Money is Not a Form of Birth Control…

“Can we afford another child?” My answer is different than certain celebrity money people. Here it is: Money is not a contraceptive device. Do not try to use it as such. Having a child (or another child) is an emotional decision only. The rest are details to be managed.

Pretty provocative, huh? Remember, we’ve talked about priorities. You are the adult, you decide what your priorities are, but the flip side of all that beautiful decision making power is that you are also on the hook for all the responsibilities.

If you want a child or another child, consider all the ways it effects your life and decide if you are willing to make the necessary sacrifices to have that child. Remember, your other children will have to make sacrifices in lifestyle, too.

Where do you start? Ditch the child raising calculators out there. I do not see how you can value the cost of raising a child since the ripple effect on other aspects of your life is so profound. You can value college and daycare easily, but what about the difference in your vacations, your car, your choice of home, your work hours, raises you do not get because you leave at 5.45pm each evening.

You see what I’m saying, it does not lend itself to simple financial valuation like deciding whether to refinance your house.

Here are the things I ask people to think about with regard to having a child before even discussing finances:

  • Think long and hard about child care. Will you use a daycare facility, nanny or will someone stay home? Who does pick up and drop off, how does that effect that person’s job?
  • Think about your expectations for education for any and all children. A private college education has a present value (if you had the money today for 4 years of college) of about $200k, how much do you intend to pay for EACH child? Does another child affect your goals for the kids you have?
  • Think about your lifestyle. Where will you go on vacations? How often do you need a new car, can you keep your old car? What are you willing to give up for your goals and what are you not (e.g. a guestroom, more disposable income, etc.)?
  • Think about yours and your spouse’s career goals: hours, travel, stress, sick days, etc. Where do you plan to be in your career over the next few years and can you achieve your goals with a child or another child?

Notice, none of those “things to think about” were explicitly financial. Sure, they have financial implications, but everything does. They are life choices whose financial implications are there to be managed, not vice versa. You control your money, it does not control you.

If you have decided having a/another child is a priority, then consider the financial implications in the short term (until child hits pre-K) when you can actually predict them pretty well. Figure out if you can cut expenses or increase income to adjust for another child. If you’ve gotten this far, you’ve made the decision and you want a/another child. Now, you have to figure out what you have to sacrifice to realize your goal.

Here is just the beginning of a list of short term expenses. Make your own list and remember things like health insurance changes, after care for other kids, etc.

  • Count on about $300-450/month in sundries in the first year of life (yes, it’s true no matter how many hand-me-downs you get)
  • After age 1, estimate about $150-250/month for food
  • Daycare in an urban area is between $1300- $1600/month, nannies are about $36-50k/year

Figure out HOW not IF you can afford the short term financial implications. What needs to be cut? Gyms, massages, vacations, cars, hobbies, etc. Are you willing to cut them? This is how you decide whether a/another child is a priority. It’s not the other way around.

If you are not willing to cut anything and you do not have thousands extra each month, it does not mean you cannot afford a child, it means cutting to afford a child is not a priorty. There’s a difference. Remember, this is not a license to be financially irresponsible, because you want something. It’s a map of how to know what you want, prioritize it and make it happen responsibly.