If you are a long time reader, you know that we are aiming to become financially independent in about 9 years. I have validated this timeline a few times using the financial independence / early retirement spreadsheet calculator that I created. Although we have a target, Mrs. T and I know that 9 years is a long time and a lot of things can change. This is especially true considering that we have two growing kids that may require us setting more money aside in our monthly budget as they get older. This is why we are not too fixated on an exactly FI date. We are simply executing our FI strategy so our passive income will exceed our expenses one day in the near future. So, given what I know today about having kids and the negative impact to saving money, would I forgo kids just to expedite our financial independence timeline? Can I have kids and still become financially independent in 9 years?
These questions arose when I had a conversation with a co-worker of mine the other day. He and his wife have been trying to conceive for the last half year or so. When I talked to him, he happily announced that they are expecting their first kid. Since being a parent is a complete new territory for my co-worker, he asked me a bunch of questions. It was rather interesting to be in such position, because not too long ago, I was doing the exactly same thing as my co-worker, asking other co-workers about their parental experience.
One of the interesting topics that came up during our conversation was how expensive it is to raise a kid. My co-worker quoted a recent study by Moneysence.ca that the average cost of raising a child to age 18 is $243,660. That equates to $12,825 per child per year, or $1,070 per month. He was completely blown away by these numbers. To add to his surprise, he recently had a sticker shock moment when he started looking at baby items like car seats, cribs, and strollers. He began questioning if they have the financial means to raise a kid.
There is no doubt in my mind that our household expenses have increased since the births of Baby T1.0 and Baby T2.0. I do not believe for a minute that our expenses have increased by 2x $1,070 per month though. Rather, our monthly household expenses have only increased by a small amount since the births of our kids. Perhaps it will increase as they grow up, but I am pretty certain it will never come anywhere close to $2,000 per month.
Which household expenses have increased since the births of our kids?
- We moved from an apartment to a house to have bigger living area
- Property tax
- Building upkeep
- Garden and yard
- Children's gym
- Swimming classes
In addition to the increasing monthly expenses, there are other factors that can reduce our overall savings rate. For examples:
- We put money aside for RRSP every month. That money could have gone toward adding more stocks in our dividend portfolio.
- It costs more money to travel anywhere with children. Lap infants under 2 cost 10% of the airfare for international travels, kids costs 80% of the regular adult fare.
- It is harder to find time to side hustle and earn extra income.
But having kids may also provide some minor monetary advantages as well...
- We get money via Canada Child Benefit from the Canadian government each month for having kids.
- Our schedules are tied up, hence spontaneous adventures or outings are a thing of the past. Say goodbye to late night beer drinking with friends, or last minute get-together with friends.
- Sleep deprived parents may just decide to go to bed instead of spending money on activities in their spare time [end sarcasm].
Regardless how frugal we are and have been, having kids will have a negative impact on our FI timeline. If we didn't have kids, I truly believe that we would be able to reduce the 9 year FI timeline to something like 5 or 6 years.
Is having kids worth the extra 4, 5, 6, or whatever extra years it would take us to become financially independent?
Would I trade a faster FI timeline by not having kids if I had the choice, given what I know today?
Two months ago, we started having family meetings every Sunday. Our whole family would sit down Sunday afternoon to discuss the upcoming week. We felt it was important to get Baby T1.0 involved in some of the household planning (Baby T2.0 will get involved once she's two or so). One of the things that we do during the family meeting is called acknowledgements. This is when each family member says thanks to other family members and acknowledges for something they did the past week.
Since we started our family meetings, Baby T1.0 has been saying "thank you mommy/daddy for playing with me" whenever it was his turn to give acknowledgements.
This past Sunday when it was Baby T1.0's turn to say thank you to Mrs. T, he paused for a while. It was obvious that he was thinking very hard in that little brain of his.
"Thank you mommy for looking after the kids."
Both Mrs. T and I got a bit emotional and shed a few tears.
Would I trade a faster timeline to financial independence by not having kids?
It has been truly amazing to be a dad and seeing two wonderful kids grow up in front of my eyes. It is fascinating to see two small individuals that reassemble so much of me. Both kids are learning and doing more and more things each day, and as a dad, I can't be more proud. It melts my heart to see Baby T1.0 running toward me to greet me every day when I get home from work. Just the other day Baby T2.0 started saying dada. No words can describe the rewards of being a parent.
Sure there are sacrifices both monetary, time, and sleep wise.
But the rewards outweigh all the sacrifices.
Therefore, given the choice today, I will happily take a slightly longer timeline to reach financial independence and have kids than not have kids at all and reach financial independence a few years earlier.
Can I have kids and still become financially independent in less than 10 years?
Dear readers, do you agree with me? If you are a parent, would you forgo kids to become financially independent earlier? If you are not a parent, would you consider having kids knowing that your timeline to become financially independent will be longer?