Good point MrsPete about the ages of the kids and their costs. In terms of college costs we have 529 plans setup we contribute too (listed) that we do not include in our retirement stash. We are targeting paying for not more than half of in-state college or technical school for the kids that want that. Both my wife and I worked at least part time for our colleges and think that skin in the game is important.
The braces and other larger medical costs is interesting and will have to make sure we have some additional medical costs thought through for all the kids.
I think our lifestyles may be a bit different though - I believe I am entering the lowest costs decades of my life.... I started work in Chicago as a strong consumer (frugal by my peers standards though.) We bought houses, cars, went on frequent travel and outings. Monthly Grocery and food spends was well over 1k. Now we are in a lower COL city with no consumer debt of any kind and a paid for house.
Even if we let our kids force some lifestyle creep (can they do that?) I can't imagine they won't get us back to our car / house paying consumer lifestyle. I do take the point though that what we forecast for RE at current budget (+ inflation) over time probably needs to get to the next level of detail to determine the stash to have some buckets of budgets where 3 teenage boys may in fact have a meaningful hit to things like food budgets). Based on some of the genetics braces will certainly be a predictable expense.
I really appreciate the perspective though from someone further down the child rearing road.
College: I've never bought into the "skin in the game" concept in terms of college. The reality is that if you wait 'til college to teach your kids to be grateful for the opportunities they're given,
it's too late. You're going to teach the children to understand the value of a dollar and help them develop a work ethic before they turn 10 or so; once they're actually in college, you're just finishing what you've already started. At MANY steps in their childhoods we've required our kids to work /cover a portion of the cost of things they've wanted, but we see basic college expenses in a different light-- the financial lessons have been learned, and it's time for them to put the lion's share of their efforts into classwork.
We're paying the basics for our oldest, and she's responsible for her wants. She's absolutely done her share by working hard to make the most of our investment and by living frugally. We're very pleased with what she's accomplished, and we feel sure her just-about-to-finish-high-school sister will follow in her footsteps.
We have made it clear from the beginning that we're on the "semester plan". Because our oldest excelled in high school, we gladly paid for her first college semester. When we saw good grades and progression towards graduation, we gladly paid for the second semster, etc., etc., etc. If at any point we didn't see what we wanted to see, we would've immediately stopped and reconsidered the situation -- but that didn't happen with our oldest, and we don't expect it to happen with our youngest either.
Perhaps we have lived different lifestyles. We've always been frugal and have been completely debt-free including mortgage for ... well, more than a decade. Honestly, I know we paid car payments and a mortgage, but it seems like forever ago.
We've always been frugal, and that didn't change when our kids became teens. I wouldn't say it was "lifestyle creep" that increased our costs; rather, things just begin to cost more when your kids reach that age: We didn't suddenly start buying them more clothes or designer clothes, but adult clothes cost more than children's clothes. We didn't suddenly start eating out more, but the quantities they put on their plates increased. By the time they're teens, you're sort of "done" testing out whether your kid is a music kid or a soccer kid or whatever ... and with that often comes increased activity costs: Once you know, for example, that your kid is really into track, you're going to buy him the GOOD running shoes; or once you know that the guitar is more than a passing fancy for him, it's time to invest in a GOOD instrument for him. And you'll want your kids to take part in career exploration activities, even though they'll cost you money; for example, my girls volunteered at the hospital, which required some cost on my part ... but it was a good experience for both, and now my oldest is almost finished with her RN. A frugal family will probably require the kid to earn the first $100 or so of a major expenditure, or will have some other plan for instilling appreciation for the money spent, but it'll still add up to MORE than the younger-kid expenses.
For example, the first year our oldest had her license, adding her to our family cars cost as much as my car insurance ... and my husband's car insurance ... and our homeowner's insurance COMBINED. Yet what's the choice? Don't teach her to drive? Keep her on a learner's permit until she's ready to go to college, then expect her first solo driving trip to be her college orientation weekend? It's things like that that make you say, "Wow, everyone said ___ would be expensive, but I didn't realize how expensive!"
I suppose if you've been spendy in the past and are newly-frugal, you could decrease your spending during the teen years -- but that's a change in your perspective, not the cost of raising teens. All things being equal,
your cheapest childhood years are the elementary and middle school years.