BiggerPockets Money Podcast - 357: Budgeting for a Baby: The Costs EVERY New Parent Should Expect

Episode Date: November 28, 2022

The cost of raising a child is constantly changing. Every year, a new article comes out claiming that the cost of raising a child is hundreds of thousands of dollars. But is this figure accurate? Could kids actually cost far less than this, or does a few hundred thousand barely even scratch the service? What should new parents know before they bring home their first bundle of joy, and is financial independence even worth pursuing while raising a kid, let alone a few? We brought in the Investor Mama, Jen Narciso, who is not only raising kids but also chasing financial independenceand running her own podcast. Jen speaks to mothers all around the world who not only want the best for their children's futures but their finances as well. And, as someone raising two young children, she knows how much kids truly costbetween the car seats, formula, dance classes, doctors' bills, and everything in between. And, with Scott as a new dad, he’s got some serious questions to ask about how he can best raise his own daughter on a budget without sacrificing any quality of life in the process. Jen talks through the surprise expenses that most new parents overlook, how to save money on some of the most expensive items you need, the cost of child care and how to make it affordable, and whether to invest for your child’s future or your future retirement! In This Episode We Cover The average annual cost of raising a child and why it’s not what you’d expect Common child care costs and innovative ways to significantly lower your spending Surprise expenses you should prepare for and why you always need an emergency fund Money tips for new parents and how to sleep soundly even if you’re not financially free yet Roth IRA investing for your child and how to fast-track them to financial freedom even earlier Medical costs of having a child from delivery to regular doctors visits And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Mindy's Twitter Scott's Instagram Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets Check Out Mindy’s 2022 Live Spending Tracker and Budget Toysrus InvestorMama Podcast 4 Ways Real Estate Can Help Offset the Staggering Cost of Having Kids Taxes, Backdoor Roths, Options, and How to Max Out Your Childrens’ Roths Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast where we interview Jen Narcissso from the Investor Mama podcast and talk about preparing for a baby. There's no right or wrong decision. It's whatever you're comfortable with because I know a lot of parents who need to work just for their mental health and like choose to work. Even though that maybe their actual employment may not cover the cost of child care, it's just more for mental health than for nothing. And I know other parents are like, oh my goodness, I just would love to stay home with my kids. And then so, like, you know, I've been climbing the corporate ladder. I've been doing this for so long, but I feel weird not bringing in a check.

Like, don't feel weird for not bringing a check if you want to be home with your kids. And then don't feel bad if you do decide to work because you're not home with your kids. So there's no wrong or right answer. It's just whatever is good for your family. Hello, hello, hello. My name is Mindy Jensen. And with me, as always, is my brand new dad co-host, Scott Trench. I don't have any dad jokes about being a new dad.

You are unprepared with the dad jokes, Scott, who is, always, always Mr. Dad jokes? Dad jokes about dad jokes. That's the one set I don't have. Yeah. Wow. Okay. Well, with me as always is my dropping the ball co-host, Scott Trench. Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting. I'll bounce back with that ball next time, Mindy. That's right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or start your own family,

will help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going,

and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch's subscription with the code pockets.

What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all-in-one tool. that makes money management simple. Use the code Pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. I love Matt, said no one ever.

Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off.

Change all that with Found. Found is a business banking platform built to take the pain out of managing money. It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Sound makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com. That's F-O-U-N-D-com.

Found is a financial technology company, not a bank. Banking services are provided by lead bank, member FDIC. Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Liener Stronger for Fitness,

The Anxious Generation for Parenting Perspective and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more. All accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at Audible. dot com slash BP money. Scott, today we're bringing in Jen Narciso from the Investor Mama podcast, and we are talking

about all the things that you need to start preparing for having a baby. You had a baby recently, and did you buy out like all of Babies R.S? Does Babies R.S even exist anymore? Yeah, pretty much. We have a, we have a new, we have a car seat, a stroller, a changing table, a crib, tons of supplies, million diapers, you know, all the goodies. Yeah, it's super awesome fun. And, you know, hey, only for the next five years, right? Only for the next 18, 20.

Yeah. We're lucky. Yes. We talk about paying for child care for the next five years. But yes, this baby is around for the next 18 years. And really, they don't go away after 18 years. They keep coming back. You keep going back to seeing your mom.

