Opportunity Cost Of Kids

[John Galt]

Call me old-fashioned. I have 3 kids. The first when I was 20 and the last when I was 40. Only one was
"planned" and financial considerations never came up
(until much later ) Anyway, it all worked out
beautifully. Cost a fortune. Wouldn't change a thing.

John Galt

 

[Jane]

3.  It really all depends on what you want to spend.  

malakito

Yes, it is difficult to estimate the cost of raising children because it really all depends on how much you want to spend. And my suggestion is that if anyone would like to calculate this particular cost, he/she needs to remember that the most important thing in raising children cannot be bought with money, you know things like love, attentive parents, trust etc.

My two brothers and I grew up on second-hand toys and clothes. We went to public school and we didn't receive mountains of toys for Christmas. But I recalled being very young (pre-kindergarden maybe?) and having to sit with my dad every evening after dinner so he could teach me how to read. I recalled my mother read to me every night before bedtime until I could read by myself. And I recalled my parents (although being not too fluent in English at that time), both of them, attended all parents-teachers meetings at my school. Yes, both of my parents were working at that time and nowhere as well-off as some people on these board.

Kids don't have to be expensive (or they can be if you want to raise them that way), they just need to be cherished.

Jane

 

[FlowGirl]

I disagree. Financial affordability should be a top priority in deciding whether to have kids. The last thing we need is another middle-class family struggling between paying for their 3-4 kids, and keeping a roof over their heads, food on the table, clothes on their backs, etc.... when only one spouse works and then loses his/her job. Having witnessed this first hand, and the financial fallout resulting therefrom, I'll never allow myself to get into such a situation. If that means I don't get to have 3-4 kids, but rather only 1-2, and then only in my mid-to-late 30s, so be it.

Obviously no one wants to be homeless, but I don't think thats much of a problem for people on this forum who tend to be both well off and financially sensible. Sorry, I just think its absurd that the only alternative to living paycheck-to-paycheck is having a million or two in the bank. Lots of people here managed to have kids in their 20's and still ER. My goal is to plan for "what ifs" but not live in fear of them.

As for the fertility issue, if the wife is at least 5 years younger than the husband, then such a circumstance would be more or less ideal for having kids and the financial ability to afford them without an interruption in lifestyle.

Great if you can swing this "ideal" situation. Unfortunately, I didn't screen my spouse for age and income when we fell in love. We started together as starving college students and together worked our way into middle class respectability with both fun and hardship along the way. Wouldn't trade that bonding experience for the world - let alone a few extra years of ER. I intend to apply the same logic (or lack thereof) to having kids.

I know this is an analytical bunch, but I think its quite possible to be too analytical. As for me, I'm going to take my cue from the ones on this board who have "been there and done that" when it comes to raising kids. They seem so much more relaxed.

 

[bongo2]

How could [cost] ever be relevant?

Anyone trying to justify the cost/benefit of having children just don't get it.

You don't want to look at kids the way you are, otherwise you'll resent them.

You have the kid(s) first and then you figure out how to support them.

If you start thinking in terms of "how much is my kid costing me," you are not understanding the true value of having kids.

Are you guys smoking dope?

How could you possibly try and scope out a long-term financial plan, and ignore the costs of children?

There is a strong contingent of people on this forum that are proud of the fact that they didn't plan on retirement at all until 50, got butt-lucky, pulled it off in a couple of years, and feel planning is for sissies. If that's your recommendation, then fine. Otherwise I think that someone who is trying to get a big-picture view of the trade-offs in their life that they will make over the next 20-30-40-50-60 years should be curious about the costs of children.

 

[Jay_Gatsby]

There is a strong contingent of people on this forum that are proud of the fact that they didn't plan on retirement at all until 50, got butt-lucky, pulled it off in a couple of years, and feel planning is for sissies.  If that's your recommendation, then fine.  Otherwise I think that someone who is trying to get a big-picture view of the trade-offs in their life that they will make over the next 20-30-40-50-60 years should be curious about the costs of children.

Hear, hear! Nothing against you personally Flowgirl, but following the advice of people who had kids in their 20s, and then subsequently had things work out due to certain unplanned beneficial circumstances/events is far more foolish than analyzing the repercussions of your reproductive actions.

You want kids in your mid-to-late 20s? You want to spend a tremendous amount of time with them as they're growing up? Fine, then you'll have to accept the accompanying tradeoffs, including likelihood that you'll never make it out of the middle class financially, and that you'll never become FI or RE.

