How much did it cost you to raise your child?
Hey,
So I currently have a partner but we do not have any children. I am big on planning and would like to prepare myself for the day that we have children (~next 3-5 years). I am currently blessed to have a good career which allows me to save ~50% of my net pay + bonuses.
My question is, what is the incremental cost of raising a child? The only costs that I can think of are food and clothing. Housing, transportation, and so on are not incremental costs as I would be incurring them regardless. My rough math tells me that one child would drive incremental costs of approximately ~$500 a month which works out to $108k over 18 years. In addition, higher education would cost an additional $50-70k.
Basically, if I save ~$106k (PV of $77k for monthly cost, and PV $29k for univ) in principal before the child is born, a return rate of 4% annually would cover 100% of the cost of raising the child plus their university education. I am assuming that I draw the $106k down to zero over the 18 years + university education.
Am I understating the cost of raising a child? My goal is to save enough before the child is born and be able to finance their upbringing + university education off of the interest and principal of the account. Based on my current savings rate it will be very easy for me to do this.
So I currently have a partner but we do not have any children. I am big on planning and would like to prepare myself for the day that we have children (~next 3-5 years). I am currently blessed to have a good career which allows me to save ~50% of my net pay + bonuses.
My question is, what is the incremental cost of raising a child? The only costs that I can think of are food and clothing. Housing, transportation, and so on are not incremental costs as I would be incurring them regardless. My rough math tells me that one child would drive incremental costs of approximately ~$500 a month which works out to $108k over 18 years. In addition, higher education would cost an additional $50-70k.
Basically, if I save ~$106k (PV of $77k for monthly cost, and PV $29k for univ) in principal before the child is born, a return rate of 4% annually would cover 100% of the cost of raising the child plus their university education. I am assuming that I draw the $106k down to zero over the 18 years + university education.
Am I understating the cost of raising a child? My goal is to save enough before the child is born and be able to finance their upbringing + university education off of the interest and principal of the account. Based on my current savings rate it will be very easy for me to do this.