I sent this picture of a Porsche Cayman S with a ‘NO KIDS’ license plate to my MegaCorp boss a few years ago. He’s a Porsche guy and he and his wife don’t have kids of their own. His reply was insightful … “One wife, too!”
I wouldn’t recommend making significant life decisions based purely on dollar and cents, but that doesn’t mean that many of these decisions don’t have HUGE financial consequences. Our personal situation is pretty favorable to reaching FIRE (financially independent & retired early): we’re college sweethearts who have been married almost 30 years and have only one son.
A recent article I read suggested that the two-parent family is a “perfect economic unit”. Especially if there aren’t too many kids, who are expensive to raise and don’t typically contribute income to the family. This chart from the USDA suggests it costs $233K to raise each child in a “middle-income, married-couple” household:
Kids get more expensive as they age, but they are still quite costly when they are young. That’s when parents are earlier in their careers and the opportunity cost of not saving for the future is higher.
Spreading the costs out over 18 years and using a 5% return rate, you could estimate that each child requires about 5.5 years of extra work (at $75K per year).
Perhaps it’s not a surprise that most Americans think two kids is ideal …
Divorces are also quite costly, which makes it ironic that disagreements about money is one of the primary causes of divorce.
The legal bills are a one time hit, averaging $15K, but splitting your nest egg to establish separate households is very expensive. Often times the married couple’s home has to be sold to free up the money needed to allow the divorced individuals to set up their own separate addresses. Those costs are ongoing, unless one or both of them get married again and start sharing expenses with someone else.
Again, I wouldn’t suggest these decisions be made for financial reasons, but they need to be understood. As we all know, happiness isn’t a function of wealth after a certain point, but it also no fun to be broke!
How much did you consider the financial implications of kids or marriage in your life?
Image Credit: Pinterest