The Unexpected Financial Benefits Of Having Children

One of the main reasons why people delay having children is due to cost. Rising prices for daycare, preschool tuition, and shelter plus the opportunity cost of not working, partially explains why our population replacement rate is declining. 

The cost of raising children worried me so much that I actually had a $1 million net worth target before having kids. In retrospect, having a $1 million net worth goal was clearly unnecessary. But the goal did reflect the type of financial anxiety I felt while working in New York City and San Francisco.

My wife and I weren’t ready to have kids until we were in our mid-30s. San Francisco was already expensive enough. To add a child then we already didn’t have enough time or energy due to our respective occupations would have been unfair to our kid.

Therefore, we logically waited until we had more wealth and more time before seriously trying. We were familiar with the often-cited statistic that it takes $250,000++ to raise a kid to adulthood.

After several years of parenting, however, I now realize there are some unexpected financial benefits of having kids I didn’t anticipate. Further, having children isn’t as expensive as you might think.

How Having Children Saves Us Money

Here are five financial benefits of having children.

1) We don’t travel by plane anymore.

My wife and I spent on average $25,000 a year for six years traveling internationally until our son was born. Now we travel to the California Academy of Science Museum, a seven-minute drive away. The cost to attend every day is just $120 a year.

The museum kept our boy entertained for up to two hours between ages 0 – 3. When we didn’t go to the California Academy of Science Museum, we went to a free public park with a playground. When we were not at a public park, then we were playing on our deck or in our back yard.

Since kids don’t remember hardly anything under the age of three, the return on travel just wasn’t there. They already don’t sleep well at night. Introducing time zone changes and new sleeping arrangements will only make their sleep worse.

Besides, my wife and I have already traveled to over 60 countries. Further, I grew up in five countries before coming to America for high school. We were traveled out by the time our kids came.

The ideal age to travel with kids is after they are five years old so they can remember their experiences. Therefore, we won’t be traveling by plane until our youngest one turns five in 2025. In the meantime, there are plenty of great places to explore within a 5-hour drive of San Francisco.

Total savings: $2,041 /month, $24,500 a year

2) We eat out way less often.

Because it’s difficult to eat out with babies and young children with short attention, we tend to eat more at home. We used to go out to eat three times a week because San Francisco seriously has some of the best restaurants in the world. Each meal for two would cost anywhere between $30 and $200.

Total savings: $1,000 / month, $24,000 a year

3) We go less often to shows, movies, plays, or sporting events

A two-hour show plus commuting now feels like an eternity away from our children. There is this weird biological alarm that goes off every time we’re away from our children for longer than three hours a day. As a result, doing the whole dinner and a movie thing was out for the first couple years of our son’s life. We can do dinner, but no show. Or we could do a show, but no dinner. Can’t have both!

Further, if we wet out, we needed to pay for a babysitter. Therefore, today we mostly just watch Netflix or other streaming shows on TV after our children have gone to bed. If you’re looking to watch a new show, check out Severance on Apple+. It is deliciously sad, creepy, and real.

You might want to look out for my Love Is Money TV idea I’m pitching as well! So far, the Netflix executives are ignoring me. Donna what’s up with that!

Total savings: $500 / month, $6,000 a year

4) We maximize the value of our house.

When we were working or traveling, our house was maybe utilized for 12-14 hours a day. Now that we work from home and hardly travel, our house utilization rate has skyrocketed to ~20 hours a day. Someone always has to be home to take care of the kids.

And if one of us isn’t home, that person is only gone for at most 3-4 hours at a time. The best time to own the nicest house you can afford is when you have kids. It’s rare to upgrade to a larger, nicer house once the kids leave the nest.

Our old house used to cost about $5,500 a month all-in when it was just the two of us. The two of us could have happily lived in a $4,500 a month place. Therefore, we were wasting about $1,000 a month of space. With the birth of our son, our waste went to $0 as we fully utilized the house every day.

Total value increase: $1,000 / month, $12,000 a year

5) We didn’t have to send our son or daughter to daycare.

