Parents of young children: How do you predict what you'll spend in the future

[cangelosibrown]

I have a 1 year old son and am basically FI, by some definition. I very nearly retired a couple years ago, but decided against it because we were planning on having children (and because my job is so good, that's another discussion). I would have been on the low end of what I was comfortable with as a retirement number 2 years ago, now I'm a bit higher and could retire any time probably.

 Except I have no idea how to predict my spending as my son grows older. Will I want to move to a better school district? College costs? What sort of life do I want for my son? I'm a minimalist and don't really have any need or desire for anything, but is it selfish to foist that on my son? I'm rambling, but you get the point.

Before my son I felt like I could predict fairly well what my life would look like 10 years down the road and what I'd be spending. Now I have absolutely no idea. How can I make a decision on running l retiring when that's true?

[AMandM]

I'm a parent of grown children, not young ones, but I'll bite. The short answer is, you can't really predict your expenses because you can't predict your needs. What you will need to spend money on (clothes, food, medical care), and what you will choose to spend money on (education, activities, entertainment) both depend on the number of kids, their state of health, their talents and interests (and the degree to which you want to support those), and the opportunities and costs in your area.

If you'd like one data point, I would estimate that at the peak of our child-spending years we spent approximately twice what we spent before kids. We had a larger family than most(seven kids), but also a simpler life than many of our peers: few paid extracurriculars, no high-level sports, no vacations other than camping or visiting family, no personal electronic devices, no orthodontia. I don't see it as selfish, but as part of bringing my kids up with the values I want to impart.

If you like your job, you might as well stay and add to the stash while you decide. You don't have to have 25x the peak spending, since you won't be spending that amount indefinitely.  You can switch to part-time work, or you can retire and then pick up some paid work later on if your expenses rise beyond what your stash will support.

Congratulations on the stash and the baby!

[frugaldrummer]

Also the parent of three grown children. Expenses included:
Extensive orthodontia for all three (my genes).
Pet expenses (cat and dog).
Music lessons and instruments (no regrets, love of music is a lifelong gift)
Karate lessons (through black belt for my oldest who has mild Aspergers, gave him confidence and taught persistence)
Annual ski trips (my ex husband grew up skiing and wanted to give them that. None can afford to ski now but these trips were great family memories. Camping trips could fill the same purpose less expensively.)
Surfboards and wetsuits
My kids didn't play organized team sports except for a year or two of soccer but there are expenses associated with that as well.
Clothes (they grow!)
Wisdom tooth extraction (all three)
College (prolonged by a couple extra years for one through no fault of their own).
Two live with me as adults - the one with Aspergers (who works but doesn't make enough to live independently in our high rent area) and one who is recovering from an addiction.
Emergency room copays times maybe 10? (Asthma, broken arms and legs, laceration - ordinary kid stuff).
One hospitalization for appendicitis.
Prolonged psychiatric counseling for one with an eating disorder (luckily covered under our plan). Only avoided extremely expensive residential treatment because I wasn't working and could monitor 24/7 at home.

[MayDay]

The issue is that you can't.

You can't predict whether your kid will struggle and need extra support or a special school or therapy, or any number of other things.

Even if nothing goes wrong you are basically supporting adults in terms of the things they are consuming, for a good decade.

My kid is autistic and needs therapy, my other kid needs speech, both need braces, have broken bones, outgrow clothing shockingly fast, cost a lot to take on vacations, the list goes on. Obviously some of those things are optional.

[honeybbq]

One of the biggest line items will be whether you want to pay for college or not.
100k+/child.

[MayDay]

One of the biggest line items will be whether you want to pay for college or not.
100k+/child.

This is what people talk about, but I'd argue the medical costs are higher, as is the combo of all the other costs people don't think about when they have babies like the cost to feed them for their high-eating years, etc. 

Age ~7-12, let's say they eat the equivalent of an adult. 12-18, they eat 1.5-2x. at perhaps 200$/month per adult, you are looking at perhaps 36k per kid.

