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We didn't save anything. We just made sure we had the infrastructure in place for kids.....meaning, a house, paid off cars, jobs, emergency funds, health insurance, dedicated room, etc
They DON'T cost as much as people claim....costco is your friend. We had twins.....formula from costco is 16 bucks and lasted about a week. Diapers about 35 bucks from costco on sale and lasted a couple weeks.
no daycare costs as my wife stayed home.
Don't be afraid.
We just made sure we had the infrastructure in place for kids.....meaning, a house, paid off cars, jobs, emergency funds, health insurance, dedicated room, etc
If we are going to have a serious finance discussion about having babies (and raising them till 18) these are things that should not be ignored as part of the expense. Additionally, if you are currently a dual income family, the decision to have you wife stay home doesn't mean that child care costs suddenly disappear.... lost income (including retirement payments) should also be factored in as part of the cost of having children.
In my case, we decided my wife should stay home first couple years. We placed 100% of her take home into savings to adjust to living on a single income well before the children were in the picture. It turned out to be a good financial decision. We ended up having twins with medical issues. We were spending $800USD a month on special formula. That alone was eating through our savings faster than expected. Twins in daycare ended up being more than my wife's take home pay so we changed our plans to have her home until they are of public school age. Something that we had not anticipated but because we slimmed down our expenses well beforehand, it wasn't too bad. Despite all this expense, we were able to start college funds, continue my retirement contributions (unfortunately not wife's), put away into savings and fund summer activities for my elder son. We did have to sacrifice our annual family vacation trips... but that's only until my wife returns to work.
Whatever you decide.... ITS NOT ENOUGH! There's also way too many variables for anyone here to really make a suggestion.
This is the answer. Expect the best and prepare for the worst because stuff happens. My son wouldn't tolerate cloth diapers--not even with a liner--so I had to start buying disposables. His digestive disorder necessitated buying prescription formula. Of course, it wasn't covered by our insurance. When he was just about three years old, he fell on the sidewalk and cracked all of his front teeth. We didn't have dental insurance. That cost a lot. So, save, save and save some more. You'll need it sooner or later.
This is the answer. Expect the best and prepare for the worst because stuff happens. My son wouldn't tolerate cloth diapers--not even with a liner--so I had to start buying disposables. His digestive disorder necessitated buying prescription formula. Of course, it wasn't covered by our insurance. When he was just about three years old, he fell on the sidewalk and cracked all of his front teeth. We didn't have dental insurance. That cost a lot. So, save, save and save some more. You'll need it sooner or later.
So true. No matter what you plan for, something else will happen. For us it was copays at the doc and for Rx's for a chronically ill child, followed by various therapies that have cost from very little to thousands of dollars.
Say I plan to have a baby in 5 years, and a second baby 3 years after. How much money should I save up in the next 5 years for the babies on top of what I normally would save? Let's assume I'm 30 years old and I make 100k a year, and my wife will stay home to take care of the babies.
I acknowledge this is a vague question. Let me know what other input I need to provide.
As much as possible, but not necessarily just for the sake of kids, but also because it's likely going to be easier to put away more money for retirement or for other goals now. Since your wife will be staying home, I'd suggest living NOW only on your salary, and put aside her salary for the future. (Take some time for fun stuff, too; maybe some adult-focused vacations while you still can?). The big costs of kids is usually either housing (as you need more space than a single person or a couple, and can no longer squeeze comfortably into, say, a 1-BR apartment) and childcare -- either the cost of a daycare/nanny, or the lost income of a parent who stays home.
Our biggest cost (other than lost income) was medical-related, for both me and for our baby. Since you have the time, I'd bump up your emergency savings to cover unexpected costs like this, just in case. Make sure your insurance is also in order, including disability insurance.
It sounds like you are in great shape, however. You have some time to get all of your ducks in a row, and it's entirely possible for your wife to stay home with kids on that salary anywhere in the United States. If you're in a lower cost location, even easier.
If we are going to have a serious finance discussion about having babies (and raising them till 18) these are things that should not be ignored as part of the expense. Additionally, if you are currently a dual income family, the decision to have you wife stay home doesn't mean that child care costs suddenly disappear.... lost income (including retirement payments) should also be factored in as part of the cost of having children.
In my case, we decided my wife should stay home first couple years. We placed 100% of her take home into savings to adjust to living on a single income well before the children were in the picture. It turned out to be a good financial decision. We ended up having twins with medical issues. We were spending $800USD a month on special formula. That alone was eating through our savings faster than expected. Twins in daycare ended up being more than my wife's take home pay so we changed our plans to have her home until they are of public school age. Something that we had not anticipated but because we slimmed down our expenses well beforehand, it wasn't too bad. Despite all this expense, we were able to start college funds, continue my retirement contributions (unfortunately not wife's), put away into savings and fund summer activities for my elder son. We did have to sacrifice our annual family vacation trips... but that's only until my wife returns to work.
