How Much Do Kids Really Cost? – Episode 075

April 3, 2019
Exploring at a local nature preserve was a whopping free.99!

Even though the federal government published a report that determined the average cost of raising a child from birth to age 18 is $233,000- that doesn’t mean you HAVE to spend that much! When calculating how much YOU will spend on a child, start by asking yourself: what are my current expenses? Because really the best indicator of how much you’ll spend on your kids is how much money you are already spending on yourself. The cost of children will be an extension of your values and what you’re already spending money on. Listen as we cover how much kids cost, ranging from specifics like the cost of car seats to a broader, principled approach towards entertainment and spending in general.

Additional resources from this episode:

During this episode we each enjoyed a Heavy Hands DIPA by Spindletap Brewery which you can find on Untappd. Another huge thanks to Leo for donating this beer to the show! And if you enjoyed this episode, be sure to subscribe and give us a quick review in Apple Podcasts, Castbox, or wherever you get your podcasts- we’d love to hear from you.

Best friends out!

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4 comments on “How Much Do Kids Really Cost? – Episode 075

  1. Nate G. Apr 3, 2019

    Love the podcast guys! We have a 3 year old and one on the way. For our first child, (other than food, diapers and childcare) we figure she costed us a net of somewhere close to $0. We bought everything we could (crib, high chair, monitor, car seat, toys, bikes, etc) on Craigslist, thrift or consignment stores, and essentially sold those same items when we were done using them on CL, thrift stores, consignment stores, etc. for basically what we bought them for. If it wasn’t $0 it was limited to a couple hundred dollars. We ask our relatives to do minimal gift giving, so they are more than happy to buy one item she would love/want at full cost from some department store/Amazon. Our daughter has wanted for nothing and has as many books and engaging toys (no loud noises or blinking lights!) any kid could ask for.
    As for college, we are putting a nominal amount into a 529 for them and are buying our next rental property with a 15 year mortgage. We will refinance and pull out (tax-free) money for them from the rental at that time, if they go to college and if they need it. So we figure, total higher education will essentially cost us the down payment on the rental and a few years of dealing with tenants. Pretty affordable.
    Keep up the cool perspective and congrats on the additions to your families!

    • Chris Sep 25, 2019

      Congrats on the new baby! I agree with the first part of what you wrote wholeheartedly. We were able to be gifted, borrow, or buy for cheap a lot of the toys, books, clothes, and other baby needs. There is still the cost of food, diapers, and childcare, but that is completely dependent on your situation.

      I am familiar with the strategy you described about funding college with home equity, and I just want to offer a word of caution. For one thing, the 529 plan is already tax free (in terms of federal capital gains taxes), and could even offer tax advantages on your state income tax. The equity option works if the house appreciates in value before the kid goes to college and/or produces a net positive cashflow. That first scenario probably seems likely, but here’s where the caution comes in. There were a number of people who used this strategy in the 2000s, and when the market crashed in 2008 many of them were underwater on the mortgage and lost the property to foreclosure. I know you mentioned using a rental property, but I would definitely be wary if anyone is thinking about doing this with their home.

      Don’t mean to be a downer, but I wanted to acknowledge the real risk with that strategy.

  2. Hey guys its me again. Love this episode. Joel I especially relate man to your childhood. My parents weren’t prepared and went homeless once sending us away for a few months to get on their feet. but not even to this day do they really think about financial readiness. So i have that stigma of financial pit falls and try to avoid that history. Which is why I hear your show from Afghanistan. Pre downloaded of course. lol

  3. Nicole Ellery Jul 15, 2019

    Hello, I’ve been enjoying your podcast after stumbling upon it a little over a week ago. As a working mom of 3 kids having been single for a while with two I felt missed income for one spouse may have been marginalized. Very few companies offer paid maternity leave. I was with 3 different companies with each child in the last 10 years. Waiting tables with the first with no vacation time, assistant managing a property with the next just before maternity leave kicked in for those with the company for three years needing to use vacation and the most recent a corporate director position with only 4 weeks of pay at 60% and again using vacation as well as going unpaid. I know the study you cited likely didn’t take into account the lost income from maternity leave but there is also the loss in income growth that should be considered. Had I stayed home after the first and second children I would not have earned a promotion and be close to making 6 figures annually with bonuses at my last job. I also would not have been able to survive a divorce with two kids financially without my own independence. I make slightly less at my current position but it affords me the ability to work from home on an as needed basis which is especially important if any one of the kids 10, 7, or 8m falls ill but I missed out on a pay increase since I was on fmla during reviews. Below is a link about additional costs associated with having children for working mothers.

    I appreciate that you guys mention the joys of having children but should stress the importance that depending on spousal income level the cost can increase exponentially when factoring in lost income, promotions and raises. Maybe female earnings shouldn’t be so marginalized to help combat the wage gap. Obviously it didn’t sway me for choosing to have three but my husband and I live relatively frugally as full time working parents so we knew we wouldn’t need to make major changes when the surprise news came up. I apologize for typos and run on sentences since I’m posting from my phone.

    Keep up the good work.