Having kids is expensive, Grownups. Blogger Kalie Brooks explains how the experience also helps to put finances in perspective.
If someone told me five years ago that having kids would improve our finances, I would have burst out laughing. After all, the USDA cites the average cost to raise a child is $245,000—before they enter college. Yikes!
Four years into parenthood, the invoice isn’t in, but I know kids have done more to help than hurt our finances. Despite the quarter-million dollar baby quote, our net worth has increased along with our headcount.
My husband and I were married six years before welcoming our first child, and we had plenty of time to achieve some financial goals. Surprisingly, it was our growing family that prompted our progress—even though I took a significant amount of time off to be with our babies.
Having kids motivated us to become more responsible with our money. We were finally ready to act on outstanding Grownup goals. Parenting also developed the qualities we needed to continue taking these financial steps. We learned new levels of sacrifice, creativity, and persistence—the same traits it takes to win with money. With these we’ve built a solid financial foundation, which has freed our family to focus on other values and interests.
The first area we were motivated to change was our budget. Since doubling our family, we’ve reduced expenses in areas like entertainment, clothing, food, and utilities. We accomplished this by challenging our spending in nearly all categories, and by seeking cost-effective alternatives to some of our staple purchases. Many simple changes like shopping for better utility rates and cooking at home added up to significant savings. The cash we’ve freed up has covered many incidental costs of parenting while accelerating other goals.
Another area we turned around was our debt. We’d always resisted paying off our student loans early, but having a baby prompted us to rethink our approach. Dragging out our school debt until our son’s 10th birthday was not an option if we wanted to start saving for his college education. We decided to slay our student loans, and since then we’ve made regular contributions to college funds for both kids.
Repaying those loans felt so good—we found ways to reduce the amount we’d pay on our mortgage, too. We refinanced to a better rate and shorter term and gradually started prepaying it (a controversial method, we know).
Planning for the future also became a priority. We improved our retirement savings by maxing out our IRAs for the first time, purchased smarter life insurance, and finally wrote a living will.
Whew! If that list sounds daunting, rest assured we took one Grownup step at a time. Each small move propelled us into bigger goals. I’m sure we would’ve accomplished some goals without kids, but we definitely got it together faster with little ones to think about.
Pursuing Our Passions
We used to joke about all the ways we’d inflate our lifestyle after paying off our debt, but our consumer fantasies lost their appeal as we considered how to enrich our kids’ lives. We started aligning our spending with our values, such as volunteering, traveling, and enjoying the outdoors. Having our finances in order gave us the flexibility to pursue these passions in new ways.
For example, volunteering is a value we want to model for our children, so we’ve continued serving in our community and abroad. My husband and I took turns traveling on short-term mission trips while the other spouse stayed home with the kids. Our children like learning about other cultures from our stories and pictures, and we look forward to bringing them with us on a similar trip when they’re older.
For now, we travel the U.S. together, mainly via road trips and camping. The kids love spending a whole week outdoors and discovering nature in new places. Camping allows us to vacation often since it’s very affordable, and we love brainstorming future destinations.
We’ve increased our charitable giving as well. Seeing the needs of impoverished children firsthand during our mission trips hit home significantly now that we are parents. Our kids participate by sending drawings and gifts to children we sponsor. The spirit of giving is rubbing off already, as my son initiated a food drive and collected 71 pounds of donations. Not bad for a preschooler!
Our creativity and productivity have also flourished as we find hobbies our kids love: gardening, raising chickens, and maple sugaring. Honeybees are our next adventure! These activities save money and unite our family as we learn new skills together.
Another pursuit we enjoy is sharing our personal finance knowledge with others. There is so much we wish we had learned earlier in life, so now we teach financial workshops for college students. We also launched a personal finance blog to reach a larger audience. Interacting with our readers is rewarding and it challenges us to continue our financial education all the time.
Our Plan for the (Really) Long Haul
Children and retirement accounts are among life’s few investments that take two decades to mature. Raising kids can’t be rushed, and this is teaching us the persistence we need to invest for retirement. Practicing long-term motivation and delayed gratification isn’t as fun as raising chickens in the backyard, but the gains awarded by these Grownup virtues are downright awesome.
Since we started saving more for college and retirement, we’ve learned about investing and developed a strategy that suits our family. This includes buying low-fee funds and making consistent contributions over time. Taking the long view makes it easier to ride the market’s ups and downs with peace of mind. The same attitude helps us persevere over the long haul with both parenting and investing goals.
Parenthood has done wonders for our financial outlook and habits, and I believe this progress is available to others, too. If you have the drive to make a long-term investment in your children, you have what it takes to persist with big financial goals. Of course, you don’t need to make babies to reap the benefits I’ve described. All of us can find unique reasons to plan for the future like never before.
How has parenthood changed your finances? Whether or not you have kids, what is the next step in your Grownup goals?
Kalie Brooks’ blog Pretend to be Poor
covers financial planning and living
on the cheap.