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Cost of children, Part II

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  • Cost of children, Part II

    For those of you who have been in the trenches:

    1. How much did having children set you back in terms of your short term and long term financial goals?

    2. Looking back, would you have done things differently?

    3. Were these "detours" chosen by you (choices you and your partner made) or related to unforeseen events associated with pregnancy, new baby or raising individuals?

    I would be interested to learn about how much opportunity cost were associated with having kids in this group of individuals, for the man vs. the woman.  Of course, I would also be interested to learn about how to minimize them, if possible.

    For the record, I am neither for or against kid(s), just interested in the numbers.

    Thanks for the input.

  • #2
    Children are a substantial financial encumbrance, especially the children of physicians. Bigger than the cost of your house and your student loans (if you had any) combined. Maybe twice as large as both together, maybe three times as large.

    If you look at having children in the USA in 2016 from the standpoint of investment and opportunity cost, you may be better off without them (or to seek counseling before moving forward). I am serious about the counseling suggestion.



    • #3
      For my wife and I, having kids was always part of our plan, so we've never come up with a financial plan without kids. It's hard to know the numbers. I don't think a mortgage would be much different because we'd probably live in a similar cost house but in a different location not in the suburbs. The saving for college would be gone but we'd probably roll it into vacations. I imagine we would actually save less and spend more each year. In this regard, it's hard to put numbers on it because I bet we would spend more with nobody for an inheritance.


      • #4
        Granted my children are young, but you pose interesting (but I'll be honest and say slightly bothersome) yet unanswerable questions in my mind.

        1. I had my first as a resident, second/third as a military doc and just had the fourth as a civilian doc.  I have no clue what we would have saved/invested/blown on other stuff if we weren't spending as a family.  I am honest when I say I don't know how much each of my kids costs on a day to day or monthly basis but I certainly buy more mac and cheese than I would if it were my husband and I.  I also think not having kids would have changed so much of our lives it's hard to know what would have been different.  Would I have gotten out of the military?  Would I have taken this job which is so lifestyle friendly?  We certainly don't need a house this big for 2 let along my minivan..... it goes on.  Who knows.

        2. I wouldn't do anything different.

        3.  When you talk about kids I think everything is "unforeseen" because who can anticipate what your going to be like as a parent, the temperament of your kids, etc.  The only perfect parent is the person without kids because parenthood is fly by the seat of your pants.

        Kids are an opportunity in and of themselves.  Money is nothing if you don't enjoy life so I think the question is what do you think you will enjoy?  If it includes having kids then go for it, if it doesn't then don't.



        • #5
          Paying for childcare is very expensive in a dual physician family. We have paid a nanny the last 2 years and she pretty much erases my wife's fellowship income. The cost for the nanny alone is about 36k per year between paying healthcare, income and employer share of taxes without. So after we max my wife's 403b, pay her taxes and the nanny there isnt much left compared to if she wasnt working. Food, toys, clothing, diapers, and formula all have costs but make up a significantly lower amount than childcare.

          The other thing that is costly is education. We chose to pay more for a house in a good school district (probably a 100k premium). I have a lot of partners that send their kids to private school for up to 20k per year per kid. K-12 that is a lot of money that could be college, retirement, fancy vacations, etc...


          • #6
            3 high risk pregnancies,on bedrest most/all of the time, worked part-time--so instead of having a physician income at 30 it is happening now at 41. Would not change a thing! I have chosen most of my jobs based on flexibility--and recently I am not taking a financial beating on it--quite the contrary--which has been nice.



            • #7
              Thankful to all those who have given input.  I appreciate your time.  I am surprised that my post elicited strong emotions and feedback from some of you.

              VagabondMD- why counseling? My understanding is that as physicians, we should always discuss r/b/a (risk/benefits/alternatives) with pt regarding any elective or necessary interventions? How is asking about the financial (since this is a financial forum) pros/cons of having children (who some on this forum considers elective vs. some consider necessary) not simply doing due diligence on knowing the r/b/a?   We, "as the younger docs", are constantly reminded by those financially ahead of us here at the forum to understand the economics of medicine and to understand the economics of our choices, how is this different?

              drcollen- I appreciate your input. I wonder how come my question is interesting yet bothersome to you? I can tell you that it is an issue quietly contemplated by or have completely blind-sighted many female professional (not just physicians).  Perhaps, the fact that it is bothersome means that we should be more honest about it?


              • #8
                While an interesting exercise......