Full-time daycare costs $2,500+ a kid here in San Francisco. That’s $30,000+ a year in pre-tax expenses. Given we were two stay-at-home parents before the pandemic began, we were able to save $30,000+ a year in daycare costs for two and a half years. But to keep our sanity, we did spend $600 a month on childcare assistance.

We’ve also both been stay at home parents since our daughter was born in December 2019. Hence, again there’s been no need to send her to daycare for the past two-and-a-half years either.

Total net savings: $1,900 – $3,800 / month, $22,800 – $45,600 a year for five years and counting

Total Financial Benefits Of Having Children

If I add up all the savings from our now homely lives, we’re talking about ~$100,000 a year in financial benefits for having children!

Of course, children also come with additional expenses such as food, diapers, tuition, lessons, higher healthcare premiums, a bigger house, and so forth. But for the first two-and-a-half years of each child’s life, the expenses weren’t that much.

Where the expenses can really pick up is if you decide to send your kids to private school. Here in San Francisco, private elementary schools can run $30,000 – $40,000 a year. If we send both children to private elementary school, that’ll be $60,000 – $80,000 a year. Ouch!

But $70,000 – $80,000 a year is still less than the $100,000 a year we were saving. Bottom line, having children can be much less than you think. You can also spend an endless amount more on children if you want.

How Having A Child Can Make You Money

“Have children and the money will come,” is an old saying across many cultures.

So far I’ve discussed ways our children saves us money or increase the value of what we already have. But the most important financial benefit of having a child is the tremendous amount of motivation they will give you to work harder and smarter.

There’s nothing a parent wants more than to provide for their family and ensure their kids get the best opportunities possible. Therefore, you will naturally find ways to make more money.

Since our son was born, for the first two years, I never worked so many 5 am – 8 am and 10 pm – 1 am shifts. These were the only times when I could get any work done since a writer needs quiet!

There were so many times when I wanted to just take it easy with my writing, podcasting, or business development activities. But every time I saw my babies, my energy gauge filled back up.

It’s hard for me to quantify how much more money I’ve made since having children. But I would say at least $95,000 more a year because that’s what our healthcare and preschool tuition for two kids cost a year. I made it a goal to make more money to cover these additional expenses.

Having kids also made me focus on building more passive income. We were fine with $150,000 a year in passive income for the both of us. But when our son was born, I focused on getting to $200,000 a year in passive income by the time he was three. And when our daughter was born, she encouraged me to generate an addition $50,000 by the time she turns three at the end of 2022.

Finally, during the first two years of the pandemic, my kids are what kept me going to write Buy This, Not That. I just imagined having both of them bring the book to show and tell one day and share with the class what their daddy does. I didn’t want to let them down!

Children May Be More Affordable Than You Think

If you’re afraid of having children due to the added financial responsibilities, I wouldn’t worry so much. After food, clothing, bottles, and toys, babies/toddlers can be as cheap as you want to be. You will figure out how to provide for your family because you will do whatever it takes.

Having a kid incentives you to work hard, work smart, and stay in better shape. They provide you with an immense amount of purpose. Before having kids, all I did was make money for myself. And once I had enough to live a basic lifestyle, the motivation to work and make lots of money faded.

I’m pretty sure if I had kids while working in finance, I would have kept on working. Suddenly, I wouldn’t find doing the same old thing for 13 years so meaningless anymore. My chances of getting paid and promoted would have risen given I would have been more collaborative instead of indifferent towards the end. As a result, kids would have made me way more money in my career. Shucks. Should have had them sooner.

It doesn’t really matter what you do for a living. Just knowing that every dollar you make can help support the people you love the most is huge. So if you want to make a lot more money, you might consider having lots of kids!

Just make sure you can handle the energy requirements to raise kids. Kids might not be as expensive as you think. However, kids will drain your energy quickly if you decide to take care of them.

Related: Dear Older Parents, Having Kids Late Might Be The Best Choice After All

Readers, have you found that you’ve made more money after having children? What are some other financial benefits of having children?