No, It Doesn't Make Financial Sense to Have a Baby (But I Did It, Anyway)


There’s something extra special about the holiday season when you’re a parent, watching your kids excitedly open presents and enjoy quality time with extended family. But, of course, that’s just half the story. On the other side of that coin is the financial stress of having to buy those gifts and coordinate travel to meet that extended family.

And, honestly, the holidays are the least of your financial worries with kids. The latest estimates put the average cost of raising one child at $233,610. And an estimated one-third of American families devote at least 20 percent of their annual income to child care. These stats can feel pretty daunting for those of us already grappling with other major financial commitments.

“It’s safe to say that millennials are juggling more financial priorities and hurdles than prior generations,” says Certified Financial Planner Natalie Colley of Francis Financial. These hurdles include paying off student loans and credit card debt to struggling to accumulate enough savings to one day buy a home.

Indeed, in a July New York Times survey, about a quarter of millennials said they’ll have fewer children than they’d hoped because of the high costs associated with parenthood.

As a millennial with a mortgage, student debt and a fluctuating income, I can relate to that stress—but it didn’t stop me from starting a family nearly three years ago. While it may not make financial sense, my husband and I make it work. Because, like anything worth having, some sacrifices are necessary in the pursuit of bigger dreams.

We’ve only just begun our journey of balancing parenthood and financial goals, but it’s been a real crash course, especially now that we have two kids under the age of 3. Here are some lessons we’ve learned so far.

There’s no perfect time to have a baby.

I got married at 20, so there was no urgency to rush into parenthood. Instead, we spent the first years of marriage finishing college, enjoying (a little) disposable income and buying a house. But did we manage to check everything off our financial to-do list before having our first kid? Not even close.

We still have student loan payments topping $800 per month. We’re paying them down as aggressively as possible, but we’d certainly be making faster progress without kids in the mix. Plus, my work as a freelance writer means I don’t have a steady paycheck or benefits like maternity leave.

We weren’t blind to these downsides, but life decisions can’t always be based on what looks best on paper. Starting a family in our mid-20s was aligned with our long-term goals, like traveling later in life and enjoying more years with our kids. If that required finding a way to budget and saving for the future on a tighter budget, we were up for it.

For us, that looked like putting a focus on building our emergency fund as much as possible from the moment I got that positive pregnancy test. From that point on, we knew to expect the unexpected—and wanted to give ourselves as much of a cushion as possible, even if it meant scaling back on our other loan payments in the short-term.

Family money decisions aren’t always black and white.

Despite our best intentions, we had a lot to learn, especially when it came to weighing our day-to-day expenses against long-term goals. For example, we initially decided not to pay for regular child care because my unpredictable earnings weren’t guaranteed to cover the expense with anything leftover to save. It didn’t feel worth it.

But by my child’s first birthday, my kid’s schedule didn’t leave enough time for me to get work done, and I was actually leaving money on the table. Faced with the decision to invest in child care or take a step back from work, I did some (overdue) research: Was it enough to only consider today’s earnings, or was I missing something by not factoring in potential earnings and long-term professional goals?

The answer was clear. Continuing to grow my business would yield more money over time and allow us to save more—and it made me happy. This was a lightbulb moment that prompted us to get creative about finding affordable child care that was compatible with my career. We ended up organizing an in-home nanny share with another family, which gave the kids a playmate and us moms reliable work hours.

It’s okay to say ‘no’ to some baby purchases.

There’s a real temptation to buy all the baby things—especially on birthdays and around the holidays. But as my first kid’s closet filled up and our storage space overflowed with toys, I hit the pause button to redefine what was a necessity, what was extra and where our money would have the highest impact.

Dressing up a baby in an adorable new outfit is definitely more fun than saving that money. And, as our kids have grown and begun to express interest in pricey activities like gymnastics classes and swim lessons, we’ve had to explain in their terms that we can’t do it all at once.

But I’m grateful for this perspective, which has helped us pad our long-term savings and travel fund. Now, when I’m tempted to make an impulse purchase, I think about spending that money on our upcoming family trip instead…and then step away from the baby bows.

In the end, you can have anything, but you can’t have everything.

Here’s Colley’s bottom line about affording to start a family: “Each couple’s unique circumstances, values and priorities will impact how they decide to arrange their lives to accommodate a new family member.”

In other words, it’s all about tradeoffs. It’s about saying “no” to all the vacations we wish we could take and things we wish we could buy in lieu of the opportunity to build our family. But these are tradeoffs I’m glad to make for my personal life and for the example it’s setting for my children about being grateful for what we have.

And thankfully, the happiest memories of being with your family during the holidays don’t cost a cent.