The Financial Implications Of A Second Child

As many of you know, I’m the proud parent of a sixteen month old boy. My wife and I are carefully considering the possibility of adding a second child (and perhaps more) to the family. One major part of this decision is the financial aspect of it: can we really afford another child on our current incomes and buy a house this year (we would simply have to move, as the three of us live in a less than 600 square foot apartment – a fourth child would be almost unmanageable in our space).

Here are the considerations we’ve calculated thus far. We are primarily concerned about the child’s first five years of life, although we do recognize that this is a longer term commitment than that.

Child care: This one is the big one for us. We currently pay $160 a week for our child care. When he becomes two, this price goes down to $130 a week, so we will save $30. However, child #2 would be another $150 a week on top of that $130 (only $150 because you get $10 off a second child). That would move our weekly child care bill from $160 to $280, or $120 more a week. In total, this will add up to about $4,500 a year for us (we will remove them from the daycare for some portions of the year). Ouch.

Large supplies: Most of the large supplies are already taken care of because of the first child. We have no need for a crib, etc. We will have to buy a bed for our oldest child, but a simple, small child bed isn’t particularly expensive. Even better: one set of grandparents is suggesting that they may buy him a “big boy bed” when it comes time. So, the startup costs should be minimal.

Clothes: If we have a boy, he will be wearing almost exclusively hand-me-downs. We’ve saved every stitch of clothing that our first child has worn (except for one extremely fouled article of clothing from The Great Flu Of ’06 that we simply couldn’t get clean). If we have a girl, she will still wear a ton of hand-me-downs, but there will probably be some small purchases of dresses and the like. $5 a week in extra costs, or $260 over a year.

Diapers: A push compared to right now, as our first child should be out of diapers/wipes by the time the second child appears on the scene.

Food: In the short term, children don’t cost too much to feed. We feed our current child on only a few dollars a day, so we estimated a doubling of that. $20 a week in extra costs or so, or $1,040 over a year.

College Savings: I plan on saving the same amount for a second child as I do for the first, so $50 a month more, or $600 a year.

Taxes: Here, we get a number of tax benefits which soften the blow. We estimate that we will at least make $1,500 a year back due to the tax benefits of a second child.

And that’s not even considering health insurance for kids — something that could cost thousands.

Financially, a second child seems to not be as financially painful as the first one, as there are expenses that are shared between the children. I should also add that according to our calculations, with a family of three, we will actually save money after we move into a home once we consider all of the tax benefits and the opportunities for more frugality (our own washer and dryer plus our own deep freezer will add up to some serious savings on a weekly basis).

In short, we feel that we are in better financial shape with one child than we were with none (he was the impetus for our financial changes), and thus a second one seems financially feasible.

Are there any major areas that we are not considering?

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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