Hi, Mrs. Trench. Yeah. But you know what was what's wonderful, though? is that I thought that the infant stage would be like kind of they're just going to cry and whine the whole time

but I think it's just delightful to hold my baby and see or get a little bit more developed each passing day, each passing week. It's so cool and wonderful. So 100% awesome.

I'm just being a little sarcastic on the 18 years, 20 years thing. So I couldn't be more delighted in love with our little girl. Oh, that's so sweet. You're going to make me

cry, Scott. Wait until she turns three. All the parents of three-year-olds are laughing right now. And then eight and then 12. Those are the real slap you in the face ages that are super awesome. Jen Narcissisto from Investor Mama, welcome to the Bigger Pockets Money podcast. Mindy and Scott, thank you so much for having me. I'm so excited to be on. I'm such a huge fan of you guys. And I'm just, I can't wait to dive in today. I'm super excited to talk to you today. We're talking about having babies. I'm not having a baby. This is not an announcement podcast. Neither am I. On Jen's podcast, she aims to educate, inspire, and motivate moms and mothers to be on their

wealth-building journey. And I think one of the scariest articles ever written is the annual How Much Does It Cost to Raise a Child Through Age 18 article that comes out and it's always something, some lunatic number like $225,000. My oldest is 15 and there is no way that I am even close to being on track to spend $225,000 on this child. Sorry, Claire. But I think if you're having kids, if you're thinking about having kids, this article is super, super scary. So Jen, let's talk about reality. How do we start planning to have a child? Yeah, well, it doesn't have to break the bank. And if you're thinking about having kids, have kids. They're amazing and awesome. So don't let that dollar figure scare you. And when you have a child, too, it's, yes, it's,

Like you can plan and plan and plan, but you also can't plan for everything. And don't let the analytic side take over your brain because as soon as that baby comes, your emotional side is going to gear in. And so I think that's also one of the things parents have to think about when they're having kids. Like you can plan and plan, but I do like to acknowledge, though, for a lot of moms or parents out there, sometimes it doesn't always end the way they want it and to also acknowledge that. But there are definitely things you can do to start preparing for a baby. and it doesn't have to cost you hundreds of thousands of dollars for them before they even get to college,

that as long as you, just like anything with personal finance, personal finance is personal, like Mindy always says, and so is having a child and making decisions for your kid. I love it. So how much should a parent anticipate spending on having a, spending on a child in their early years? So I ran numbers on the past two years that we've had. We have two kids. They're toddlers now. and we probably spent about $10,000 for the year combined.

So, $5,000 per kid and once two, one's five. Now, granted, our child care situation has changed a lot. So that has significantly, like, helped reduce costs because I know childcare, and we can talk, we'll go into that. And there's definitely ways. But also, my husband and I have chose things that are more, that are more expensive, but we're okay with those decisions because we've budgeted for it and it's in line with our values and we're okay spending a little bit more in certain areas on our kids.

I just want to underline that. You have made a decision. You have specifically chosen to do something after weighing the pros and cons, after considering the other options. I am so judgmental about a lot of things that people do on this show and more on the finance Friday show than on the Monday shows. but I want to embrace this if you have a reason for spending the money. That's very different than just spending money for no reason whatsoever or spending money

because you happen to think about, you know, oh, my neighbor has this, so I should have it too. Like, that's not a good reason. Why are you spending the money on your children? I think that's awesome that you are choosing on purpose to spend some money on certain things. And I'm sure you're choosing to save money on other things. It's just like everything else. It's okay to spend money on things if they mean something to you. If it doesn't mean something to you, then cut that.

Can you explain how you came up with the $5,000 per child number? So I added up all the food that we spent throughout the year. And I divided it by four, which is also kind of high. So that ended up being about like $1,000 for the kids. Then for travel, I had a couple hundred dollars for travel. Again, I didn't put in child care for our activities. That was about 500 bucks. Granted, one of our kids is doing a lot.

We have a two-year-old, so unfortunately he doesn't get to do many things. But, you know, clothing, we are very blessed. My mother-in-law buys, like, all the clothes. So literally, our budget was like 100 bucks for the year on clothing. The thing that was actually surprisingly expensive was medical costs. like just with the kids, that's like that was like the biggest thing. They are always getting sick in doctors visits. And for us, we have an HSA plan.

