Author Topic: How much should I budget for my kid as she grows up?  (Read 3299 times)

ysette9

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How much should I budget for my kid as she grows up?
« on: May 05, 2015, 02:13:42 PM »
Hello all,

I am refining my post-FIRE budget and finding that I have to make a number of wild guesses on expenses. That amount of uncertainty is making it tough to plan. One area in particular is my baby. She is not quite 1 right now and so far the biggest expenses are daycare (won't continue forever and wouldn't if we were FIRE anyway) and 529 savings (planning on continuing that for the time being). The other stuff is so minimal it is just background noise (i.e. diapers, some random items at the second-hand kids' store, etc.). I expect this will change over time because I hear that kids are more expensive than babies. I can imagine wanting her to have piano lessons at some point, for example, or maybe she will want to learn a martial art or play sports.

What do you budget for your kids and what do you think is reasonable for my estimate going forward? Right now I am guessing a total of $500/month for "dependent expenses" which includes 529 savings, currently at $250/month.

Cheddar Stacker

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Re: How much should I budget for my kid as she grows up?
« Reply #1 on: May 05, 2015, 02:26:28 PM »
If you are the only one making the decisions (i.e.-there isn't another parent in the mix) then it can be as low as you want. A little bit for clothing, and little bit for food, maybe a little for activities.

On the other end of the spectrum, you have expensive private schools, Iphones, etc.

The cost for our kids is somewhere in the middle, but I'm not a single parent either. My wife is not mustachian. So it's up to you really.

meandmyfamily

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Re: How much should I budget for my kid as she grows up?
« Reply #2 on: May 05, 2015, 02:54:05 PM »
$500 including the 529 savings sounds right to me unless you forsee her really being involved in traveling sports or a very serious dancer.  We have four kids and they are only as expensive as you make them minus unforseen health costs.  Make sure your HSA is full!

Bob W

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Re: How much should I budget for my kid as she grows up?
« Reply #3 on: May 05, 2015, 03:23:37 PM »
I might suggest another route and figure out how much she would need to be retired at age 25.  You can do the reverse math on that.   My guess would be that around 18K per year for 20 years should do it.    Then ad in current expenses.

The best answer may be to invest as much as you possibly can and forget about a personal FIRE goal because your goal is now the FIRE goal for your child.  Of course I could always be wrong. 

sugarsnap

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Re: How much should I budget for my kid as she grows up?
« Reply #4 on: May 05, 2015, 03:46:07 PM »
Sports in my area run $40-$60 per month.  Music and drama are often more, $75 and up.  Clothes are not expensive until the high school years when they care what they wear. Braces run $5k, additional medical, dental, vision costs will depend on your insurance. Plan for a few outlays of a couple hundred once or twice a year for a summer camp, overnight field trips, sports tournament, special school supplies, etc.

ysette9

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Re: How much should I budget for my kid as she grows up?
« Reply #5 on: May 06, 2015, 02:42:38 PM »
Thanks for the input. My husband is more frugal than me so we should have no problem with is support there. So far she is costing us very little outside of daycare and college savings. I have found it interesting to observe our spending as compared to a small group of close friends I have made with babies all born around the same time. We probably make the most of the group and appear to spend the least. We have bought her some new things but have been pleasantly surprised at how many things we have received/borrowed from friends! I hope we can continue keeping the spending down, though I am about to pull the trigger on a sleep coach. ~rolling eyes~ That is a story for another day though....


Guses

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Re: How much should I budget for my kid as she grows up?
« Reply #6 on: May 06, 2015, 03:03:16 PM »
I might suggest another route and figure out how much she would need to be retired at age 25.  You can do the reverse math on that.   My guess would be that around 18K per year for 20 years should do it.    Then ad in current expenses.

The best answer may be to invest as much as you possibly can and forget about a personal FIRE goal because your goal is now the FIRE goal for your child.  Of course I could always be wrong.

I don't think this is how you should do it. Why would you hand over a 25 y/o enough money for them to (supposedly) last a life time ?

That's a very good recipe for disaster.


I am keeping track of our spending for our kid so far and it is currently sitting at about 100$ per month. Daycare will multiply this several folds.

chouchouu

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Re: How much should I budget for my kid as she grows up?
« Reply #7 on: May 06, 2015, 04:22:45 PM »
Well I think a lot of it will depend on where you live and how much support you have. For example if you live somewhere in the mountains you might find yourself buying expensive snow boots every year (shoes are one particular area that charity shops seem to lack in, at least where I live) if you have no supportive family then you might budget in a babysitter every now and then. Then of course is travel, children cost 70% of a full fare but some airlines charge more.

