Opportunity Cost Of Kids

[brewer12345]

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I'm at it again... Spending time with my kids will be key once I have them. *I've approximated the "costs" of a child to translate into ~5 additional years of work (i.e. reduced savings capacity due to single income, approx child costs to be 2x's living expenses--including mortgage). Thoughts on the level of accuracy of this approach....alternatives? Thanks, TD * *

Tommy, I figured I'd post now that I have a chance and it seemed as if nobody really answered your question. I think it really depends on when you have kids, but the likely result is working a few more years, with the specific number varying based on your lifestyle and how many kids we are talking about. I have kiddo#1 sitting on my lap as I type this. We had her when we were 30 and had dragged ourselves through grad school and accumulated a decent grubstake. I think making sure you have at least a sound financial base before having kids is very important, since it helps ensure that the family will be protected in times of economic uncertainty and it boosts your odds of FIRE despite having kids.

My wife dropped out of the labor force about 18 months before the baby arrived and has started a part time small business to stay active in her profession, but job 1 is spending time with the kid. The business nets maybe $10k a year. I hsave intentionally taken a job that allows me to spend more family time, but at the cost of some comp.

I figure that if we have two kids, I am probably looking at 3 extra years in the labor force, possibly a tad more depending on the margin of safety I require. Let me be very clear: having kids is about the only thing I can think of that is worth spending extra years working.

[Jay_Gatsby]

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We had her when we were 30 and had dragged ourselves through grad school and accumulated a decent grubstake. I think making sure you have at least a sound financial base before having kids is very important, since it helps ensure that the family will be protected in times of economic uncertainty and it boosts your odds of FIRE despite having kids.

This is exactly what I've been saying.

No argument from me on any of this "family planning"
stuff. As usual I went in the opposite direction,
i.e no planning about the kids of any kind, kind of like
my ER planning, or lack thereof Reminds me of:
"Life is what happens to you while you are making other plans."

John Galt

[windedhare]

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No argument from me on any of this "family planning" stuff. *As usual I went in the opposite direction, i.e no planning about the kids of any kind, kind of like my ER planning, or lack thereof * *Reminds me of: "Life is what happens to you while you are making other plans." John Galt

I'm too unlucky not to plan. In planning I believe I make up for the lack of luck. I could be delusional, but at least the delusion makes me think I have some control

[Jay_Gatsby]

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I'm too unlucky not to plan. In planning I believe I make up for the lack of luck. I could be delusional, but at least the delusion makes me think I have some control

Too true. :P

Since many of us are risk averse here, why would anyone not try to minimize the financial risks associated with taking on "cost centers" for 18 years?

I don't mean to make children sound like per se business expenses, but isn't one of the mantras associated with personal fiscal responsibility, not to mention FIRE, knowing how and when to spend your money?

[SDY888]

FWIW, my wife and I were approaching mid-thirties before we had our first child (earlier this year). For us it was a combination of not feeling "ready" until our early thirties (this feeling is a very personal thing to each individual) and also wanting to get to a good financial position prior to starting a family.

I guess we were lucky in that they kind of coincided. Had they not, then the family would have been started regardless as not having children was not an option for us.

S888

[slepyhed]

This is my first time posting here, but I think my "story" is an interresting spin on the general question about how much kids cost:

My wife and I got married 5 years ago. We're both college grads with regular good-paying white-collar type jobs. After a couple of years of marriage, we decided it was time to buy a house and have a kid. Back then we had way more income than expenses, so we felt very comfortable with the whole idea.

So we paid off the credit cards and saved up for a down payment. Just about the time that we had enough saved up, my wife became pregnant. We found a nice 3-bedroom ranch and moved in. So far so good.

As the birthdate approached, we started to think about daycare. Well, guess what, its expensive! While I was discussing it with my wife, she mentioned diapers and babyfood and all that kind of stuff. I ran the numbers through my head real quick and... well... gosh.

So sacrifices were made and expenses trimmed and the baby was born and everything seemed OK for a while until the baby's first birthday. I noticed that we had gone one full year like this, and our bank account balance was a little lower than the year before. When my wife reminded me that we had gotten (and spent) a small unexpected windfall during that year, I realized that we had a money problem. We were living beyond our means!

That's when I started researching personal finance. I checked out lots of books from the library (Millionaire Next Door was the best), read lots of websites and made lots of spreadsheets. Once I got a handle on the situation, I was able to seriously trim the fat from our budget and really get serious about not squandering our money.

So now the little girl is three, and we've got enough of a grip on our finances that I can figure out how early I can retire depending on how much I save, etc. Four years ago I had no clue how much I would need to save for retirement, how much my post-retirement expenses would be, etc.

Since I had no clue about savings, investments, retirement planning, etc before the baby was born, I guess you could say that having a baby has actually saved me money. I now know that if my wife and I had continued spending money like we used to before having the kid, we would not have as much savings as we do now.

[Nords]

Kids will make you grow up... and grow older.

Judging from my FIL, I think that grandkids have the opposite effect.

[russ1910]

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Anyone trying to justify the cost/benefit of having children just don't get it....and should immediately go and have a vasectomy....

As I sit here watching Bear in the Big Blue House with my 11 month son (he's in his chair watching while dad is next to him with the laptop), I couldn't agree with this statement more.

In fact, here he comes to add his comments
/\\
fkgyhhjkh

[SDY888]

Quote:

As I sit here watching Bear in the Big Blue House with my 11 month son (he's in his chair watching while dad is next to him with the laptop), I couldn't agree with this statement more. In fact, here he comes to add his comments /\\ fkgyhhjkh

Last night my daughter took her first unaided steps (exactly two before she fell into my lap). Nothing in the world, no amount of money, no stock or bond or house or widescreen TV or holiday memory could ever replace the feelings of joy and pride I felt in that moment.

Simon888

This mainly relates back to a couple of earlier posts.
One was by bongo2 (the one where he opines
those of us who suggest long range planning and family
planning
don't mix are "smoking dope"). Anyway, maybe it is because I took such a casual approach to long range financial planning for decades, but I just can't see it.
Planning your kids based on SWR/ROI seems a little
Orwellian to me.

There was also a comment from someone about
being "homeless", I guess because if you have too many
unplanned kids you may end up living under a bridge.
First, you could always call Habitat for Humanity and they will build you a McMansion FOR FREE. Whoo hoo!
Seriously though, some folks never get over the fear that they will end up homeless. I saw an interview with Larry David (co-creator of SEINFELD). He confessed
that to this day he still scopes out nooks and crannies
where he might live if he ever gets down on his luck.
Some of this childhood stuff just never goes away
I guess.

John Galt

[bongo2]

Sorry John. I should have said Boddingtons!