So before we reach the high deductible mark, our doctor bills are like $150. I think it was per visit per kid. And so especially come winter, you're looking at maybe five visits for two kids. So one kid may be like two to three visits at least during the winter. And that's like generous. And then entertainment, we are all about instead of presence. we are really about experiences and having other people pay for those experiences for our kids. So we significantly saved on that.

We're also all about like secondhand things. So our kids, toys, we probably spent maybe, I'm being like $100 on toys and books for our kids for the year because everything else comes from other people or from like Facebook groups or whatever. So those were like the big ticket items. we've also, before our second, we house hacked for a while. And all our friends thought we were nuts because we were house hacking with, you know, a newborn. But that significantly allowed us to save money too. That also helped us then with child care costs. Awesome.

So if you didn't have some of those benefits coming in, you know, friends, family, those types of things, what would you anticipate that that cost might change to? Yeah, I also think it depends on where you live. we are in a very high cost of living area, it can very easily go to like $10,000, a year. But again, it all depends on your choices. Do you need to buy the newest thing? Do you need to buy the top of the line things?

Can you buy the, you know, maybe not as nice aversion, especially as the kids get older. I know this sounds terrible, but especially once we had a second kid, you know, like, I feel like when your first kid comes, you're all, oh, my goodness, I have to get the best thing. It makes sure everything is 100% safe and 100% good and clean and everything. And then when you're with the second one, you're like, okay, you're like, yeah, okay, this is like from so-and-so from here. I got this from that. And you put it all together and you're like, have this hodgepodge, mess of things. And you know what?

The kids are still having fun with whatever it is. And as long as you're providing a good fun environment for them, you don't need to spend a lot of money on them. You don't need to spend a lot on activities. You don't need to spend a lot. The only thing that they, and honestly, even food, you don't have to, like, yes, we did get a little bit of some of the organic stuff for our kids, but they also eat chicken nuggets. It's like cheap things. So, you know, it's our choice. But some moms might be yelling at me and judging that they need, you know, all the

top of the line and the best things for their kids. It's a choice. But your kid does not need all organic, everything handmade by their own private chef. I mean, there's, it comes down to what you value. And now I am getting judgy. Look at me. I will say that as long as your child is fed, the manner in which you feed them is your choice. And I will say too. So this year, I am, we're totally breaking the bank and this was a decision we're making. So our $5,000 has significantly jumped. But we are sending her daughter to camp because after COVID, she was so isolated for so long. We really want her to. And a lot of her friends are going. Mindy, you're not going to like this number, but it's like $4,800 for four weeks, which is absurd. I know when the town camp's like $200 for eight weeks. We are spending the money. But again, we are.

have thought about it because to us it was just an important value and we budgeted for it. And so we're cutting other areas. And we really wanted her to have this social connection with friends who she hasn't seen in a while. And it was important to us, especially after like COVID and everything and all the social isolation. We just wanted to provide her with that. So that was a conscious decision. I'm not telling every parent to do that. And some of you again are probably like, oh my God, $4, $4,800 for four weeks. Are you nuts? Yes, we are nuts, but that's okay. Now, can you afford the $48, or are you not going to make your mortgage payments because of it? No.

We budget it for the year. We planned for it. We researched it. We looked into it. We knew this was coming. It was a conscious decision. We were very, we've been very blessed because we've always been kind of frugal with money throughout our whole lives and always took the alternative paths so that we knew when we would have kids.

Then now that this is what we want for them, we want to be able to provide the things we value for them. And camp was one of them. Now, are she going to go to camp every year? Probably not. Is there cheaper camps? Yes. Are we going to probably pivot? Yes. But at least for this year, we wanted her to go to the one with her friends. Is camp sleepaway? No, it's not even sleep away. That amplifies. Sleepaway camps seems very worth it. Yeah, well, with sleepaway camp, though, there are a lot of scholarship opportunities and things, too, that you can look into. Can we hear about child care and your thoughts on how to do that economically or what the options are? How much, how much, uh, parents who know that they're going to be needing child care should should plan a budget around that? Sure. Well, first thing you have to think about is how many years is your kid going to need child care for

that's paid for? So I love to get creative because for us when we had our first, it was 1575 a month. And that was one of the cheaper child care centers in our area, which that's a mortgage for many parts of the country. But we had to do it because I was working full time. My husband was full time. And we were really nervous thinking, oh my goodness, if we have two kids, you're talking three grand now. Like, that is, that's more than I make. Like, this is going to be just something we have to think about. So I don't want to scare you. But there are things I think parents can do. So first of all, talk about the different types of child care. One is if you're very blessed and you have family members or friends that might be able to do it, I know since COVID people have been getting

