A tent is more affordable than a house.

You’ve Being Doing It All Wrong: Spending Too Much on Raising Children

A tent is more affordable than a house.
Maybe we could get things down closer to the $3,000 per child range if we sold the house and moved into a tent…

My wife and I didn’t exactly jump into parenthood, waiting for nearly a decade after being married before deciding the time was right to have our first child. That long into a career, a child wasn’t a budgetary killer. One we started, we quickly realized what we’d been missing and decided we would add a second and stop — two being the optimal number that would allow us keep our existing lifestyle relatively intact. Well, two ended up being twins and that was when we started feeling the pinch. A new report released by the Fraser Institute here in Canada (a public policy think tank) says raising a kid shouldn’t cost $10,000 or more per year as has been commonly suggested; you should be able to pull it off for between $3,000 and $4,500. Clearly, we’ve been doing it all wrong.

I have no regrets about having kids. Best thing we ever did. But it wasn’t a financially smart decision.

With the arrival of Natasha, we had to sell our townhouse and I had to trade in my sports car, a little black VW Scirocco that wasn’t exactly kid-friendly. We got her into a decent daycare that set us back $1,500 or so a month. So for child number one, we had the cost of a car, upgrading to a larger house and $18,000 in daycare. Plus diapers, toys, food, equipment and clothes. Call it $200,000 for that first year. Even if you take out the house, which I suppose wasn’t technically necessary (although it would be by the time she had a sibling), it was still something like $50k. Way more than that $3,000 I should have been aiming for…

When the twins arrived, we were out of luck on the car. I’d traded for a Volvo, figuring the turbocharged sports wagon (with excellent safety ratings) would be preferable to giving in to a minivan. Great idea with two kids, but no dice with three — the rear seat (which seemed huge at the time) was too narrow to fit three child seats. So we gave up and the wagon was traded for a minivan. Again, I lost my shirt in the process. At least the house was still workable, although the newly renovated nursery had to be rapidly transformed into Natasha’s room when we discovered we would be bringing home two baby brothers for her instead of one. She ended up with the short end of the stick (i.e., the small bedroom) on that one.

Daycare? Three time $1,500 equals $4,500 per month. Yeah, that didn’t fly. On those days when I’d drive three or four hours each way to a meeting in Toronto, come home at 11pm and get up at 3am for feedings, I’d torment myself with what I could do with $4,500 per month. His and hers Jaguar convertibles, complete with insurance, fuel and daily detailing was a common theme. We ended up going with home care after being lucky enough to discover a wonderful woman in our neighborhood who looked after kids and lived directly across the street from what would be their school, making for a great before and after school transition. But still not cheap.

My kids are past the daycare stage now (wallet says thank-you), but I just returned from one of many back to school shopping sessions and I’m still feeling that one. The boys — now going on 11 — are going through a growth spurt and besides outgrowing everything from shoes to pants every few months, are eating us out of house and home. Additional grocery costs directly attributable to the kids are easily $500 per month (whoops, there’s two thirds of that $3,000 each already despite the fact that I cook in bulk and freeze) and that’s only going to get worse as they reach teenage years. Looking at next month we have $300 for soccer registration, $275 for a leadership camp, and it’s birthday party season. There are the video games, the Lego investment (okay, both of those are at least little bit for me), the computers, iPads and other stuff that kids today take for granted. Family vacations — even camping has costs.

Then there’s the big one that’s always getting closer, trying to put away money for their post-secondary education. I think I need to read Erik’s book

Anyway, the long and the short of it is that I can’t for the life of me figure out how this $3,000 to $4,500 number could be realistic. The author even points out that additional savings could be realized by “couponing, taking advantage of sales and doing your own home repair and maintenance.” All of which I do. And I’m still thinking that $10k per child that used to be the accepted expenditure per year seemed low. Obviously I’m doing this completely wrong, but I don’t care. Having kids is still the best thing we ever did.

Here’s the PDF of the full report if you’re interested in finding out all the ways you’re doing it wrong too.

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5 thoughts on “You’ve Being Doing It All Wrong: Spending Too Much on Raising Children

  1. What I find is the average for child care. The problem with this is that for the most part you either have full time child care or you have little or none when a family member watches the children. It’s kind of comparing apples to oranges. We have 2 preschool children and it costs us 2,100/month USD for the child care/preschool which puts us way above the average. We just don’t have a family member close enough and willing/able to watch the children. Also, we want to make sure the kids are in an educational environment now that they are approaching 4 years of age, not just child care.

  2. Another item is college savings. We are saving $400/month for the 2 kids towards college savings, I don’t see this anywhere in the charts. I know a lot of people don’t have much to put towards their kids college, hoping for scholarships, grants and loans, but for those that do they don’t even include it on the basic charts, unless that’s part of the “child care and education” portion, in which case people just choose not to put away much towards college or are not able to save.

  3. This sounds like a blog post my husband will write in 2024. We just had our second… and third child (boy/girl twins) four weeks ago, with the intent to be a family of four like you. We’ll soon start paying the $4,500 in daycare expenses for the next several years. Glad to hear there’s no regrets!

  4. Thanks for this! I also look at that number in disbelief. This quote especially: “These cost estimates exclude any savings strategies such as home gardens, sewing and knitting clothing, couponing and taking advantage of sales, own repair and maintenance work in the home, etc.” had me laughing out loud and wondering if they were talking about child-raising costs in the late 1800’s 🙂

    Sadly I don’t have time to read through the whole paper, but scanning it a bit I think I have a few ideas of where they came up with the number. In a nutshell, the assertion seems to be that families with children don’t spend all that much more on any given item (besides childcare) than families without children. This makes sense actually – we might remember eating out, going on expensive vacations, buying sports cars, expensive clothes and watches before we had kids. But the real impact is that *discretionary spending* takes a radical downturn and other non-discretionary spending (like childcare!) goes up dramatically. But making the claim that the cost of having children is only the difference in spending is misleading at best and really makes me think they have an agenda.

    Regardless of the article, In my experience we don’t decide whether or not to have children based on finances. People of all means make the decision to have or not have children based on a multitude of factors and I’ve never seen money be the driving one.

    Sure – there are a lot of things we don’t do anymore since we’ve had kids. But there are also a ton of new experiences I could never have had if we didn’t have them. I think the paper misses the mark – the subject should be “Sure, having kids isn’t cheap. But you’ll figure out a way to make it work anyways.”


    P.S. I’m not the only one who thinks the Fraser Institute is off-base:

  5. I can’t even send my 5 yr old to full day public school kindergarten for under $3000. With after school care, food, clothing and any sort of organized sport it is at least $10000 a year.

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