We’re Expecting – Our Early Christmas Gift

I have managed to hold on to a little secret in the past few months, but I simply cannot keep it for myself any longer.

My wife and I are expecting a baby in June next year and we are beyond excited and happy to meet our new family member! 🙂

While we had not planned for it just now, we didn’t really do anything to avoid it either. However, we were still caught by surprise when the two lines on the pregnancy test showed up.

Our first reaction was that something must be wrong with the test… but somehow the second, third and fourth test all agreed on one thing. My wife was indeed pregnant.

Having followed my wife and the beginning of the pregnancy has been a wild experience.  It is an absolute miracle that a future citizen of this world can live inside her. It has also been a time filled with many different emotions and thoughts:

  • Are we too young?
  • Who should we tell and when?
  • How do you actually do this parenting thing?
  • What kind of parents do we want to be?
  • How will he/she look like?
  • How should we prepare?
  • … and of course, as a personal finance blogger: what will it cost and what will happen to our FI journey?!

So far, we have taken it pretty chill and we have learned from friends and family that most of the questions above will have a very natural answer once our baby arrives.

We’re sure we will figure things out on the way, but being fans of planning we have also bought an extensive amount of parenting literature to consume during our mini-retirement.

Financial independence and kids

Now, this wouldn’t be a personal finance blog if I didn’t briefly touch upon our financial independence journey and the way kids will impact it.

We all know that kids cost money. We have always planned on having kids, but have only to some extent included this in our financial independence goals and calculations.

Even before our child is born, there are costs like preparing our baby room, buying baby gear and baby literature.

I assume this will rise exponentially as we start having expenses for food, clothing, child care (subsidized), vacations, activities, baptism party, birthday parties, transportation etc.

Luckily I am born in the welfare state of Denmark, so healthcare and education is 100% free from the child’s entire life (hello +50% income tax). We even get a small allowance per kid (~$200 per month), although it’s probably not going to cover all the costs.

Nonetheless, we are budgeting for our child expenses to be around $10,000 per year (slightly below the average American family’s expenses). We’ll see whether this is totally off or not, but I believe it seems fair. We expect to buy most of our things second-hand and will rather focus on a few, quality items than many items of poor quality.

As a couple pursuing FIRE, we are naturally focused on the opportunity cost of getting kids. However, there’s no doubt in our mind we want to have kids above anything else – also at the cost of financial independence.

The opportunity cost of getting a kid is roughly $350,000 ($10,000 per year for 18 years with a 6% return), so that is obviously a serious cost to consider, but obviously some things in life are bigger than numbers in a bank account.

We expect to have more kids over time, so I guess that number can be multiplied with number of kids (perhaps at a slight discount for additional kids due to economies of scale).

We might delay our time to financial independence a bit and have to re-adjust our goals and timeline on the way, but as long as we continue building our net worth, I am sure we will be just fine 🙂

Merry Christmas everyone – I hope you will have an amazing time with your loved ones!

Your turn: Do you have kids? How did it impact your finances? Is our budget totally off?