For medical, of you are switching to a family plan and hitting the OOP Max (we usually do) it's ~5000 a year more in premiums + 10k a year OOP if you had a moderately subsidized HDHP. 15k x 20 years = OMG. Of course in that case multiple kids cost the same as 1 kid. There are some volume discounts ;)

[ruraljuror]

It's a big guessing game, but for forecasting purposes I'd recommend settling on an inflation rate. The rate will depend on your parenting style, but I take expenses related to the kids and expect them to grow at 3% per year not including college.

[Zamboni]

I managed costs pretty well when my children were born through elementary school. All clothes were second hand, we mostly ate at home, activities were still pretty affordable through the local parks and rec, etc.

In middle school the costs started to pick up a bit: they were eating more food and sports got more expensive (including $5-15 admission per adult to see their games.) It became harder to find suitable second-hand clothes due to their weird proportions . . . they were as tall as adults, but much skinnier than most.

Then they hit high school and the wheels came off the wagon. Car insurance on our three vehicles (two 2003's and a 2014) is $2200 for 6 months. $100-$150 per teen per month is the going rate, apparently, even if they don't drive much and are driving old tanks, because liability insurance is so high for them as new drivers. It's August 16th and I've spent over $1000 already this month feeding me and two teenagers (including $750 in groceries, much of which we still have, so technically I could make it to the end of the month from here if needed.) We are not eating steak and lobster . . . and I cook daily. They just eat A LOT. Part of the restaurant spending has been due to fluke injury emergencies that kept us running around unexpectedly and away from home at meal times.

And I've been very lucky in terms of child health. I think the poster who said it's hard to predict nailed it.

[cangelosibrown]

Thanks everyone for the frank replies. Definitely some sobering thoughts. The other thought I've had lately is that I'm spending more because of the baby, not just on baby things, but on everything -- I don't have the energy I used to for saving and optimizing. I don't expect that I'd going to change any time soon, and the child costs will just keep increasing.

[Cassie]

Zamboni, nailed it. 2 of my 3 kids needed braces and that isn’t cheap.

[trollwithamustache]

Kids seem expensive at first... then they get cheaper but after age 8 or so, they keep ramping up in cost.  Orthodonture is one. Your 2 year old will be happy with a new stuffed animal and a box. older kids will want more complicated things... and there will be things with educational value that you are ok buying them. While you don't have to do travel teams, there will be some sport/activity they like/are good.  By the time they are in High School you will need a decent computer and adult priced clothes. And since they are growing, the clothes cost keeps hitting every year. Dear god then they will want to drive!

I view it as a linear expense curve per child. You can be reasonable about every speeding choice, but the costs just keep coming. (and yes kids are worth it)

[remizidae]

Maybe you could ask some parents in your area how they feel about the school district.

Unpopular opinion around here, but I think that parents who can help their kids with college costs should do so. It’s an amazing gift for your child to be able to start their career debt free. But if you plan for a fancy college and grad school, you’re looking at potentially $300k just for tuition at today’s prices, and that’s assuming the child can work enough to pay his own living expenses.

[insufFIcientfunds]

Kids seem expensive at first... then they get cheaper but after age 8 or so, they keep ramping up in cost.  Orthodonture is one. Your 2 year old will be happy with a new stuffed animal and a box. older kids will want more complicated things... and there will be things with educational value that you are ok buying them. While you don't have to do travel teams, there will be some sport/activity they like/are good.  By the time they are in High School you will need a decent computer and adult priced clothes. And since they are growing, the clothes cost keeps hitting every year. Dear god then they will want to drive!

