Cost of kids

[accountingsucks]

I am one of those hopeless souls stuck in MegaCorp, but planning to ER.

I am 30 y.o., have my mortgage paid off (home worth 275K) and between my company RSP and my savings am putting approximately $40,000 per year in either my RRSP (retirement account in Canada) or non retirement funds. I currently only have about $40,000 in my retirement accounts as I just started doing this as my focus previously was on paying the mortgage off.

I am by profession an accountant so naturally I've built my own comprehensive Excel worksheet with fairly extensive detail on every possible scenario. By my projections I will definetly be able to retire at 50 and possibly at 45 depending on market conditions. Ideally I want to semi retire at 47 or 48 and work 2-3 days per week at that point (doing bookkeeping, tax returns, easy non stressful stuff) whereby I would cover my expenses and let my nest egg grow for 5 or 6 more years during the highest compounding period.

Of course planning like this means absolutely nothing as there are so many variables. Some of my projections are that I stay single, get married with no kids, and married with kids. Obviously the best result financially is getting married with no kids as there would be 2 income streams saving for ER.

Having said all this, I HAVE NO IDEA how much kids would cost. I assume my wife would have a salary of about $35,000 and that a child would cost $1,000 a month to raise for 18 years (and then 3% inflation after that). I am assuming that I would not pay for college (sorry kids, pay your own way like I did...plus schooling here is very cheap). How realistic is this figure? Obviously each phase of a child's life will cost more or less than others. Generally speaking I am assuming that having a 2nd income would offset the cost of children in my calculations but would be interested in hearing of better estimates for my projections. $12,000 a year adjusted for inflation seems reasonable to me though (that's about $220,000 over 18 years in todays dollars)

 

[brewer12345]

Have one and you will find out.

The biggest drivers of cost for us thus far has been needing a car and home big enough for kids. On a day to day basis, we probably spend anither 200 to 300 a month on kiddo consumables (food, clothes, diapers, etc.). I suspect that all of this will be dwarfed by school tuition and eventually college costs.

 

[73ss454]

Remember, kids are a lot cheaper when they are young. The bigger they are the bigger the costs.

But really Kids are what it's all about, I wouldn't change a thing.

 

[Nords]

But really Kids are what it's all about,  I wouldn't change a thing.

Just think of yourself as a great big wallet on wheels...

 

[accountingsucks]

Can anyone comment on my estimate of $12,000 per year. What would really be useful is a breakdown of estimated costs by phases such as toddler, preschool, school, teen, etc......

 

[REWahoo]

Having said all this, I HAVE NO IDEA how much kids would cost. I assume my wife would have a salary of about $35,000 and that a child would cost $1,000 a month to raise for 18 years (and then 3% inflation after that). I am assuming that I would not pay for college (sorry kids, pay your own way like I did...plus schooling here is very cheap). How realistic is this figure?

accsucks,

You might want to do a search on "child cost" and take a look at the threads that come up. Maybe they can shed some light on the bottomless pit subject.

 

[laurence]

But we will all thank you for propping up Social Security with more worker bees!

Small take, make the decision to have kids without doing a cost benefit analysis. If you really want kids, you won't mind whatever it costs. Even if you get a coupon for all costs paid for but didn't really want to be a parent, well...

 

[haha]

I am one of those hopeless souls stuck in MegaCorp, but planning to ER.

I am 30 y.o……. Of course planning like this means absolutely nothing as there are so many variables.  Some of my projections are that I stay single, get married with no kids, and married with kids.  Obviously the best result financially is getting married with no kids as there would be 2 income streams saving for ER. 

Having said all this, I HAVE NO IDEA how much kids would cost.  I assume my wife would have a salary of about $35,000 and that a child would cost $1,000 a month to raise for 18 years (and then 3% inflation after that).   I am assuming that I would not pay for college (sorry kids, pay your own way like I did...plus schooling here is very cheap).  How realistic is this figure?  Obviously each phase of a child's life will cost more or less than others.  Generally speaking I am assuming that having a 2nd income would offset the cost of children in my calculations but would be interested in hearing of better estimates for my projections.  $12,000 a year adjusted for inflation seems reasonable to me though (that's about $220,000 over 18 years in todays dollars)

You belong in a movie. Maybe played by Martin Short, or Rick Moranis.