There are so many variables it would be hard to estimate without knowing more details about your expectations and lifestyle.

Healthandwealth

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Re: How much should I budget for my kid as she grows up?
« Reply #8 on: May 07, 2015, 04:45:10 AM »
Think IT REALLY DEPENDS how much you spend on your kids as they grow up.

We've got 2 teenage daughters (10 and 14) and we are living in Europe (Netherlands). Some years ago I thought the most expensive years were the pre-school years (mainly because of the costs of day care).
Now they are older, we spend on activities like sports (both play field hockey), music lessons (one daughter plays piano, the other cello) and drama (youngest), scouting (oldest).
Of course you don't NEED to spend on so many activities. We do because it is good for their development (sorry if this is incorrect english).

And then there's an after school carer for the youngest daughter (twice a week, the other days her dad or me is at home after school). The daycare-woman also cooks for us and helps youngest doing homework. She can't help the oldest daughter because the oldest one just doesn't accept her help and doesn't listen to her.

School is not really expensive around here (public schooling in the Netherlands). You pay according to your income.

But I never expected our oldest daughter to need private lessons and help after school four times a week. It's a long story, but she wasn't selected for the high quality school she wanted to go to (lottery systeem, not related to your grades; if too many kids want to go to a school they just randomly pick a few names who are not going to be selected, arghhh!!).
Then she went to a Montessori school. Now two years later, our oldest daughter is really happy at that school but the education is quite poor. Kids can do whatever they want in the classroom, even listening to music on their phones or preparing for other lessons or do home work or just talk to eachother (4 or 5 kids) doing 'group-work'. Teachers often don't teach, they are just available in the class room if kids have questions.

Last autumn her grades were dropping (2nd year). School advised to switch to a lower level of education (which would be stupid because she's very intelligent).
 That's why she is in a private afterschool program four days a week since november (). At that time we thought it was gonna last a few months. That was 6 months ago.

Anyway, I recently calculated we spend around 1250 per month on our 2 teenage daughters and food is not included in that figure (gonna get face punches now I guess). I want my kids to be happy and develop themselves, but I also want to prepare for the future and save more money. Since our oldest daughter started this private after school program we save very little. Coming months my salary temporarily drops, we need to use a little bit of the emergency fund if we continue this after school program. I must say, the thought of this really hurts (you fellow mustachians probably understand...).

Anyway, answering your question: the cost (or should I say: the expenses) really depend. Not all expenses are predictable. In the end it's about choices. We could stop sports and music lessons etc for instance or going on family-holiday. Or downsize our house.

---------------
About our oldest (may be I should start a separate item for this :)) OUR DILEMMA is: change schools for oldest this summer (won't be easy to find a spot on a nice and good school, but we already put her on a few lists) or keep on joining the after school program for probably quite some time??

Husband doesn't want her to change school, he changed his mind, last autumn he wanted to switch schools. A few days ago he said to me he doesn't want to take responsability for her changing schools (because of the social aspect, she is 14 years old and that's not an easy age). I said we're basicly living above our means now. I think husband is thinking this over in his mind. This morning he asked eldest daughter how long she's expecting to be in this private after school program, she was talking about exam kids which means she's thinking she needs this for FOUR more years. I thought: no way..... What if the youngest needs extra classes? What if they want to go to university and we were not able to save money to -partially- support them? What if my pension is inadequate by the time I'm 67? Not even talking about retiring earlier....
We have no debts other than our mortgage, we do have an emergency fund which equals around one year of living expenses, but that's it.

On the other hand, what if oldest would be completely demotivated when we force her to change school? What if she doesn't want to do homework at all - out of anger and frustration? What if she couldn't find new friends at the new school or would just not be happy? What would happen to our family bonding if we force her to change schools? Husband is afraid we'll lose our relationship (parents and daughter).

I still think we need to get her on a proper school.... Does anyone have experience on this kind of stuff?? Thanks in advance.

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cerebus

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Re: How much should I budget for my kid as she grows up?
« Reply #9 on: May 07, 2015, 06:29:00 AM »
If nothing unexpected happens, $500/month seems more than enough, particularly if you raise them to be mustachian. I personally don't plan on assisting my children to FIRE because it seems to be self-defeating - they need to learn the value of money themselves in order to develop the discipline to stash it. I didn't ever own a car until I got married for instance. I would say without a doubt the most expensive period of time for my father was when I did my education abroad. If you can plan to mitigate the cost of higher education you can be quite thrifty with them otherwise.