Financial Impact Of Having Kids Early

When my wife and I had our first child we made the decision she would stay home with her until school age, and then possibly rejoin the workforce. We were young parents, and had only been married about a year when we found out my wife was expecting.

Of course we were elated to be starting a family together, but I couldn’t help but worry a little. At the time I was working an entry-level job and floundering a bit when it came to finishing my degree.  Around the same time we had two sets of friends who recently had their first child. In fact, our kids were around the same age and as both moms became friends through various “mothers of preschoolers” (MOPS) events at our church, so did our kids. But there was one big difference in both cases – the couples were about ten years older than us.

Both sets of friends had completed college degrees, and enjoyed nearly a decade of career success.  With no kids during that time they also managed to build some serious wealth. They drove new vehicles, lived in a huge (compared to ours) house, and their kids wore handmade dresses and such from the trendiest shops in town.  Unfortunately, we made the mistake of trying to keep up appearances with these friends, probably because we were a little insecure about our own finances, even though our situations were entirely different.

The first mistake I made was leasing a new SUV because we just had to have a bigger vehicle with a baby.  And of course, leasing made sense to the younger me because I could simply turn it in a couple years and get another one.  Of course, now I realize this method of “renting” something to drive is not a wise financial move in most cases.

We also made the mistake of charging a bunch of junk on credit cards when my wife quit work because we did not gear down spending once we were living on one income.  From talking with other couples in similar circumstances, I understand this is a common problem.  But unfortunately that didn’t make it any easier to swallow when the bills came due.

I share these mistakes in the hopes that other young couples don’t repeat them.  And by mistakes, I’m not referring to having children while still young.  I am referring to falling into the financial trap of keeping up with older couples who chose to build a more secure financial foundation before having kids.  That method probably makes the most sense from a financial perspective, but there are many other factors to consider when having children.  And I would argue finances, though important, is not the top consideration, despite what others wondering if they should pay off debt before having kids might think.

Make no mistake; the decision to start a family has a significant impact on your finances.  However, it is the decisions we make that ultimately lead to success or failure.  In our case, it was the poor financial decisions we made early on that caused trouble, not the fact we had kids.  We could have easily made those screw-ups when it was just the two of us!

Having kids magnified those issues because it intensified the pressure I felt to provide a solid foundation for my wife and kids.  In hindsight, it probably would have made sense to wait a few years to finish my degree, work my way up the corporate ladder (in other words, beyond the first rung), pay off our debts and build some savings.  But, I wouldn’t have it any other way!


  1. Was just telling my 16 yo that when you have kids it is often when you are financially the most insecure because you quite often have a mortgage and the jobs are not that well paying. She was asking about paying off a mortgage and how you go about that. Her fatthers job is a little precarious at the moment and we have been tightening the purse strings for the last 6 months just in case.
    There had been a discussion at school today about how the kids are spending their money and indeed what money they get. Quite a few have part time jobs. It was interesting to note that most of the boys spent all their earnings while a few of the girls were putting away 25% to 50% of their earnings.
    This child will do OK she has a good sense of money. I also explained the concept of a sinking account

  2. I was 24 when I had my daughter. We made most of our bad decisions before she was born because I also got married young (20). Most of the moms in our play group are also older than I am. They all stay home with their kids because their families make plenty of money and their income isn’t needed, completely unlike us. Our family makes the least amount of money out of our group. I stay home because that’s important to us. It’s worth it and I love it. I do think we have to work a little harder though.

  3. People always point out the financial negatives of having kids and properly so. It obviously does take money to raise kids.

    There are financial positives too, however. I knew a guy in school who was always a bit of a goof-up. He got a girl pregnant, and they got married. All of a sudden, he became a great student. His life priorities had changed.

    That’s a dramatic illustration of a general point that applies in lots of lives. I know that I work harder and smarter today because I have two small boys and a wife to worry about and not just myself. That difference in motivation makes a big difference in one’s financial picture over the long term.

    Having kids early in life can cause you to get more serious about your career earlier in life. In some cases, that can more than make up for the cost of raising the kids.