                The final goal for all of us is happiness. That means different things to different people. Becoming financially independent and retiring earlier drives many on these boards.

                I'd hazard to say that even these folks would trade it all in a heartbeat for the health, success, and happiness of their kids.

                I can see how someone near the poverty level could struggle with the decision on whether to have a 2nd or 3rd kid, but even then screw it. You will find a way to make it work.

                That is why I don't spend much time worrying if my 4 kids will cost me 5 million, 10 million, 10 years more of working, 20 years more? Not worth the academic exercise.


                • #9
                  I spent a few tens of thousands on child specific expenses ( furniture, diapers, clothing ).   The big expense was daycare, which was about 2k per child per month.  While there were other ongoing increased expenses, eg extra food and utilities, at our income that was trivial.

                  Private schools are costing me about $35,000 a year total for my 2 kids, but I could use the public schools, which are excellent, and at the other end of the spectrum, some schools here cost over 25 k for kindergarten and 47k for high school.

                  So, without private schools, the cost has been negligible.  While some costs have gone up, others have gone down, as I haven't traveled since the kids were born, other than to visit family, and we go out less.  I expect those costs will go up as they get older and we travel as a family.

                  I haven't found them to be a burden financially, although they have obliterated a lot of my hobby time, which is fine.  In fact,  I think of having children as a very time consuming and somewhat expensive hobby.

                  Neither my wife nor I had to take off any unpaid leave to have our children, and neither one of us had our careers negatively affected, but we were both employed with companies with generous benefits.

                  My only regret is not having started sooner and having more kids.  One caveat is that if one has children with special needs, I'm sure that the costs and time commitments might be very different.

                  My financial goals are probably different.  I want to leave them as much money as possible, so I'm investing with eternity as my time horizon.  I don't need to economize, though, as we tend to be fairly frugal by nature.  I don't like cars and boats make me seasick, so I save a lot of money there.


                  • #10
                    I agree with Vagabond.  If you are that focused on how much kids may cost, you are missing the point.  I think that may be what was inferred by the counseling comment?  From a strictly financial standpoint, having children is a horrible decision, but the decision to have them or not, should not be based on this IMO.  Call it an urge, a duty, a dream, whatever the reason, some love the idea of parenthood (myself included) and my life would not feel complete.  Have 2 and 2 more on the way (that was not planned!! What a year to have chosen HD health plan, but i still have my stealth IRA!).  Others don't (have family members who have made this decision).  If you choose to have kids or not, it should more be based on how you see your life, family, etc, now how much your bank account will be.

                    YES, children are very expensive but not always in a direct cash out the door.  You will likely buy a bigger house, or expensive neighborhood (for better schools if not going the private school route).  Vacations, you are buying, 3, 4, 5 or more tickets instead of two.  Now granted this would be similar to one or two first class tickets but I digress on that point.  You will have camps, sports, activities as they grow and get older.  In addition you have the time requirements which sometimes are more important than $$.  If you are thinking about whether or not you should have kids at all and you are focused more on saving or acquiring assets, then don't do it.  If you are thinking about putting it off for a little bit of time to get on a better financial footing that is understandable.   To specifically answer your most direct query, I don't think my kids or family have "set me back" in any way.  If I was single with no kids, would I have even more assets?  Maybe.  Would I live even more extravagantly?  Maybe.  Who knows, least of all me.  I am write where I want to be.

                    With all that said, we still are saving about a third of our gross income and don't feel crushed.  As WC often notes, its all about how you choose to spend what you have, you are two doctors, earning income will not be a problem.  Which lifestyle you choose will more determine if you hit your financial goals and what your goals are for that matter.


                    Just my 2 cents.  One last point.  Don't ask a bunch of parents a question and refer to their kids whom them most likely love very much as "detours."  No doubt you will receive some emotional responses.


                    • #11
                      Follow up:

                      Sorry I somehow got the idea you and a spouse were both doctors.  Even one doctor will have a decent enough income.


                      • #12
                        Obviously having children is an expensive thing.  Most people think it is worth it.  I don't know of anyone who keeps a spreadsheet to document these expenses. It will cost more than you think and it will be astronomical if you have a special needs child.  I also think that having children motivates some people to work harder.


                        • #13
                          The true cost of children is infinite and to put numbers on it trivializes a sacred responsibility, IMO.

