costs, but I figure with baby, we'll likely hit our deductible every year, right?