Children Are More Expensive Than You Think
Updated: Jan 9
A major premise of this site is that avoiding having kids saves you money.
So, let's give this point a quick breakdown!
Here's an image from the USDA:
Almost a quarter of a million dollars.
And that doesn't include opportunity cost.
We'll have to "Math shit up", as my fellow FI bloggers at Millennial Revolution
like to say, to see the real impact of having kids.
If we break the $233,000 down, it comes out to about $13,000 a year.
If we invest that money instead using a simple calculator with a standard rate of 7% growth, let's see how much of an opportunity cost we're incurring...
Half a million dollars over 18 years.
For a really frugal person, that's almost enough to retire on! But that's just your cost to raise one kid to 18. If you want more children, private education, or college, these costs skyrocket.
It also doesn't begin to consider the additional, invisible impact kids can have on your career. If you're less likely to put in long hours at work because you want to spend time with your kids, or you need to take time off to bus them around to doctor's appointments, your visibility at work can suffer. And for the female crowd, taking time off for maternity leave can hamstring your career progression.
And what about if you're thinking of raising a kid while retired? At $13,000 a year, then according to the 4% rule, you'll need to have an additional $325,000 of investments to cover the costs! Considering kids cost money to raise, you might even have less extra income to contribute to your investments to reach this number, too. You'd have to really hustle to make the finances work out.
All I can say is "No Thanks".
What really gets me is how most parents or want-to-be parents don't grasp this concept. When you give them this figure, they often won't believe it! They'll talk about gifts, free child care from their family, etc, as if it will magically make that $233,00 shrink to zero. And I get it - they're excited about their decision, so they're happy to invest in their kids - but such a big decision requires some serious, sober consideration. My partner and I have come out on the other side.