  4. We had our children early and made many of the same mistakes you highlighted in your post. The good news is that kids make you grow up real fast and you can get back on track. I don’t regret having my children early and I look forward to basking in my retirement hopefully someday a lot sooner than my friends who are just starting out 🙂

  5. I’m glad we waited to have kids until we were pretty secure financially. That experience is stressful enough, without the money issues making it even tougher. I think we’ll also set a better example for our kid(s) with money that those who try to “keep up with the Jones”.

  6. We had kids almost as soon as we married.

    My biggest mistake was worrying about money and letting that influence the decision to have more children.

    I worried over problems that didn’t exist and I could have easily shifted my spending to allow for the added expense. Of course, its an individual decision. Never throw caution to the wind. Just make sure your fears don’t shut out the most wonderful gift of all – kids.

  7. Kevin M brushes up against one of the good reasons to be in a sound financial state before having children — it causes less stress in the household. The parents must come to terms with the proposed financial burden and be open about the budget. I clearly remember many fights between my parents about money. It is just another stress factor that should be reduced as much as possible in order to help out the new family. Keep in mind that though you may have screwed up and think it only affects you, it can affect other people’s lives too.

  8. I had my daughter when I was 20 and I have to say that I’m really happy with the way that my life has gone. She is now 17 and looking at colleges. My son is 13 and is a honor role student like his sister. I think that it really depends on the type of person you are. I feel like I was born an old person. Honestly, I have made more than my share of financial mistakes but I have been very honest with my kids about it. I hope that they will learn from it.
    Life is just our own personal perception of the world around us. Some would see my life as a string of mistakes while I see it as a blessing. I think that a person just has to be responsible and willing to adapt in order to prosper.
    I love your articles. Thank you.

  9. We’re struggling with the idea of starting a family and/or buying a home. Because up here in the Northeast, we can’t afford a mortgage and associated house/baby expenses on one salary, even living as frugally as we do and with a fixer-upper. And I’d really like to stay home the first few years. Worse comes to worst, we both work and baby goes to daycare, which is also a big drain on the wallet.

  10. I’m all in favor of getting your finances in order before having a baby. If you can do that early on in your life, so much the better. Just remember there are no guarantees in life…

    I had kids later, simply because I married later. In some ways I wish I’d started earlier, as I have 1 son in high school & 1 in college while some of my friends are having grandkids. But overall its been a good experience and one that I would repeat.

    One note of caution from personal experience… Even though we were financially stable when we married and had kids, our situation later went bad when my ex-husband started his own business, did quite well for awhile but then borrowed heavily to finance an expansion that failed.

    So being older & financially stable when you have kids is no guarantee, unless you’re both in agreement on living within your means and not taking major risks!

    I had the benefit of being home with my kids when they were young, but later had years of financial hardship, dealing with the fall-out from my ex’s financial decisions. We’ve finally now recovered our equilibrium, but I’m way behind on retirement savings.

    Bottom line, do what you feel will work for you and somehow things will work out.

  11. I was 23 (and still am) when my son was born. We’re in pretty good financial shape, I think.

    When Jonathan starts college in 18ish years, I’ll be 41.

    That’s a good 15 or 20 years before my husband will retire. It’ll be nice to have our son in college while still saving up for retirement, I think.

  12. My husband and I have had the unique situation of having been in both positions – having a child early, and having a child later.

    We adopted my husband’s niece about 10 years ago. We were struggling on one income, with my husband laid off, me making a minimal income, and we took in a special needs kid.

    The thing is, kids require a certain minimum amount of money – my husband and I could live on only ramen noodles for a couple of weeks, but you have to feed a child vegetables. Plus, we paid thousands of dollars in medical bills for our niece. She just couldn’t understand why we had old, unreliable cars, and couldn’t afford to buy her new clothes.

    I have to say, of the two situations, I’m much happier about waiting to have our daughter. Now that my niece has joined the Navy, life is much easier. My husband nearly tripled his pre-laid-off income, I’m making the same amount I was (but working from home), and we’ve got our financial house in order. I can afford to buy Pampers if I want to. Our stress level is so much lower, it’s unbelievable.

    Unlike most parents that I know, I *enjoy* spending all day with my daughter. I see parents feeling harassed at the supermarket, or complaining about their child’s behavior (and I see a lot of illbehaved children), or just so stressed out from trying to pay the bills that they can’t take time to enjoy their child.