I view it as a linear expense curve per child. You can be reasonable about every speeding choice, but the costs just keep coming. (and yes kids are worth it)

This was totally true for us. We have a teen and a 7 y/o. When they got out of diapers, it was a drastic cut in cost. They would eat off our plates, no big deal. Bought clothes off eBay, used holidays and birthdays to stock up on clothes from family. Then one got older. Still try and use the same approach - TJ Max; eBay; Marshall's, etc. for clothes. Older boy is in braces. Ortho gave us 24 month level payments, no interest. 160/mo. So we cut a few things here and there, blends right in. No large outlay.

It ebbs and flows. Don't worry, you find a way. I agree it's totally worth it. I'd do anything for those kids.

@remizidae - I agree with college. We help them our via a 529. Our state has the self managed option through Vanguard, which I do. They have a gifting option where I can print off a gift coupon, and family can donate directly to their 529. Means I don't have to mess with it, and they get the tax deduction. I always have the kids go up to whomever sends money and personally thank them and send them a thank you letter (well they do for any gift.) Then I throw money in there too. Probably won't cover the whole college, but they can community college it for two years and then do a 4 year state school with scholorships, and they will for sure get close. If child A has leftover $$, then that stays in the 529 for child B. Maybe I can have two college graduate kids, no loans? I don't know, but that would be pretty cool.

Kids are awesome.

[Dee18]

I found the biggest factor in how much I and other parents spent on our children was our choices.  I never wanted a large house, never bought a child a car; I shopped second hand for kid clothes.....but decided to put one child in private high school.  (The latter choice came out fine financially as she obtained full tuition scholarships for college.) as the parent you get to make those choices so much is within control...although there will be many surprises, some challenging, such as health issues.

[tinsoldier]

See if you will be the only one who earns in the family a certain time. First, take care of your health and, if necessary, take care of your pension. As for the child - it is not worth it to move somewhere right away. Make yourself an approximate list-table, consult with friends who have adult children. College - yes, you should always put off a little bit, it’s better to save on a prestigious school and super expensive things.https://www.usda.gov/media/blog/2017/01/13/cost-raising-child

[habanero]

Kids might alter both sides of the education. The cost side has been commented on, but it can also affect household income and most likely not in a good way as kid requires a portion of your time and energy. Also when having kids priorities might change and those are likely to not be towards earning more money unless forced to (exceptions most certainly exist, of course). As time for kids reduces "me-time" working slightly less suddenly becomes tempting. So that's more expenses (the kids) and less income (less hours worked).

A lot of it comes down to what you choose and how you play it. For us we probably spend less on holidays now then before we had kids because we don't really go abroad anymore and we tend to less of the fancypants stuff like eating all meals in a restaurant on holiday etc etc.

There are some many known unknowns and unknown unknowns that you can't really plan it that much. Even trying out for a few years might not give you that much of an idea as a kid aged 3 and 13 are very different and a lot of life can happen in between.

[oswin]

With kids, the biggest mandatory expenses tend to be childcare, healthcare, and basic necessities (food and clothing). Now, childcare can mean a lot of things. It could mean daycare, because you've got no one who will watch the kid(s) for free, such as a stay at home parent or grandparent. It could also mean babysitters for date nights. Healthcare for kids can be enormously expensive, even with relatively healthy kids. Cheap healthcare for kids can be had in some states if your income is low enough, but otherwise expect substantial premiums and copays, even with employer-sponsored healthcare. And then there are all of the more optional costs that other have mentioned - organized sports, music lessons, math camp, etc.

I would be very careful about any assumptions about moving for "good schools", since much of the time "good schools" is code for rich white neighborhood. Many school rating systems end up having scores that are entirely correlated with affluent families. See also https://chalkbeat.org/posts/us/2019/12/05/greatschools-ratings-poverty-race-segregation-housing/

As noted in this thread, kids can also change the time/money/convenience tradeoff equation. When you've got 2 working parents and 3 young children (my own situation), convenience has a tendency to win out. Also paying for help with chores, etc (house cleaners, yard service). Because there's just no extra time for anything. With only one kid, you'll have more time but will still have to make conscious choices to weigh which things are worth spending money on (to buy yourself time) and which things are not.