into pods. So that maybe one parent kind of takes the lead on certain days and another parent takes the lead on another day with like a small group of kids. So that's a way to kind of do communal daycare, child care without. And I know that there's rules and laws about, you know, what you're allowed to do and not do with kids. But if it's just you and maybe like one or two friends, I don't want to speak, but I think it's okay to do something like that format. So that's a great way. I know some friends have been have been looking into that for their younger ones. Another type of thing is an au pair where you have someone who comes in and lives with you. That can be a little bit cheaper than nannies. Nannies in our area are absurd. You thought 1,600, 1600 was expensive. I don't even

want to tell you what the cost of a nanny was. I think it was like closer to two, three for one kid alone, which again is like... Per month? Yes, per month, per month, which is so, so expensive. We're seeing pricing at between $20 and $30 an hour. So for, let's say somebody works eight, nine hours with commute, maybe 10 hours of commute. It adds up very quickly. And then if you have two kids, you're like, oh, but I like hybrid models. I'm all about that because some people don't have parents that can help and some people just have to work. So one of the things I love is, like I said, if you could do the hybrid model with friends, but also if you could talk to your employer, maybe you work an hour during the week extra so that you could have off one day and

then your spouse can do that too if you are also have a, if you're co-parenting. This way, that could maybe you only have to do daycare for two or three days a week instead of the full five days or maybe you could work from home so that you don't have to put them in for the full day. So when COVID happened and our daughter, our other child was in daycare, we only had to do from nine to two and that was that saved us about $200 a month. It wasn't a ton, but it was still helpful. So anyway, you can kind of create hodgepages so that you can be home with a kid or have someone else watching the kid to not pay for it.

it is best, but child care is just an expense you're going to have to do. It's going to be like five years worth and then you can cut it, you know, cut out. So if you can just kind of mentally prepare for that for the five years and figure out what you want to do. And also like people can stay home and give up their career for a little bit and go back. A lot of professions, you can have the luxury to do that. A lot of professions you can't. But either decision, whatever you decide, I just love to highlight though, there's no right or wrong decision. It's whatever you're comfortable with, because I know a lot of parents who need to work just for their mental health and, like, choose to work, even though that maybe their actual employment may not cover the cost of childcare. It's just more

for a mental health than for nothing. And I know other parents are like, oh my goodness, I just would love to stay home with my kids. And then so, like, you know, I've been climbing the corporate ladder. I've been doing this for so long, but I feel weird not bringing in a check. Like, don't feel weird for not bringing a check if you want to be home with your kids. And then don't feel bad if you do decide to work because you're not home with your kids. So there's no wrong or right answer. It's just whatever is good for your family. But I mean, it seems clear that this is a cost of raising a child and it's easily 20 grand for one child, double it or times and a half for two and times five years. So that's that's 100 grand right there. That makes that 225,

per kid number that we were teasing earlier seem a lot more reasonable, doesn't it? Yeah, well, it can if you do that full time. That's why if you can stay home a little bit or if you like if you can co with other parents, that's like since COVID, these pod groups have been forming a lot and one parent takes over. So if you are off one day a week, if let's say if I have two or three parents, everyone takes off one day a week and they're in charge for that day with two or three other kids, now maybe you only need two days worth of child care or one day worth of child care, which is significantly cheaper. The other thing is a lot of programs, if you really are struggling, do offer discounts or

benefits. So I always encourage people to find out, like, first of all, you should shop around for any daycare you're going to do anyway, but also shop around and ask the financial questions, like if they offer grants, what are the income thresholds that people? Because even in our area, surprisingly, if you make even just like 150 to 180, you, you can still qualify for some money. It's not a lot, but at least it's something. So let's say you can knock off a day or two a week, then you can get a little bit of money back. We've also have asked people for like instead of holiday gifts to kind of contribute to whatever fund. And then we've used that for child care. That was another way to kind of lower the cost. So it's not easy. But if you are planning for it, there's definitely ways you can, you can crack it. So Scott, that's really interesting that you brought that up. I stayed home. with my kids because A, I wanted to, and B, I wasn't making any money. I did not have a career. I just had a job that I hated. So it was super easy for me to stay home with my kids after I had

them. And I didn't consider the cost of my career. I didn't consider the cost of child care because I didn't, quote unquote, have any cost of child care because I was the child care. And my husband made enough money that it didn't matter. Like I funded our 401K contributions and that was it. I wasn't making anything at my last job before I stayed home with the kids. So that's a really interesting point. The $225,000 seems like such a stretch. But if I would have had to pay child care, now it's not nearly so much of a stretch.

