How much do kids cost?

The blog isn't dead. Not yet anyway. I had the goal at the beginning of November to do a post every other day--30 posts by the end of the year. Utter FAIL. But let's look ahead, not in the past.

Last year, one of my unpublished posts was about our 2007 spending report and how drastically it would change with the arrival of LBA, and where would that money come from--$10,000 as an estimate. This was based largely on the reported cost of raising a child to age 18--$250,000. The Simple Dollar covered this topic recently, and made many good points about how tax benefits and change in lifestyle habits are cover a lot of that cost. To some extent, it's shifting money around, but the point is that you don't have to come up with an extra $250,000 to raise a child. Thankfully.

But let's look at some real numbers--our comparison of 2007 to 2008. The net earnings are within a couple hundred dollars of each other--any raises received balanced out the lost income from Joanne's short-term "disability".



My exactness in accounting doesn't really say how close we came to the $10,000 estimate. Muddying the issue is whether to include 529 contributions as a child expense or savings. Including it as an expense means, at minimum, Owen accounts for 10% of our budget (a chunk of the merchandise line is attributable to him, as there were a lot of charges at Target and other places). THe other way to look at it is we redirected our mortgage overpayments to Owen's 529--it's almost an exact match. (Digression #1, I took a look at my retirement savings calculator and adjusted for the market collapse. Assuming my other assumptions are OK, it means we have to work to 61 instead of 60. So that's not super horrible).

And to be fair, we don't incur the biggest cost of infant/toddlers--daycare. At least not yet. So that's quite the boon to the savings line. And I'm shocked by the large difference there. One of the reasons I don't see it is because of how we have our savings structured (equities in taxable accounts; fixed income in sheltered), so that took a hit, and we already funded our 2009 Roths. That gives me some optimism in our 2009 budget that when Owen does finally start daycare, we have the resources available to not have to scrimp too much (although a place over $900/month would more than eat up the savings), and we maybe able to continue fully funding our 401k's. That one perhaps a little more questionable, though, as I'm reassessing if we need to direct that much there, and I wouldn't mind having a little more liquidity. Just in case.

We did skip major purchases in 2008, which probably won't repeat this year--we're already considering getting a new refrigerator (digression #2: A Maytag side-by-side is heavily discounted at Home Depot as an internet special. At an appliance store I visited today, I asked the salesperson what I get for spending $1200 versus $800 on a fridge. His answer: features. Not quality. "It's all the same box". Illuminating!). I/we may also be a little more active in home projects and what not. And I might get a hankering for Blu-ray (probably not).

So, yay!, Owen hasn't broken the bank.

Yet.