    I am grateful every day that we waited to have our daughter until we were financially secure, emotionally mature, and satisified with where we are in life.

  13. Is there a biological advantage to the children when they are born to younger parents? If so, is it outweighed by the advantage of being born to parents who are more financially stable, but older?

  14. To address Squeaky’s question, yes (maybe) children born to younger mothers are at lower risk of various genetic problems (including Downs syndrome, but others as well). The (maybe) accounts for the fact that in this era of genetic screening, women — and sometimes particularly older women (depending on the doctor, etc.) — are offered tests for such things as Downs while we are pregnant, and some decide to terminate a pregnancy based on the results of those tests. So the proportion conceived is one thing, the proportion born another. But certainly older women are at higher risk of conceiving a child with a genetic abnormality as well as of miscarriage and a host of pregnancy-related health problems.

    Children conceived by older fathers also have some similar risks, though they aren’t as well known or understood (autism is one).

    How those risks balance out against tradeoffs relating to financial stability is obviously very individualized.

    Older women (and to a much lesser extent men) also face a much higher likelihood of having difficulty conceiving, and treatment for infertility can be very expensive (as can other means of expanding a family, like adoption).

  15. I think you just gave me an idea for a post! We’re thinking of buying a home but with a possible baby coming within a year we may have to rethink it…I’d love to have that down payment pile as a cushion “just in case.”

  16. This is a great post. I think it’s easy to want to “keep up with the Joneses,” but we have to resist the urge…especially when we are young. My parents still look back on their earliest years of scrimping and saving as some of the best years of their lives.

  17. I had my first when I was 24. She’s 7 now. I feel it impacted our finances for the positive. Both our incomes went way up as we got serious about providing for a family. I do think it is important that I had finished my bachelor’s degree but beyond that I think having kids young is a really great experience.

    The pros are that you have a lot of energy, you aren’t as easily swept up into the “helicopter parent” mentality as older parents, and you can figure out your life together with your kids and grow together. The cons are that all the other parents are at least 10 years older! Though many of the ones who are older than us don’t actually make as much money as us. Go figure. We are just really driven. Driven to have a family and driven to have careers at the same time. And we’ve made it work quite well.

    A post earlier mentioned, “the older moms all stay at home” – well, I have one thing to say to that…”a man is not a financial plan.” Why start having kids at 35-40 when my career is peaking? I’ll have a 16 and 13 year old at that time. When I’m in my peak earning years at 40-55 I’ll be putting my kids through college. Sounds good to me.

  18. @Anon – Just keep in mind that when your career is peaking & your kids are teenagers they may need you at home more than ever. Being driven is fine, but leaving high school age kids alone too much can be a recipe for disaster.

    When they’re younger you can make use of after-school care, but as teenagers it’s more of a problem. It helps to have a parent more available, rather than in the peak of a career.

    I’m on the 2nd teenager & after problems with the 1st (now in college) I’ve managed to work from home & be more involved with the 2nd in high school. It’s made a world of difference.

    Just a thought…

  19. Hi Diane, that’s good advice. Thanks. I’ve heard that from others as well. I actually run my own business and have been able to be home for the past 7 years while working 20-30 hours per week (though making more than a full-salried person with my qualifications). I work evenings and weekends. When dad is home, I work and vice versa. Hopefully this model will continue to work until they are out of the house.

  20. I put off responding to this to see what the tide of comments were like. I have a different perspective to offer.

    My wife and I married early, and began to have kids. Now we have 8. Our oldest is 25, our youngest is 2. I’ve had 2 weddings, 2 college expenses (for kids), and (soon) 5 grandchildren.

    I have dozens of friends and acquaintances with large families (5 kids), so I’ve seen a lot of situations.

    Over the years, my wife and I have commented on the lie that is perpetuated about the expense and difficulty of having children. We cringe every time the news comes out with one of “those” stories–“it takes $6.4M to raise one child from pre-conception counseling through Ivy League PhD”. 😉

    The reality of it is that it does help you grow up faster than your childless peers. The flipside secret is that it keeps you younger for a lot longer.

    You get to reuse clothing; you make better choices in food (more basics, less processed); friends, family and neighbors cast things off by the carload for you to use; you pay less in taxes; you get greater amounts of financial aid for college; and more.