Let me give you some helpful advice that you will almost certainly ignore. You have made it to age 30, so your years of greatest vulnerability to every well padded tushy that walks down the street are behind you. Take advantage of this fact, and you just may be able to avoid wives, children and all the spreadsheet destroying uncertainty that they are likely to introduce into your heretofore very well calculated life.

Ha

 

[cube_rat]

The older they get, the more you will look like an ATM machine

 

[lazygood4nothinbum]

not to scare ya out of having kids but i'm 49 and still collecting my allowance.

 

[cute fuzzy bunny]

Can cost almost nothing or a whole lot. Depends on you.

40+ years ago families with piddly incomes raised six kids in a tiny house with no car.

 

[73ss454]

Can cost almost nothing or a whole lot.  Depends on you.

40+ years ago families with piddly incomes raised six kids in a tiny house with no car.

This was when most families had nothing to give.

Today most families have much more and tend to give much more. Not saying that you have to but this is what generally happens.

 

[laurence]

THose overblown estimates often include numerous afterschool activities, huge budgets for tutors and/or private schools, assume you are going to foot the enitre bill for college, you are going to buy them a new car on their 16th birthday etc. etc. I know someone making less than 50k a year and raising three kids. They aren't living lavishly, but they are doing just fine.

 

[cute fuzzy bunny]

This was when most families had nothing to give.

Today most families have much more and tend to give much more. Not saying that you have to but this is what generally happens.

True. Now is that a good thing or not?

My wife and I were talking about this the other day. We both grew up in pretty dang "poor" situations. We werent really aware of it at the time though...

Whats better...time and attention or money thrown at kids? Note: there may be an ER tie-in involved

 

[shorttimer]

I think I would concentrate on the partner first. Pick a partner with similar ideas that you have on money management and saving and it should be much less of a problem.

for instance, a woman who enjoys taking care of kids, breastfeeding, washing cloth diapers and making her own babyfood is a totally different situation than someone who has every latest expensive baby thing they think up and buys the most expensive disposable diapers and formula and hires a babysitter so she can get her hair and nails done.

Even public schools have costs of field trips, and sports and activities need fees, special shoes etc. Food can be cheap or expensive. Obviously burgers on the grill with homemade french fries are a totally different cost than a trip to the McDonalds drive through. People who accept hand me downs or yard sale clothes are different the a babiesRus poster child.

It is really impossible to predict as there are so many unknowns. My children were my biggest money drain (we contributed the cost of a state college education to each) but also my biggest joy. I am so proud of them- they are happy self supporting individuals with partners we love as well.

 

[brewer12345]

st's mention of a partner jogged my memory. Actually, by far the buggest cost when they are young is the cost of daycare or the forgone wages of one of the spouses. Blows everthing else out of the water.

 

[cute fuzzy bunny]

Makes ER'ed diaper daddy a good thing, doesnt it?

 

[73ss454]

True.  Now is that a good thing or not?

My wife and I were talking about this the other day.  We both grew up in pretty dang "poor" situations.  We werent really aware of it at the time though...

Whats better...time and attention or money thrown at kids?  Note: there may be an ER tie-in involved

I think it's a tough balance. You give what you can and hope for the best. I know that I gave a lot of things that I didn't have to but hey, I did what I did.

It all worked out in the wash and now the kids/adults are 32 and 30 and doing well on their own. (thank God)

CFB you have a unique set up being home with your child all the time. That's one thing I missed when my kids were growing up.
DW was home full time but I sort of missed most of it. Now that my DD is working on grand child #2 in florida we have our house in NY for sale and looking forward to getting down to help her out.
I don't want to miss them growing up with what ever time DW and I have left.

With that said would you wan't a good deal on a house on Long Island? (hehe).

 

[VoyT]

  To answer one of your questions: The USDA has had more than a few studies on the cost of raising kids. That $12,000 per year average sounds about right for middle-income family. Bankrate also has had some stories on the cost of raising teens.

  That being said, I think you'd better concentrate on finding a spouse first   You're assuming her income will help offset the expense .. she may be OK with that, or she may take one look at the little one and say, "Nope, not going back to work."  (It does happen.)

   While you're making out spreadsheets, better consider these scenarios.
    1) You can't have biological children, so figure in the cost of an adoption. (Hint, both private and international adoption run in the 5 figures.)  Or figure in the cost of fertility treatments, IFVs, etc, which may or may not be covered by insurance.
     2) Your child has medical issues, so make your best guess about co-pays, equipment, therapy, etc.....

