So, we’ve all read those doomsday articles before, right? Kids cost you $3 million dollars each by the time they’re 18 years old. That’s obviously assuming that you’re raising them to today’s high standards, i.e. they’re enrolled in the best childcare available, they participate in every imaginable extracurricular activity, you’ve enrolled them in expensive summer camps, and they’re learning Mandarin in their free time instead of *gasp* watching cartoons.
Can you detect my disdain for these articles and the peer pressure to parent kids in the *right* way? Don’t get me wrong, I think it’s super important to plan for the extra childcare or medical costs, just how much you’ll need to save if you want to help your kids pay for college and to expose your kids to lots of new experiences. However, I think we spend WAY too much time focusing on these doomsday articles and not enough on the subtler ways that having kids will affect your finances.
It’s not just about you anymore
This sounds really obvious but stick with me for a moment. Before you had kids, you probably considered saving for a down payment for your first home or for your eventual retirement. You may even have taken some concrete steps towards that end and opened a Roth IRA or contributed to your 401(k).
Considering your financial future takes on a new sense of urgency, or dare I say, desperation after kids. Suddenly, not putting away 10-15% of your salary in your 401(k) feels physically painful. If you under-save, you’ll have to live in your daughter’s basement once you retire and will be a proverbial ball and chain weighing her down. If you don’t put down a healthy down payment on your home, you won’t have extra room in your budget to take that memorable summer vacation with your kid to Disney World.
This may seem like a non-issue to those readers who aren’t parents, but once you’re a parent you see just how much every decision you make feels weighty. If properly channeled, it can serve as a hugely motivating impetus in achieving your goals. However, if you let it get the best of you, you can feel absolutely paralyzed and powerless to prevent your doomsday scenario.
Financial Prioritization Becomes Urgent
Money is inherently finite, and never more so than when you have children. I know it has felt like that for us more often than I’d have liked. There are always new toys to buy, new activities to sign up for, a million birthday parties to attend and the requisite gifts to purchase. It can feel like you are always five steps behind where you want to be financially. This is where financial prioritization is going to save you from feeling as if you’re never going to achieve what you set out to do.
I was first introduced to this concept via Brooke Castillo’s podcast, the Life Coach School. Make a list of your top 5 financial/life priorities. Let’s say those are paying your mortgage on time, saving for retirement, extra speech therapy for your child, summer vacations, saving for college. Let’s say funding that adequately should cost you $2,000/month, but you really only have $1,500/month to dedicate to that. Instead of looking at this as a failure “gosh, I don’t have enough money to take the family to the beach this year!” you can say “okay I’m choosing to pay my mortgage and not take the kids to the movies every weekend.” Do you see how the framing makes that feel different?
Years will go by without you even considering your finances
Parents are BUSY. You knew this before you have kids, but the way days, weeks, and months go by when you have children defies all logic and reason. I have a 6-year-old, but I honestly feel as if I had her yesterday. I’ve been busy changing diapers, attending school performances, and braiding hair(I have 3 girls. Please pray for me! My Sundays are officially fully designated as “wash days”) that I didn’t realize all this time has passed. If it weren’t for my profession as a financial planner, I would probably rarely think about my finances or have the time to run numbers and come up with a long-term plan for achieving my family’s financial goals.
Therefore, I think it behooves every parent out there to be strategic and minimize the time you *need* to spend on your money. Automation is going to be a huge time-saver and allow you to “set it and forget it.” This way you can get back to changing diapers, cajoling your son into trying the dinner you lovingly prepared or hiding from the kids in the bathroom to scroll Instagram in peace. Your bank account will thank you later.
It’s Worth Celebrating Some Progress
We’ve already discussed how you’ll need to prioritize and be really mindful of where your money goes. With more demands on your money than ever, you will need to accept that your progress towards certain goals might be slower than before you had kids. You may not be able to save your new home down payment in 3 years, and it might take 5. However, as long as you are taking whatever steps you can towards that goal or have a plan for when you can address that goal, you should celebrate. It takes a lot of work to juggle all the demands on your money and time as a parent, and any progress is some progress. Baby steps are much more important than huge steps and will add up faster in the long run.
For now, I’ll leave you with a few things you can consider/implement in order to take control of your finances and manage to change your 3,000th diaper of the day.
What do you actually value? I know I keep banging on about this, but it’s important, especially when you’re a parent and every resource you have is in short supply (time, money, energy, etc.)
If you can’t achieve your financial goal right now, what can you do today to get you closer to achieving it? How much can you put towards the goal today? How much will you be able to 6 months or 2 years from now?
What financial goals can you automate?
Ask yourself what your top 5 financial priorities are and relentlessly work towards those. Say no to everything that is not that, and live in peace knowing that your actions and money are in line with your priorities.
Please comment below and let me know how having kids has changed your finances. Were the changes bigger or smaller than you expected?