Think about it this way. If your parents were middle-class or low-middle-class, they most certainly wanted you to have a better life than they did. Consequently, they made the sacrifice to give you the opportunities they never had. They might never have gone to college, grad school, etc...and yet they sacrificed (e.g., worked 2-3 jobs) so that you'd have that opportunity. Yet you're going to squander that opportunity (and their sacrifice) by having kids in your mid-20s when you can't afford to have them AND make the professional sacrifices needed to launch yourself into the upper middle class. I'm sure your parents will enjoy becoming grandparents, but I bet you that they'd prefer to see you reach a level of financial and/or professional achievement they never did -- and that they sacrificed to give you the opportunity to achieve. Likewise, because of your parents' sacrifices, they're probably very tired/burned out and want to enjoy retirement. They don't want to be a free babysitter while you work late at the office trying to impress the boss.

The freedom to be upper middle class and have the time to watch your kids grow up often takes more than one generation to achieve. There may be exceptions to this, but the odds are stacked against being able to do so in less time.

 

[yakers]

Just my two cents worth. My wife & I would prefer like nothing more than to be free baby sitters to our upcoming grandchild. We waited a long time, our older boy is 32 and there are a large bunch of people that will say the heck with middle class or any class, have a family and have it be your focus. That assumes that a family is that important to you. Its important enough to us that we may relocate 300 miles to be near our son & grandchildren. There are indeed tradeoffs but in our case we would trade and are trading our assets to support our kids and their kids. For example, our son has a decent county job and his pregnant wife teaches school. Both modest jobs but they do like their work. So we just gave them a MiniDV camcorder. Sounds generous on our part but now we get to video conference and get DVDs of grandchildren; us clever old grandparents.
The commonly heard statement that "no one on their death bed ever expressed regrets about not spending more time at the office" rings true to me. For me, I would regret not having my family life more than I would ever regret not having more financilal resources.

 

[Nords]

Benefits of parenthood

Heard at an Elderhostel group introduction: "My kids-- aaah, they're nothing special. But my grandkids!"

Our parents always remind us that if they'd known how much fun grandkids are, they would have had them first...

 

[BigMoneyJim]

My sister is due soon. I suspect being an uncle will be similarly advantageous as being a grandparent; well, without the gloating and "I told you so"s, though.

Actually, her new husband has a kid, so I'm already an uncle, but it takes a little time for kids to acclimate to the new family, although I seem to be poupular so far.

 

[Bob_Smith]

FlowGirl, good posts.

 

[Tommy_Dolitte]

lol

I stirred up a hornet's nest...the principal question has been lost in what now appears to be an intellectual argument on self vs. financial worth.

To that case, I yield to what I believe is an abundance on intelligence by the participants of this board--rather than participate in such a humane-LESS battle...

We all know that life without love is an oxymoron--and money is not a sufficient substitute in its absence.  Never can or will be.  But there is a corollary... love although felt...needs to be expressed...and to express, you need TIME...for me...TIME is worth more than MONEY...money is simply the measurement I chose to define my TIME capacity---or to DO WHATEVER THE HELL I WANT WHEN I WANT AND HOW I WANT...    

Hell, there is also a lifestyle that I desire---which includes "fun stuff", "splurges", the "BEST" for my kids...consider it my love for them b/f they're even here...    not just a superficial financial analysis...how idiotic...  

To neglect the current realities of the world as not being significant enough to ensure that you do not ADD to this cycle of a deterioating state is ridiculous to me...  

Call it what you want, but this mindset of having kids just for the sake of having kids is a large contributor to the state of this world.  A scapegoat for most that use it as MEANS to find purpose. We are not that sample set.

Again, THIS is an intelligent bunch---but let
us not fool ourselves for a second thinking we represent the majority of the population.  Don't believe...

Look in your neighbors garage.
Watch how often people use credit to make purchases.
Say high to the Wal-Mart greeter.  
Pay attention to commercials.
Listen to the disclaimers after all "drug" advertisements.  

Keep stuff in context....someone start a new thread...

Sorry for stirring up the pot...  :-/

I've learned more from this board in two forms...one...in which types of questions get this most participation...and which ones don't....There is a startling...almost predictable human behavioral element that is magnificent to watch....

Off to happy hour...it's Friday, rainy, I have two beautiful women that want to spend time *cough*, money on me...and I'm heading home for the holidays in a few hours...