Carbon copy of our situation, wife is still at home. We were very fortunate to have bought in a downmarket and our mortgage was easily doable on my income.
Luckily my wife did not have to have everything new for the twins and Craigslist and other sources have been our best friends.........all resales go towards their college fund. At six they still have not developed a fashion sense thank god. Children are not that expensive if you change your spending habits a bit.
Now we are not cheapskates or misers but we research and make the best out of our purchases especially large ticket items. If you live within your means now it should be easy.......if you live on the edge things will need to change.
Luckily my wife did not have to have everything new for the twins and Craigslist and other sources have been our best friends.........all resales go towards their college fund. At six they still have not developed a fashion sense thank god. Children are not that expensive if you change your spending habits a bit.
Now we are not cheapskates or misers but we research and make the best out of our purchases especially large ticket items. If you live within your means now it should be easy.......if you live on the edge things will need to change.
Yup... My wife has made stretching the dollar a bit of a hobby while being a stay at home mother. She admits going a little overboard on our first child but certainly has made up for it the second time around. She has been making our own baby food which has been cost effective (and easier with strict diets of our children) as well as perusing for sale ads on facebook and craigslist. Neighbors have dumped a lot of their used kid stuff on us (which we don't mind)... we've turned around and sold a lot of it for cash for other baby necessities. She's been really good at following up with toy manufacturers when things break... surprisingly got a lot of free stuff in response. Yes.. there is A LOT of useless crap marketed towards the mother (and fathers)... especially trendy stuff for the supposedly "hip" parents. You learn quickly to avoid those gimmicks.
One thing is for sure, its been well over 8 years since we've slimmed down our lifestyle in preparation for children. It hasn't been as bad as I had expected.. albeit we were not lavish spenders to begin with. Along with the experience of being parents, this has been a life long lesson. Even with my salary increasing during this time, we've managed to keep our expenses relatively flat... saving more, and learning how to invest more.
I know a few couples that are closing in on their 40th who say they want children but really can't afford it... much of what they describe is the result of being tied to a dual income situation with high expenses (too much house too much stuff.. too much car). My first thought... If you can't find the motivation to figure out a way to fit a child into your "lifestyle" and figure a way to "fund" the needs of child, you really not ready to have one.
We had our 2 kids 3 years apart. Other than the usual suspects (food, clothes, etc...) our biggest expenses were preschool at 3 and 4 years of age, summer camp starting at age 3, and in home childcare for our younger child. Obviously these expenses are irrelevant if you plan to stay at home and not send them to daycare/preschool. A 3 year gap works out nice if you do send them because the 4 years we are going to pay for preschool for the both of them will be spread out over 5 years.
Saving for college is also one, but I view this as optional as they can always take out loans. =)
Other things to consider are any activities you want to put your kid(s) in as they can add up.
If you make 100K and don't have an expensive lifestyle, you probably don't need to save anything for the children themselves prior to their birth. My husband was well able to support a family of 4 on 100K a year. Now we are divorced, I have my own income and he is supporting his new wife, 2 stepkids and paying child support for my 2 kids. He still does okay, nice house, decent cars, vacation time. There is money in savings for college (Not enough IMHO, but I got laid off and it set us back there.) We didn't 'save' anything for those kids, but when they were born we had paid off college loans and car loans and never carried a balance on the credit cards. Our only debt was our mortgage. Babies are really pretty cheap.
I would suggest to anyone looking to have kids in 5 years or so to A) take some really nice vacations and B) save as much for retirement as possible. and C) pay off all debt
maybe I was just lucky but i didn't think it was that expensive to have kids. we have 3 (ages 9, 1, 0). i think our biggest expense by far is going to be college.
clothes - we have many friends so we hardly had to buy any clothes because we just got them from friends (especially baby clothes). we buy clothes for my oldest kid and that's it. we just buy stuff on sale at gap, etc. and it isn't that expensive.
diapers - we use cloth diapers for all of the kids but still used disposables when going out, when the cloth ones were all being washed, etc. iirc, diapers are something like $40 at costco for like 300 of them? i don't remember exactly but we buy them every 3-4 months or so?
food - i haven't noticed an increase in food costs although when we go out, we do order food for the kids so i'm sure it's more expensive.
car - we bought a minivan.
strollers, formula, etc. - we got a lot of stuff at our first kid's baby shower and still use a lot of it. we also got a lot of stuff from friends. wife breastfeeds so we have never bought formula.
insurance - i pay for the family plan at work.
school - kid is in public school and all kids will probably go to public school.
so for me, i didn't have to save anything extra to prepare for having a kid. i would say that leading up to my first kid, i probably spend a few thousand bucks (maybe $5k) on lots of shopping (stroller, crib, glider, dresser, etc.).
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She's been really good at following up with toy manufacturers when things break... surprisingly got a lot of free stuff in response. Yes.. there is A LOT of useless crap marketed towards the mother (and fathers)... especially trendy stuff for the supposedly "hip" parents. You learn quickly to avoid those gimmicks.
