Why Starting A Family Won’t Kill Your Finances

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Starting a family can be a strain on the budget, but it doesn't have to be. Here are reasons why having children can actually help you financially.

The following is a contribution from our friend Hannah at Unplanned Finance. 

When I told my coworkers that I was pregnant, I expected the many congratulations I received. I expected the truly bizarre and completely unsolicited parenting advice. However, I didn’t expect that nearly everyone agreed that our son would fill our hearts with joy as quickly as he emptied our bank account.

And it turns out they were at least half right! Raising a family is an expensive choice, but growing kids and a growing net worth don’t have to be opposites. In fact, I would go so far as to stay that having a kid has been our best financial decision yet. Here’s why:

Kids clarify your financial goals


Prior to having our son, my husband and I did not have clear financial goals. Thanks to some generic advice, we had set aside money for retirement and emergencies, but we had no specific motivation to take control of our finances. As a result, we spent and saved our money mindlessly, and we didn’t work very hard to raise our incomes or learn about building wealth.

Our mindset changed the moment we learned I was pregnant. Suddenly, we had goals. We wanted to provide generously for our son, and we wanted time to spend with him. We realized that this required gaining control of our finances.

As we began slashing unnecessary expenses and stockpiling cash and tracking our spending we realized that we could thrive on just one income. As a result, my husband made the leap out of the workforce and into a full time PhD program (a long-term investment), in the hopes that he can be our primary income earner in a few years.

Along our journey we learned that we can provide for our son now, and we can prepare for the future too. More than that, we learned that our ability to control our finances unlocks options that we never thought possible. Today, we are working towards the option for me to stay home full-time even before my husband finishes school.

In my opinion, a strong motivation is the single most important factor in your ability to achieve financial goals. When we had our son, we found our why.

You can raise kids without spending a fortune


Our son clarified our financial goals, but we worried that the expense of raising children would keep us treading water financially. Current estimates put the cost of raising a child at around $245,000 over 18 years, but if you look closely at these numbers, you will begin to understand that the true cost of raising a child depends mostly upon lifestyle choices.

*Related: Need to buy your child a cell phone? Read our guide on the best cheap phone plans for kids that won’t break the budget.*

In the study I cited, nearly 40 percent of the estimated costs of raising a child come in the form incremental expenditures on housing or transportation. For us, the incremental cost of our son in these areas has probably been about $1,000 which includes a car seat, a bike seat, and the additional utilities to heat and cool his 64 square foot room. I think it’s safe to say, we won’t hit the incremental $100,000 anytime soon.

On the other hand, we are likely to blow the estimated $45,000 for childcare and education out of the water. We spend around $13,000 per year for a close friend to watch our son. It would be cheaper (by about a third) to send him to a daycare center, but time after time we’ve determined that the benefits of paying more are worth it to us.

As kids get older, the lifestyle part of spending will become even more apparent. Will your kids take private music lessons? Will they play city league basketball or travel league? Will they go to public school, private school or will you homeschool? These questions aren’t just money questions, they are lifestyle questions. While you’ll spend some money no matter what lifestyle you choose, the exact amount is up to you.

You can find income growth opportunities


Lifestyle influences your kid-related expenditures, but it also influences your income potential. For the 12.4 Million American families with a full-time stay at home parent (including 2 million stay at home dads), the connection between lifestyle and income is obvious; their family income dropped by close to half when one partner exited the workforce.

Even for dual career families, kids represent obstacles to income growth. With kids, it’s difficult to spend extra hours at the office, to pursue extra degrees and certifications, to move across the country, and to accept positions that require extensive travel. All of these can impinge upon your ability to grow your income.

However, scrappy parents can find opportunities to grow their incomes even as they devote time to raising kids. Here are a few suggestions:

For Dual Career Families:


Work opposite shifts. Working opposite shifts can lead to two incomes and low childcare expenses. Opposite shift families have the opportunity to focus on their career since they also can trust their spouse to keep things going on the home front. However, this tends to be a relationally taxing option.

Outsource all that you can reasonably afford. For extremely high income earners (think Hollywood celebrities and Silicon Valley Tycoons), spending money on household help (including nannies) is obvious. My husband and I outsource daily childcare, but we don’t feel comfortable spending on additional household help at our current income level.

Spend time on professional development. During light work seasons, you can do this during your workday, but even during busy seasons spending time working on your career and not just your project deadlines will make a growing income more likely. I spend about twenty minutes a day reading business books (or Harvard Business Review cases) and blogs to be sure I am developing a strategic mindset. My older sister recently completed her Master’s degree in Education by taking one class at a time for five years straight.

Don’t be afraid to hustle. Earning a side income, can be one of the best ways to boost your wealth, and your side hustle, doesn’t have to scar your kids for life. While having a side hustle might make you feel like you have a non-traditional family, there’s a lot your kids will learn from watching you and eventually, possibly even participating in your hustle.

You might even be able to grow the hustle into a full fledged family business and you’ll model real life business skills that your kids can apply to their own situations as adults.

For single income families:


Keep your credentials up to date. The primary income earner should be diligent to keep up on professional development opportunities to boost their earnings in their primary career, but the stay at home spouse should keep their credentials in tact to make re-entering the work force easier.

Earn and care for your kids simultaneously. It’s difficult to take care of kids and work at the same time, but I’ve seen some ingenious solutions. My previous babysitter was a mom of three who watched my son and her kids for over a year before she moved. My cousin keeps her hair cutting supplies in her minivan. At baseball games or on play dates, other parents are happy to pay her to cut their kids’ hair.

Build a side business even if it is small. My mom spent twenty years as a stay at home mom and she occasionally catered different events; these days she has more catering work than she wants. I have one friend who plans kids’ birthday parties; she manages to run her business during naptime and on Saturdays when her husband watches the kids. When her kids are older, she hopes to build the business further. I have another friend who runs a small photography business and hopes to devote more time to her craft and business once her kids are in school.


Why do you think so many equate having children as being expensive? What tips do you have for a parent wanting to care both for their children and grow their net worth at the same time? If you’re a parent, how do you prioritize your time and activities so as to have balance and still make a decent income?


Hannah Rounds is a wife and mom who is working towards her version of the American Dream. This dream involves shifting her focus from career to family while creating opportunities for an encore career later in life. Her goal is to help other parents forage similar paths.

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.