Money Lesson 6
Money Lesson 6
‘Children Easy on the Heart,
Hard on the Pocket’.
I love children. I love being a mum. I love all the stages from newborn to teens. I love some stages more than others. I want to pause certain stages and I would like to fast forward other stages. Given I have children in their teens, national school and toddler years I feel this is pretty obvious. However, alongside all the fun and games is the cost. Children are hard on the pocket and there really is no getting away from this.
Research carried out by Laya Health reported the average cost of raising a child to 21 in Ireland is 105,321 euro. Shock horror and considering I have 4 of them, this figure is enough to send any parent or any future parent running for the hills. Of course this figure is defendant on your income level and spending habits. Either way you are going to be financially worse of by each child. It an inevitable outcome that you will spend more money on your children than you will yourself.
Laya Health suggest that Irish Parents are spending an estimated 11,333 euro a year on each child. So let us take a family with income of 40k a year and they have 4 children. Going by these figures you will be very quickly left with zero.
For Irish parents childcare is one of the biggest outlays. It is pushing many parents out of the workforce. I say parents and not just mothers because I have noticed an increase in fathers leaving the workforce over the same issue. It simply does not pay to go to work when one full wage is going on childcare and fuel.
This article is not one about tips on how to reduce these costs. This article is about raising the awareness of the outcome of deciding to have children is going to change your financial path for the rest of your life. With each new child, your financial path changes.
When you add up the cost of having children, the usual costs come to mind. Childcare, education, healthcare, food and clothing. Follow this with costs we don’t always factor in. Higher utility bills (my electricity bill), entertainment, sports, larger car (hit us moving from 3-4 children) or a larger house.
Sometimes families feel they have grown out of their home. So you may need to get a new mortgage. Many do not realize that the number of children you have will seriously affect your borrowing power. Not so long ago I applied for a mortgage, on paper going by my income I could borrow 100k. After they allowed for my dependents ( I had 3 then), that 100k fell to 19k. What could I possibly purchase with 19k and I presume with 4 children now that figure has fallen further.
You can’t be selfish if your planning on having children. Their needs come before your needs. Your job as caregiver is a role you will need to have decided to adapt to for your lifetime. With a 17 year old down to a 2 year old I have long accepted that fact I will spend almost all of my working life, working mainly to provide for my family. This is a question you need ask yourself are you prepared for this.
The hope is your children reach the age of independence. Once upon a time this was considered 18, then 21, legally in divorce it is 22 but in reality this age is moving more towards aged 24-25 and increasing! Many adult children are moving back in with their parents as living costs and house prices rise. The straight lines to independence has become blurred in more recent years. So you need to look at the fact you may have adult children living with you for a long long time.
If I look at my personal finances and imagine I have no children, financially I would have no worries. I would be raking in the savings and the holidays abroad but would I be happier? No not at all. I am very happy with my tradeoff, my decision to have children. This is how I know my road was the right one for me. Sitting down with your other half and discussing this decision is imperative for your future. Babies add enough stress to a relationship with night feeds etc without adding in financial stress. You both need to be onboard.
Once you have considered all possible outcomes and you decide to have children or more children, the figures become irrelevant. You won’t look at the costs so stingily, you will just get on with it, make the budget balance as best you can and get on with the most important job of loving your children. The priority will change to love first, money second.