Because $100,000, sure, that's way easier to understand as raising your kid to 18. That's super easy to do. That's way too easy to do. That's an interesting point. I mean, the kid needs to be watched constantly until they are, unless they're like, you know, swaddled and secure in their thing until they're what, like 10? And even then, like, even at 10, they can't stay home alone, but they can be like alone in the other room, you know, maybe. So I think, you know, that's, this is capitalism, right?

If you're not working, you're not earning. That's an opportunity cost. So that's a That's a direct cost It's a decision either I'm going to work Or I'm going to watch the kid For 10 years Well no because once they hit kindergarten

Yeah They go to school But then there's the kindergarten's half day At least where we live So for us it's full day And then there's very cheap So our town offers very cheap programming For days of the week

So our daughter does dance one of the days that's like $200 for the year. We there's, you could do like sports. That's also like $200, $300 for the year. So our town does have a lot of programming. So it's another hack that you can do as your kids get older. There's the, you know, $500 a month dance class. And then there's probably a cheaper alternative.

Look for the cheaper alternative. Look for also small businesses that have just started. A lot of them are looking for new clients. So maybe you go a town over or so. but there's definitely ways that you can be smart to on activities for kids. And honestly, our kids are fine if they don't do activities. Like, it's more like it's not like we need to keep them busy. So if you can, if your kindergarten might be, I know some towns do only offer half day.

But I also know some stays offer free pre-K too. So if you are living in one of those states, that can also help reduce the cost of child care. And I know more states are starting to offer that. So hopefully that will be something soon. That's not something we as a family are counting on. Yeah. I think that the, I think, you know, this has been a great conversation on this point.

I think we should talk about some of the other expenses that come up. I just want to leave us with one thought here, which is I don't think there's a really a good way around this when once we consider opportunity cost, right? So if one spouse earns less than the cost of child care on an hourly basis, then the decision may become very clear in that situation from that. and like there's no-brainer potentially unless there's other long-term upside or other considerations to be thought of in that career track.

But there's not a lot of good answers here. If you don't have that nice network nearby or, you know, like friends that you can pool with or family or whatever that is. So, but it's just an expense. And I think a lot of people just conclude, you know what, I'm going to wait until I'm in a really strong position in order to have kids. And I think that's why people are having kids later and later. I mean, this is a significant factor. I mean, I'm 32. Why, you know, we didn't have kids potentially sooner. I think what some people can do, though, too, is if you do choose to stay home,

it doesn't mean you have to stay home the full time. Like, I pivoted also, and I'm now a real estate agent. So it gives me a lot of flexibility with hours. So I'm able to be home now a lot with the kids, but still work and bring in income. So that is definitely another option. for parents out there that you can still work, you just may not be working what you thought you were going to be doing, but doesn't mean you still can't bring in an income or still find fulfillment

or still talk to other adults or be, I hate using the word stuck, but like home 24-7, only raising your kids. There are ways that you can still do both, like have your cake and eat it too. Could you provide one more piece of context in this around how the ability to do a job like that might wax and wane with age.

For example, is that harder to do when children are toddlers than infants because the toddlers are consuming 100% of your attention all day as opposed to the infant that's sleeping much of the day? How does that work? So I can tell you just from personal experience, being with a real estate agent when they were very little and now there hasn't been so much of a change. It's been more just mom guilt from my end because now I feel guilty for leaving. But I have to remind myself, like, I am home so much more than if I was ever working full-time.

So when they're, you know, sleeping, it's so much easier to pick up and leave and go wherever you need to go. But even when they're older, like, it's still not terrible. Like, you can still be a really great parent and still work a couple hours. Maybe you work a little bit at night when they're sleeping. Or maybe you're not there every day to pick them up from school, but then you're home for dinner. So it's really a personal choice of what your comfort level is with leaving your kids. and also then in the back end of who you can find to fill those hours in. Like even if you're like an Uber each driver, just because you need to get out of the house and do something.

