The Financial Realities of Growing a Family

Anthony writes in:

My wife and I have two children, ages 2 and 1. We’d like to have more; we both think that four would be a great number, although there’s no particular logical reason for that number. The problem is the expense. With daycare costs, adding each additional child will cost another $260 a month. If we stopped paying extra on our student loans and cut our savings per month to $145, we could afford the daycare for the third child, but a fourth would require more painful cuts. We already live frugally: buy used clothes, drive used paid-for cars, make almost all of our food at home, etc. I’ve looked into second jobs, but there’s very little IT work in the area, other than what I already do. And with our county having the highest unemployment rate in the state, I suspect even paper-route jobs and that sort of thing would be hard to find.

My job pays decently and is very secure: her job also pays well and is less secure, but still not much in jeopardy. In Michigan, that’s significant. We can’t sell the house without taking a loss, but it is big enough—barely—for two more kids. If we need to upgrade the car to a mini-van, we’ll have enough in our car fund that we can pay cash, so that’s not an issue.

I hate to make children about mere numbers, but purely by the math it seems like more children is unwise. On the other hand, I constantly hear stories from other families about how they it “somehow just worked out.” Any advice or suggestions?

Much like you, my wife and I have two children – ages four and two – and another one due to arrive within the next few months. The issue of escalating child care costs is one that we’ve dealt with many times throughout our child-rearing process and, through it all, we’ve come to some conclusions about that very occurrence.

First of all, the idea that it “just worked out” is a bit misleading. What often happens in that situation is that people go through a period of re-prioritizing after the child (or children) arrives, and it’s often a shift that happens without a lot of conscious thought. You choose to eat at home more because it’s easier to corral children there. You don’t go out as often as you used to because of the cost of babysitting. Over time, these shifts just seem completely ordinary – parents adopt a new normal along the way and often feel like it “just worked out.” Our memories often work to make things seem smoother than they actually were.

At some point if you continue to have children, the cost of child care will likely eventually meet or exceed the net cash benefit of one of your jobs. If you have three preschool-aged children (as we will soon), your weekly costs are immense. If you, at the same time, figure up the true take-home of one of the people in the household – after taxes, commuting costs, vehicle upkeep, wardrobe upkeep, and son on – you’ll often see that working outside the home is a financial net negative. Add on top of that the financial benefits of not working (even less reason to eat out, more organized grocery shopping, etc.) and you create a compelling case for one partner to leave the employment scene for a period of time.

What if you can’t afford to do this because you’ll be burying your career path? At this point, it’s really a values thing – your career is more valuable to you than more progeny. It’s one of those value comparisons where there is no real right or wrong answer – however, because it’s such an emotional one, people often convince themselves that one answer or the other is absolutely right for them and thus absolutely right for everyone. It’s not. You have to decide for yourself what you value.

If you decide that more children are the real priority here, then plan for it. That may involve selling the house and moving elsewhere – even to another part of the country. It may involve selling a vehicle. It may involve leaving a job. If your children are your priority, then sacrifice those life elements that aren’t directly benefiting the children.

If you decide that your continued career trajectory is the priority for you, take precautions to not have another child.

Your situation – much like our own – is basically asking you to choose between the two paths. Choosing one path doesn’t necessarily mean abandoning the other one, but it does mean postponing it to a later point in your life and it may mean that you’re unable to pick it back up again.

It seems to me from the email that you’re having a hard time choosing between the two. Right now is the time to sit down, talk with each other frankly about it, and make a choice. Is it career maintenance as the top priority or is it more children?

Give the decision time. Also, perhaps most importantly of all, give each other respect here. There is no right or wrong way to feel about the question and if you disagree, that’s okay. You both have reasonable perspectives on the issue.

You don’t have to make a decision tomorrow on this, but whichever way you choose, it doesn’t hurt to take a serious look at your spending and find ways to minimize it now. Build an emergency fund. Learn to live on a little less. No matter which path you end up choosing, doing that now will help you with the ramifications of that choice.

Good luck.

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