    [I would also point out that we are good for the economy. I wish the corporate world would recognize that.]

    There are a lot of reasons to have more children–what if Social Security doesn’t work out so great? I have 8 chances of not living in a nursing home someday if I become incapacitated. Or viewed another way, I have 8 people who can help care for me in my old age, as I have cared for them my entire adult life.

    I mow sometimes because I want to, but I haven’t HAD to in 15 years.

    Life is richer, and it has nothing to do with money. My married kids bring their families over for dinner on Sunday–cheap, loud, hectic fun.

    Marriages survive longer with more kids. Kids tend to have fewer “social” problems–drugs, alcohol, abuse, premarital pregnancy. These social problems are huge expenses saved. I hear divorce is expensive.

    Our grandparents survived the Depression and several wars with lots of kids. They raised huge families in tiny houses, with limited incomes, and most moms staying at home.

    We are the first generation to think that the relatively self-absorbed siblingless child is ideal. We have deceived ourselves into thinking that we have more quality for our kids by keeping their numbers down.

    Sad. Don’t live in fear.

    If it helps, 3 is the tipping point. 😉 It gets easier after that because you have made all of the cash investments, your house is big enough (3 bedrooms and a basement is great), and your kids are beginning to get old enough to be a big help!

    Twelve year olds raised around younger children are capable of taking care of kids, from diapers to dinner.

    I’m at the very beginning of a blog to help large families address their financial concerns, since most info out there is addressed to small families (3 or fewer). Not even close to primetime yet, but keep an eye out.

    In short, more kids are cheaper per child, and I believe a better return on investment per child.

    Happy to hear your comments!

  21. I had my daughter at 33 when we were in pretty good financial shape. My husband was quite stressed though because he had just started his own business as a contractor and he wasn’t sure what his income would be. His financial doubts then started to worry me. In Canada, we get a semi-paid, one-year maternity leave, but it caps you off at about $400 a week, and I make well over that, so it did cramp my style a bit. But before I left for maternity leave I put away 10K for spending money while I was on leave. Well I was so stressed out about not earning as much as I usually do, that when my maternity leave was over I still had 7K left. Then I went to work kicking myself for not enjoying my maternity leave as much as I could have if I had just loosened the purse strings a bit.

    One advantage of being older and more financially secure is that you have more choices. I wanted to return to work, but also wanted excellent care for my daughter, so we have a nanny. I’m not sure too many couples starting their family early could afford this option.

  22. I am curious to hear about some of the “financial” blunders some of the mature parents have made. We are about to have our third child and feel like we are doing everything right. Are we blind to the mistakes we made that won’t surface for a few years?

  23. My brother is learning this lesson, now.
    They decided to have a child, but didn’t have their financial house in order.
    Now, things are a little tight and I’ve gotten the odd call or two to help them out.

  24. Thanks for writing a thorough article about personal finance management. I am getting married soon and I’ve learnt something new and hope to test drive your ideas soon. Awesome article!!

  25. As a physician I will add one point that many people forget.

    Just because you plan on delaying having children until you are older does not mean you will be able to. Risk of genetic abnormalities aside, you are not as fertile in your 30’s as you are in your 20’s. I can’t count the number of women I have dealt with who were surprised of the difficulties (and many time impossibility) of getting pregnant in their mid to late 30’s.

    While I am certainly not saying rush and have them in your late teens or early 20’s but if you are in a secure relationship and kids are absolutely in your life plan, 25 is a much better biological time to start than 35.

  26. Thank God for these posts! I married at 23, and although we wanted kids right away we weren’t financially ready. No job or place to stay but we were in love. We planned to start trying around our 1st anniversary, but to our surprise we had our 1st son just a week before our 1st anniversary. We were flat broke but happy and excited. Our daughter came 2 years later and our situation was only a little better. When my dauthter was only 4 months old we realized that we were expecting again (due in march again :). I had just started a new job, but my husband was out of work so we were back where we started. It’s a little stressful, but we’re still happy. We do wonder when were gonna both have stable jobs with 3 kids. I’m getting tied off after this pregnancy as I always wanted to have my kids before turning 30. Now that I’m 28 and about to have my 3rd child, I’m ready to get established in the workplace and build a sound future. But even though it’s been rough alot of times – we manage to stay happy!