Toodles...and Happy Gobble Gobble!

TD  

"You get on mine too..."  

 

[FlowGirl]

Yet you're going to squander that opportunity (and their sacrifice) by having kids in your mid-20s when you can't afford to have them AND make the professional sacrifices needed to launch yourself into the upper middle class.

Well I just hit 30, so I'm already beyond the point where I could "mess up" my life by having kids in my mid-20's. Waiting this long had little to do with finances though and I don't plan on waiting another 5-10 years just to have a few extra bucks in the bank.

The spouse and I are set to be FIRE by age 43, if we don't have kids. If we do have kids, it may or may not take a few years extra to each that goal. It's a risk my DH and I are willing to take for the chance to be parents.

 I'm sure your parents will enjoy becoming grandparents, but I bet you that they'd prefer to see you reach a level of financial and/or professional achievement they never did -- and that they sacrificed to give you the opportunity to achieve.  Likewise, because of your parents' sacrifices, they're probably very tired/burned out and want to enjoy retirement.  They don't want to be a free babysitter while you work late at the office trying to impress the boss.

My parents are actually pretty mellow and don't give a damn what I do with my life. I put myself through college, earned a full ride scholarship to graduate school, and am now living abroad to improve my Mandarin Chinese language skills. Ocassionally I work remotely as a part-time computer consultant for a firm back in the US - it pays pretty well and keeps my job skills up-to-date. Haven't asked my folks for a dime since I turned 18, so they don't have much to complain about. Also not much chance of them becoming babysitters since we'll be living abroad next year, and haven't lived closer than 1200 miles since I graduated college. The spouse and I live quite well on 1 (+ a little bit) income, and I have no complaints.

As for "career achievement" and "impressing the boss" - I couldn't care less. I've already made significant career sacrifices so my spouse can do a job he loves. He made sacrifices as well - turning down much more lucrative opportunities (and admission to a top 10 law school), because he couldn't stand the idea of spending his working years chained to a desk. His job is dangerous and right now I deal with the fact that he might become injured or dead at any time. So yeah, stressing about whether we make it to FIRE a few years earlier or later is really laughable to me.

I learned a long time ago that life doesn't go according to the spread sheet, but I'm enjoying the hell out of it just the same. Good luck with your plans.

 

[FlowGirl]

FlowGirl, good posts.

Thanks! I'm relatively new here and am trying to glean as much information from those who have successfully ER-ed such as you, Cut-Throat, Nords, John Galt, and others. The one thing I've learned is that there is no one "right way" to achieve FIRE. Maybe once some of my age-peers actually cross the ER finish line, I'll start taking advice from them as well.

 

[John Galt]

Hi FlowGirl! Good post. I just wanted to add
that living is dangerous and we all may be injured or dead at any time. This is not to make light of anyone's
career choices. I just believe that we all should keep in mind that today might be our last day. It helps to keep
things in perspective.

John Galt

 

[FlowGirl]

Hi FlowGirl!  Good post.  I just wanted to add
that living is dangerous and we all may be injured or dead at any time.  This is not to make light of anyone's
career choices.  I just believe that we all should keep in mind that today might be our last day.  It helps to keep
things in perspective.

John Galt

Absolutely! Unfortunately, most people don't realize this until they're hit over the head with a car accident, or cancer, or some equally dramatic event (in my case, having a spouse in a dangerous profession). Having to work until you're 70 is terrible, but so is living with regret - or so I'm told.

I love planning and thinking about the future as much as the next "young dreamer", but I think I'd go crazy if I was living solely for the day I ER. Life is way too short for that, and if my life ends up less "perfect" because we have kids sooner rather than later, then so be it. I'm taking you all at your word when you tell me its worth it.

 

[Bob_Smith]

Thanks!  I'm relatively new here and am trying to glean as much information from those who have successfully ER-ed such as you, Cut-Throat, Nords, John Galt, and others.  The one thing I've learned is that there is no one "right way" to achieve FIRE.  Maybe once some of my age-peers actually cross the ER finish line, I'll start taking advice from them as well.

Well I don't know how old you are, but the views you expressed in this thread reflect my own so well that I couldn't think of anything to add! Your comments were very eloquently stated - I hope you stick around.

 

[brewer12345]

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]

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.

 

[John Galt]

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]

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]

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.

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]

Good point.

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

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

 

[russ1910]

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]

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