Conventional wisdom tells us that kids are expensive. Really expensive. The world constantly bombards us with stories about just how much kids can cost — According to the USDA it costs $245,340 to raise the average child to age 18.
The personal finance community generally takes a negative view of huge expenses like this… a gigantic speed-bump on your way to Financial Independence. Nope, kids don’t get a lot of love from the personal finance community.
Remember though, all those gigantic numbers are just an average. I’ve argued in the past that kids really aren’t that expensive, it’s parents that make them expensive. I strongly believe that.
But what if we were to turn this whole equation on it’s head? (Charlie Munger is right — invert, always invert!) Instead of thinking about children as a burden, what if we thought of them as an investment?
What if there were actual benefits to having kids? An investment with real returns, but not necessarily financial ones…
What prompted me along this line of thinking was a recent study published by researchers at the Sweden’s Karolinska Institute. The study found that aging adults with children lived longer than those without…and we’re not just talking months. We’re talking about extra years — 2 years for men and 1.5 years for women.
What’s more, none of this is really new news — previous studies support the findings of Karolinska study: parents generally have a lower risk of death throughout life.
Parents just live longer than non-parents. While the study doesn’t provide any concrete reasons why, they do speculate that elders live longer because of care received from their adult children. That’s a reasonable hypothesis, but I think there’s more to it than that.
This study created a really good conversation at our dinner table — Mrs. Tako and I decided there could actually be hundreds of different factors involved.
If the risk of death is lower throughout life (as other studies have shown), there must logically be other factors besides ‘elder care’ that keep younger parents (like me) from dropping dead.
That’s when the mental shoe dropped for me — those factors are non-financial benefits that aren’t getting measured by monetary studies or longevity studies.
Benefit: A Healthier Lifestyle
I’ve mentioned this in past posts, but my kids have made me lead a healthier lifestyle.
We eat and drink healthier as a result of having kids. Does this contribute to longevity? More than likely!
But what about physical activity? When the weather is nice in the PNW, we try to spend as much time out-of-doors as possible. We go on family hikes into temperate rainforests. We walk to local parks. We go to local beaches. We ride bikes. We try our hand at fishing and clam digging.
Result? A physically active, and peaceful lifestyle.
Simply put, as parents we want our kids to be active and healthy. Ultimately this means we (the parents) have to be more active and healthy as well! It’s a win-win!
Benefit: Child Labor (aka The Helper)
In the old days, child labor used to be a way of life. The vast majority of people lived on farms, and farms required lots of manual labor. Kids were almost a necessity to survive.
These days very few people live on farms; machines now handle most of that labor. But that doesn’t mean kids can’t help around the house. On the contrary, I think it’s more important now than ever that children contribute.
My kids are just starting to get to the age when they can help around the house, so I’m only just started to see these benefits.
Right now, they’ve learned to clean up their toys, and help clean-up dishes after a meal. They actually love helping-out around the house.
Eventually I expect this will translate into mowing the lawn, taking out the trash, vacuuming, helping with the laundry, cooking meals, and doing other odd jobs around the house.
As they get older, these chores make great “first jobs” for kids — they learn about trading labor for money. In return, parents realize the benefits of very cheap labor.
Benefit: Tax Benefits!
It’s tax season right now, and I’d be absolutely remiss if I didn’t mention there are significant tax benefits to having kids too!
In the 2016 tax year, parents get to claim an exemption (really just a deduction) of $4050 per child. On top of that, there’s the child tax credit, which realizes another $1000 per child.
But why stop there? If you have some earned income, you can claim the the child and dependent care tax credit, which can reduce the cost of childcare by 35%!
There’s also flexible spending accounts to considered — Many employers allow you to put pre-tax money into a dependant care flexible spending account.
Mrs. Tako and I put in $5000 of pre-tax money into a flexible spending account annually, and we use it for paying daycare costs. While that’s not a ton of money, every little bit helps.
There’s even more interesting child tax benefits available for those who are willing to get creative. Famous tax guru/blogger GoCurryCracker provides an excellent example — he employs his son for modeling services. Yes, modeling…for his blog. Otherwise known as putting pictures of his kid on the blog. Up to $6300 a year tax free.
Yes, when it comes to tax benefits, kids can be quite lucrative.
