We have four kids 5 & under. Generally they are cheap -- we use cloth diapers, clothes are mostly gifts or hand-me-downs (or worst case, used). The biggest "expenses" are gifts and food, and, well, are gifts really an expense? A lot depends on what you teach them -- if you teach them they need new toys and new things to be happy, you're going to spend a lot. If you teach them to make fun out of what they have (make a fort out of the kitchen chairs and blankets, ...) you'll spend a lot less. I think food will be a much bigger issue when they hit teenage years though.
Also, there's currently still a tax credit for each child (and having additional dependents ups your deductions). This is probably not a factor if you have a really low income (i.e. retired) but it is if you're working. This year, for example, we actually had a negative effective income tax rate -- while my income is reasonable, we had so many deductions from charitable giving, mortgage interest, number of dependents, and so on, that once the child tax credit was tacked on, the government owed US money. (I'm not talking about just getting a refund -- we actually paid less than zero taxes). So yes, there's a cost, but it is partially offset.
Though i've asked this question myself in the past, I also think it's a bit of a silly question. Can life really just be turned into numbers? That is to say, if I had to, I'd gladly give up financial independence for my kids. Not that I want to, or that I plan to, but it's just such an amazing, special relationship. I can't imagine giving that up because kids might get in the way of me getting where I want to be financially, if that makes any sense. I guess what I'm saying is that my life, with my wife and kids, is about a lot more than me, and I'd never want to give that up for financial reasons.
