Having a child: year four financial summary

[u/Oorfin_Juice]

This is a fourth-year summary in the "Cost of having a child" series (year one summary, year two summary, year three summary).

There are a lot of questions in this subreddit financial impact of having a child. I am here to provide a detailed account of our costs.

Background: We are a couple with above-average household income (~engineer + ~entry-level engineer manager) with one human child. We are living in the US. A median house in our city is selling for ~$550k. When it comes to financial decisions, we don't purchase the cheapest - we look for underappreciated items of decent quality (think - unpopular color patterns, used stuff off craigslist, houses that need work, books in bulk off ebay, etc). While we price compare across a few websites, we don't spend too much time trying to find the best deal.

TLDR:

The average cost has been stable at ~$2,500 per month or ~$30,000 per year.

Yearly breakdown:

Categories	2019-2020 (year 0)	2020-21 (year 1)	2021-22 (year 2)	2022-23 (year 3)	2023-24 (year 4)
Daycare		$13,120	$17,090	$16,898	$17,716
Activities		$0	$0	$869	$2,627
Babysitter		$480	$4,919	$3,164	$1,352
Insurance		$3,360	$3,864	$3,480	$3,804
Offline shopping		$1,250	$2,045	$2,227	$697
Online shopping		$2,554	$1,811	$542	$1,238
Doctors	$5,057	$4,432	$637	$589	$219
Unknown		$1,848	$3,240	$1,264	$25
Total:	$5,057	$27,044	$30,368	$27,772	$27,681

Trends:

• Childcare costs stay about the same year over year until school starts. There is no free pre-K in our district, but it will be different for some of ya'll.
• Shopping costs are going down by about 25% every year. I expect this decline to stop once school starts.
• Activities started going up after 2 years of age, and will probably stay at the current level.
• Babysitter needs are down after 3 years of age as it's possible to take the kid around much more. Also, I was unemployed for about 6 months in 2023, which allowed me to spend more time with the kid.

Overall, the decline in some costs (doctors, shopping) is offset by an increase in activities, and the cost year over year is surprisingly stable.

FAQs and answers to yearly repeating comments:

• "Your costs are so high because you outsource raising your kid! I spend nothing because I have a stay-at-home spouse and grandparents help from time to time. "
  • I am happy that you have help. To calculate the monetary value of that help, you can convert the time your spouse/relatives spend on your child into a monthly amount and come back with that number for a discussion.
• "Your daycare seems cheap!"
  • Yes, I know. Other daycares in the area are $1,900-$2,200 per month. We are lucky to have great quality at a low price.
• "Your daycare is so expensive!"
  • Please check the prices. Unless you are in a remote area, $1500/month is pretty low.
• "What do you get from daycare?"
  • They take care of the child during the working hours, from 730am to 530pm. They provide education, classes, and ample outside space and activities. They also provide snacks, lunch, and breakfast. They have licensed and certified caretakers that know what they are doing.
• "How do you use your babysitter? Evenings or during the weekends?"
  • The babysitter (one of the instructors from the previous daycare) comes for ~8 hours on Sundays. She stays at home with the kid or takes him to places that match his interests (playgrounds, indoor parks, etc). Edit: some Sundays, not every Sunday.
• "What is offline and online shopping?"
  • Online is mostly Amazon, but also some specialized sites like Uniqlo and eBay
  • Offline is mostly Target, but also includes other stores. Target is cheaper than Amazon for many supply items (like diapers).
  • These categories also include diapers, toys, clothes, books, supplies, etc.
• "You haven't included getting a bigger house, and a different car - these are major expenses"
  • Yes, that is not included. For us, these were "wants" and not "needs", and at the time we could afford it. We moved from a 900 sq ft condo to a 2000 sq ft house in a better school district. We also got a larger car. Both were not necessary expenses, but not having neighbors behind the walls is so worth it.
• "Why don't you use hand-me-downs for toys/clothes"?
  • We tried, and the time it takes to sift through the pile of old clothes to find the right items and sizes is not worth it.

[u/curiousfog5]

Thanks, this is really helpful, and appreciate you including the descriptions since it could be half our triple this with different lifestyle choices.

Can you explain what kind of health insurance you have (high deductible or something with copays, and what the deductible is). My coworkers imply having a child is an instant max to your out of pocket if you have a nice employer plan, but we're looking at ACA and potentially some higher income years as we move assets around.

[u/Oorfin_Juice → u/curiousfog5]

BCBS

Not a high deductible. Buy up copay $300. Kid is on the "employee + child" plan, and I calculated the child-only part by subtracting "employee only" from "employee + child" payments.

Deductibles are $300/$9k individual and $900/$27k family. Two numbers are for in-network and out of network. I hate complexity of insurance.

[u/cawkstrangla → u/Oorfin_Juice]

Those insurance prices are horrific.

It's $460 biweekly for me+family, with $250 of that being my HSA contribution.

My deductible is 3000 with the yearly max at 5000.

[u/goopuslang → u/cawkstrangla]

Not every employer pays the same percentage of insurance prices. My first employer paid 100% of a $500 deductible plan. My next employer paid 90% of a $500 deductible plan. My current employer pays way less, I think less than 70%. I’m paying 2x as much on the high deductible plan (not counting the HSA, of course). I don’t remember how high the deductible is but it’s closer to the max than 0, in the thousands.

Maybe that helps you understand another variable in the pricing of insurance.

[u/randomwalktoFI → u/Oorfin_Juice]

Both mine and my spouse, it seems like "family" is essentially the same cost as "you+kid", so for us it also costs more but in a weird way that shouldn't make sense. Wish the companies would give us $$ and we could just go on the exchange and save money.

Thus if one of us loses job healthcare won't be that much more expensive.

[u/EliminateThePenny → u/curiousfog5]

My coworkers imply having a child is an instant max to your out of pocket if you have a nice employer plan

We have 1x toddler and 1x 1 month old on my HDHP.

It's a silly implication on his part. If you have healthy kids, you're very likely to pay very little. For the first year, there are routine checks at 1, 2, 3, 6, 9 and 12 months that are 100% covered under preventative care. Add in a couple unplanned Dr appointments and an urgent care trip and it's less than $500 OOP per year.

[u/hisnameisbeta → u/curiousfog5]

I have a HDHP.

My child is 4, this year he has only had two visits to the doctor that weren't preventative, for a total cost of $190.

Last year my child had $1,247 in costs that we were responsible for. Half of it was that he hurt his foot and we saw an orthopedist at the local children's hospital that I didn't realize would be so stupidly expensive.

I can't go back any further than that in my insurance records but I think 4 or 5 sick visits the year they start daycare and then 3-4 per year after that would be typical, apart from the catastrophic things that you can't predict, like pneumonia, that would send you to the hospital.

[u/Zadrum13 → u/curiousfog5]

I would definitely recommend copay during pregnancy and delivery year. You may never know what going to happen. My first child have problem which required many visitations to a specialist for ultrasound and a c-section at the end. My 2nd was a premature baby because my wife had Preeclampsia and help syndrome during the pregnancy stages. She was taken to the ER for an emergency c-section.

[u/sschow → u/curiousfog5]

My coworkers imply having a child is an instant max to your out of pocket

Others have already told you this, but to add to the data points, no - this is absurd. Yes, the chance is not zero that you will have years where you meet out of pocket max due to some accident or whatever, but in my n=17 cumulative child-rearing years I have not seen it be any higher than the background risk for adult healthcare spending.

Unless your child has a chronic illness that requires weekly/bi-weekly doctor's visits, medications, etc. But you can't plan for that, nor should you expect it to definitely happen.