It doesn’t take a genius to realize that traveling with kids requires more money. Extra plain tickets, extra hotel rooms, extra meals at restaurants…and so forth. That’s the conventional way of thinking anyway…
But there are other schools of thought — For one, you learn to travel a little differently with a family. Instead of staying at high-priced resorts on our trip to Hawaii, we rented a house with a pool instead.
Renting a house (or part of a house) instead of a hotel room is a huge advantage, and I can’t recommend it enough for traveling families.
Typically we look for a kitchen, fridge, washer & dryer, and a nice play space for the kids — outdoors if possible.
But what about airline seats? Those don’t come cheap, right? Well initially babies (under the age of 2) fly free (not counting taxes). After age 2 is when things get more expensive — there’s no discounts for being small and significantly lighter than most adults.
Fret not dear readers, that extra cost is driving me to learn about travel hacking. While I’m not a travel-hacking expert, given enough spending and sign-up bonuses, it should be possible for an entire family (like mine) to travel for free.
It is possible! Root Of Good (Early-retired dad and travel hacking guru) is traveling with his 3 kids in Europe this summer. I can’t wait to see his final dollar amount for this huge trip.
Ultimately though, I think most families travel less. When children start school, there’s only a few short breaks during the school year when families can really travel.
Not only that, but traveling during those periods is significantly more expensive…because every other family is trying to travel at the same time. Airlines and hotel operators know this, and jack prices up accordingly.
Yes, traveling less is kind of a downer… but traveling less also means you’ll be spending less. That translates into less money consumed and more dollars invested!
Benefit: A Bridge To The Modern World
Have you ever played tech-support monkey for your aging parents? Have you ever had to show them how to work a cell-phone, or buy things cheaper off Amazon?
I know I have. I do this all the time for my elderly parents. It can be frustrating, but I also realize it’s invaluable help for them.
As their child, I spend hours teaching my parents how to exist in the modern world. They didn’t have computers, cell-phones and the internet when they were growing up — the help of a child that’s savvy to such things can be a HUGE benefit to aging parents.
When I’m older, I hope my kids will be around to provide this same kind assistance for me.
Maybe the future will be filled with holographic displays, self-driving cars, home automation robots, and near-instantaneous delivery of goods ordered online. It sounds cool, doesn’t it?
I’ll probably need some help programming my robot’s smart neural networks to wash the dishes.
Benefit: Be A Better Investor
Children can also help our elders invest their money more efficiently — Recently I was watching this CNBC interview of Warren Buffett, and it really emphasized this point for me.
He was talking about his giant Apple investment, and Warren professed to changing his mind about Apple from watching his grandkids — Yes, children taught Warren Buffett what an incredible business Apple was.
But you don’t have to be an incredible investor like Warren Buffett to learn from your kids — Simple stuff, like learning about index funds is incredibly helpful too! Back in the old days, index funds didn’t even exist. Unless your parents are astute investors, they’ve probably never heard of low cost index funds or ETFs. Teach them!
Want to be a better investor in your old age? Listen to your kids and watch what they do with their money.
I can almost guarantee there will be new things to learn about investing in the future.
The Ultimate Benefit: Early Retirement?
For me, having kids brought one of the greatest benefits ever — financial independence and early retirement. Once I had kids, life ceased to be about my selfish needs. Suddenly, I had a really damn good reason to achieve early retirement.
Time with family became more important than the size of my house, or the make of my car. Our savings grew quickly as a result, and we reached financial independence while still in our 30’s.
Yes, I could have spent my remaining years working really hard to achieve big promotions at work. Maybe I’d have a nicer house as a result.
I could have put in those crazy-long work hours for the rest of my life … at least until I finally had a heart attack in my office chair.
To me, that kind of life just sounds really depressing now.
You see, it’s not just the number of years that matter….it’s the quality of life you have in those remaining years that matters more.
I gave up the office life, and chose that better quality of life … and the studies actually say I’ll live longer. That’s awesome!
Yes, it’s a life with a little less spending, but a lot more family time….and other benefits.
Those benefits I don’t hear people talking about often enough because they’re so focused on the financial numbers.
So I say let’s reframe the conversation and stop all this negative talk about children. Instead of thinking of kids as financial burdens, let’s think about kids as investments — Investments in your future and the world’s future.
They might just be the best investments you’ll ever make.
What do you think? Are there benefits to children that I forgot? Tell me about it in the comments!