                          Here are some of the bigger ticket items, direct expenses, that I have paid for and anticipate for my children (14 and 17):

                          Domestic adoptions: $60k

                          Childcare, nannies, babysitters, drivers: $250k+

                          Private school (includes tuition, annual fund, and capital campaigns): $350-400k

                          College funding (includes money to start in life if not used up for college): $500k+

                          Summer camps (including travel expense and gear): $40k

                          Driving (including car and insurance): $20k

                          Clothes, food, toys, lessons, activities: $10k/year

                          Piano $12.5k

                          These expenses do not include the bigger home in the premium school district, requiring greater upkeep expenses, nor the extra plane tickets and rooms for vacations, nor the additional cost for dining companions at restaurants, etc.

                          Does your time have any value? An enormous amount of time and energy is devoted to kids. My wife would probably have had a steeper upward career trajectory if she had not slowed down to help with the kids when they were younger, and if she today were not constantly pulled away to deal with the crisis du jour.

                          The potential cost is infinite.


                          • #14
                            I haven't tracked our spending on them, and my kids are only 5 & 7, but we have kept our costs pretty low. Here are some rough estimates:

                            Babysitting: $400 (guessing 20 times $20 each)

                            Pre-school x 6 years: $12,000 (3 years each, mostly 2-3 days or partial days  / week)

                            Private school: $3000 (one year kindergarten. Public school gifted program for both boys now; younger boy skipping KG)

                            Clothes: $1,000? I have no idea, but we've been gifted many new clothes, and we're not above secondhand clothes for them. We give tons away, too.

                            Piano: $5,000 (3 digital pianos and 3 years of lessons)

                            Daycare: $0 (unless you count the "opportunity cost" of a stay-at-home Mom)

                            College Funding: $100,000 and growing (planning to fund at least until each boy has a 6-figure 529)

                            Food / furniture / diapers / other: $3,000? We used cloth diapers from age 1 til potty trained at 18 to 20 months. Crib was the only brand new furniture item. Food = who knows?

                            Health care: $10,000? Much of the birth was covered, but they've each had a couple surgeries, which carried some serious out-of-pocket costs. At least those are tax-deductible via the HSA.

                            Looking at this, the Vast Majority of our expenses have been related to education. Take away piano, pre-school, 1 year private school, and college funding, and our expenses don't seem that bad. Some of that is by choice, and some by luck (healthy kids)








                            • #15

                              This is the what having a child did for me and my spouse financially.  To be clear, endless joy, yes. Rearranged my priorities, yes.

                              1a. Yes, having the child affected our short term financial goals. After child was born, Mother stayed at home for one year and then worked part time for another 2 years.  This is so that Mother could care for child, do all the hands on stuff and child did not enter any type of childcare institution until Parents felt child was ready.  We chose not to go the nanny route for various parenting and non-parenting reasons.  The opportunity cost to that was about 3-4 years worth of her salary and some derailment of her career growth.  Mind you, this was not the original plan.  Original plan was Mother was going to go back to work at 6 mos of age, but yes unplanned change in event regardless.  Luckily, we got a tax break with a one parent only income, so in the end maybe, hopefully, wasn't a 5-6 figure loss every year.

                              If we did have another child, how will the next one affect our short term goals? We had originally planned on paying off the mortgage earlier.  But if second came along, likely decrease work revenue in exchange for the the Mother to stay at home again, the paying off of the mortgage will have to wait.


                              1b. Some encouragement and reassurance that long term financial goals weren't affected would have been nice, but I suppose, not easy to confirm.


                              2. Hindsight is 20/20, but things I wish we would have done differently: saved more and maxing out our Roth/ retirement contributions earlier.  One big thing I wished was different was, I wished I had learned about retirement planning earlier.  Luckily, we didn't have much liabilities except for student loans, so at least we were not loaded with car payments, credit card debt or a jumbo mortgage (we were still renting, but in a HCOL area).


                              3. The "detours" I was referring, I meant financial detours, not detour as in the kid.  I would say that the financial detours played out the way it did because in some ways, we did wing it as first time parents.  Extremely grateful that the pregnancy was healthy and kid and Mother are both healthy.


                              This has been an interesting discussion. I hope after reading this, the commitment we have for our kid, esp the Mother's commitment to her child is obvious. I think actions speak louder than words.  Again, I am not asking why have kids or why have x number of kids. I am simply asking how it affected you financially in the grand scheme of things.  IMHO, loving a child but being unaware of how much the child will affect your life and goals is doing a slight disservice to the child.  Parents should have their eyes wide open when they sign up for the job and we should be honest about the cost of having children or being parents.  I don't think that equates to not loving them or not appreciating the blessing for what it is.