Does Not Having Kids Let Me Splurge?
I found a meme that made me chuckle the other day:
One of my favorite parts about the internet are people's funny, hot takes.
This tweet definitely gets the part about children being expensive right, as we learned last post, but does not having them really allow us to justify splurging?
Time for some quick math:
We know the USDA estimates a kid to cost about $13,000 a year, which is more than the poverty level for a single person.
I, as guy living alone in the Midwest, try to keep my spending below $25,000 to $30,000 a year. If I wanted to maintain this expense level while raising a child, I would have to live off of just $12,000 to $17,000 a year - including rent, food, and all my medical bills. I would have to make some sweeping changes to my habits to be able to afford everything.
More likely, I'd keep spending the same amount on myself while adding in expenses for the child, which would bring my expenses up to about $40,000 a year, an increase of about 50%. This increase would naturally cause my savings rate to go down, extending my working career. While I don't absolutely hate having to work, I'd rather do it for less time, so skipping out on the kid and getting to save that $13,000 a year sounds great.
That is, as long as I actually save that money.
If I do the mental math and realize that I could spend $13,000 more a year and be equivalent to having a kid, that seems like a not-so-sneaky way to justify lifestyle inflation. Regardless of what I'm spending the money on, I'm still delaying the time until I can retire and live off my passive income. I think it's better to view each purchase on its own merits to decide whether it's worth my time and money.
If I thought having a kid would bring me joy, I'd think it was worth spending $13,000 a year raising it. It just so happens I don't think raising kids would bring me joy.
Something I do think brings me joy is having a calm, private space in the form of a one-bedroom apartment. The cost of me not having a roommate to split rent with comes out to about $5,000 a year, but I find the price well worth it. Just because my choice of a more expensive apartment comes out $8,000 ahead of having a kid, that doesn't mean I get to spend that much more on other stuff, because there's no assumption that I ever had to spend that money in the first place - I could always save and invest it in the market.
At the end of the day, instead of weighing all your options against each other, I suggest creating a yearly budget (say through Mint) and seeing how your desires slot in to meet your target spending. This way, you can keep track of the larger financial picture instead of weighing one optional cost against another to justify spending more.
I'm probably reading too much into a silly tweet, But I never pass up an opportunity to spin something off into finance talk!... Maybe that's why I can't find a roommate.