     

   

 

[FlowGirl]

Can cost almost nothing or a whole lot.  Depends on you.

That's what I always assumed.  I look around and I see that the junior Marines who work for my husband make less than half or a third of what we do and most of them are doing just fine raising a kid or three.  Yeah, they probably aren't going to ER or pay cash for a Harvard education, but they aren't struggling either.  I figure if a 20 year old PFC can afford kids, we can too.   When kids come along (in about 6 months now) we plan to continue our usual "off the top" savings and work with whats left.  Same as we already do but with the money likely going to different priorities ( fewer exotic vacations and dinners out).

Seems like anyone with a decent job and health insurance shouldn't worry all that much.  Although I too love to plan and spreadsheet, it seems a little overboard to project scenerios that are so...  theoretical.  Keep saving, find a compatible mate and then work it out.  Who knows, your priories may change.

 

[SLC Tortfeasor]

To echo a previous post, I have seen some pretty comprehensive government estimates of the cost of raising kids. The best I can remember is that it costs the average American family a little over $10,000K per year to raise a child to age 18. There are also estimates as to how much that average may change depending on your particular socioeconomic status. Look and you will find them.

 

[Cool Dood]

I am by profession an accountant... (doing bookkeeping, tax returns, easy non stressful stuff)

I assume my wife would have a salary of about $35,000 and that a child would cost $1,000 a month to raise for 18 years (and then 3% inflation after that).

OK, I have nothing to add to what you said...

You definitely ARE an accountant, there's no arguing about that!

 

[justin]

$12000/yr is probably a bit high _IF_ you don't mind hand me downs and don't need all the latest and greatest stuff. Your medical insurance is paid in Canada, right? IF you send em to public school, it's just about free. House and cars are big concerns though - 1-2 kids can fit in most sedans pretty easy. Once you get to 3, you're probably talking SUV/minivan or cramped quarters. For the house, does your current house have an extra bedroom or spare space you can use? Can you use bunk beds?

If you have family/friends/coworkers, you'll probably get most of the basic start-up baby stuff you need in the form of gifts (if Canadian custom is similar to US custom). Our monthly cost for food/formula/milk/diapers/wipes/consumables/occasional splurges is no more than USD$200-$300/month. Almost all our daughter's clothes were hand me downs or gifts though. I don't see this increasing a lot in the future either. By the time she's eating us out of house and home, she'll (hopefully) be out of diapers and growing a little more slowly so clothes don't have to be "upgraded" as much.

We have Grandma to babysit our daughter during the day for $200/month, but market rates probably start at $400-500/month minimum. This will be your biggest expense for the first few years.

When they go to school, childcare costs will drop significantly, even if you have to put em in an after-school recreation program/child care of some sort.

Not sure about canadian tax benefits for having children, but in the US I get about $1800/yr in tax benefits per kid. For me, this offsets a significant portion of child expenses.

Hope this helps!

 

[ats5g]

Daycare is definitely the biggest cost. Our two kids cost $250 per week [combined]. However, our friends are paying $250/week for one kid [probably kindercare or one of the chain childcare centers]. That adds up to $12,500/year for 50 weeks.

Friends and family certainly helped out with the baby room furnishings, clothes, highchair, etc. Like others have said, you can certainly be cheap on stuff like toys, clothes, furnishings ['cause they're going to get broke]. My 4 yr old's favority toys are the $0.50 giant bubble wand, the $1 little pull-string helocopters, or just rolling down the hill.

- Alec

 

[lets-retire]

We adopted my son, we knew the lawyer so it was very cheap (about 2500). He was still in diapers when he showed up and had one toy and one set of clothes. So essentially we had to buy everything for him. It seemed as one expense was replaced antoher took it's place, so he never became cheaper.

As other have stated the biggest expense has been daycare and food. We have him in an after school program that runs about 200 per month and spend about 250 per month on food. How can somone who only weighs 45 pound eat so much food and still stay scrawny? We will be funding some of his college in one of those state programs. I know it's not the best, but for the cost of two years tuition he can go four years and the amount required to pay for one of those will not delay my retirement by more than a year or two. It's more than I received, but he'll still have to work for a place to live or stay at home.