You're not going to make a ton of money, but you're just like getting in your car, throwing on some podcasts and just like not being with a three-year-old the entire day because you need to keep sane. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting,

accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in a needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year.

That's 50% off at Monarch.com code pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice. on other job sites. Indeed's sponsored jobs helps you stand out and hire the right people quickly.

Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash bigger pockets.

Just go to Indeed.com slash bigger pockets right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash bigger pockets. Terms and conditions apply. Hiring, Indeed is all you need. When you want more, start your business with Northwest registered agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place.

Build your complete business identity with Northwest Today. Northwest registered agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. With over 1,500 corporate guides who are real people who know your local laws and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just help you form your business.

They give you the free tools you need after you form it, like operating agreements, meeting minutes, and thousands of how-to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data. And all services are handled in-house because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com slash money-free and start building something amazing. Get more with Northwest Registered Agent at Northwest Registered Agent.com That's a good point. It can be the best job in the world and the worst job in the world all at the same time. You're like, I already answered that question 312 times in the last hour.

Stop asking. But it is very rewarding. I think this is a really great point about child care being something to be conscious of. And I think when you are considering having a child, you need to really think who is going to be taking care of your child for the next five years. If it's you, what are you giving up to do this? If it is somebody else, how much is that going to cost? how are you going to pay for it? It is a really large part of the first five years of your child's life.

And six, if you have a late baby. So I have a daughter who was born in November. She missed the cutoff by 30 days. So she had to wait an entire year extra to start kindergarten. She was almost six when she started kindergarten. And that is another consideration. Scott, you just had an October baby. She may or may not. be able to get in at age five. She might be almost six when she's going to school. And Scott, one thing to your point, though, about people waiting. Yes, it's expensive, but also sometimes waiting can have other just ramifications. You know, you may not be able to conceive and all. Like, there's so many other thoughts into it. I don't want people to be hung up on this either as a reason to not have kids or to really wait and wait and wait and wait. I mean,

not everyone's meant to have kids. And if you choose not to, that's your decision. But also don't let this, because I feel like also once you have kids, you kind of also figure it out a little bit. Like it's not, maybe not be the way you intended it, but like we've been doing this for thousands of years. We've all had, like, you know, people have had kids and they turned out okay and, you know, one way or another. It may be really hard for five years, but I just don't want that to deter people to like wait until they're, you know, in their 40s for kids and then find out they may not be able to have kids or it's a lot harder to have kids and all that kind of stuff too. Oh, I'm not arguing with that at all. I'm just saying that's happening.

for a lot of people because of what we're discussing here. I mean, these are big numbers we're throwing out and, you know, a constant set of attention for a long period of time that, you know, a couple hundred years ago had had a very different outcome for your life. And now it's, it's wonderful, but it's, you know, kids are expensive. They're not a production unit in your in your household. You know, they're not guaranteeing your retirement. They're not a production unit in your household. I do it for love. I love my love. little baby girl and I want to have a wonderful, wonderful life. I'm not expecting her to contribute to the farm or whatever, right? Oh, good. One other thing though I forgot to mention is check with your

employer too on like my husband's employer offers a $5,000 child care like free money for child care. So definitely also check with your employer and I forgot to mention too. Before you're thinking of having a baby, maybe negotiate something with your boss too, saying we're thinking of having kids, maybe instead of getting a pay raise, you ask for some, like, time off for flexibility, or you ask for, I want child care credit, or do you offer child care? Some employers also offer childcare. So there's also that, too, to factor in. And again, especially with, we're like at the end of the year now, a lot of employers are doing interviews and things like that. And if you're a good employee, do not be afraid to ask for what their child care policy is, what benefits

they have, and all of that stuff, too, and see if you can negotiate something. let's talk about some things other than child care here. So what are some of the other surprise expenses that come up with all this stuff? So for newborns, you have the typical, you have your stroller, you have your crib and the mattress, changing tables, gliders, car seats, all of the fun things that you need, like usually kind of semi within the first six months to a year. the other cost to make a big cost of child care that no one talks about is having a baby that could be significantly expensive so another big tip is to see between you and your spouse who has the better insurance carrier find out what they cover and it might be also a good idea

to switch to whoever has the better benefits because I've knew with my husband plan for me to deliver, it would have been like $10,000 at a pocket. And on my plan, it was like $200 out of pocket. And it also included all the postnatal care and everything. And the hospital was able to take home a lot of that, like the extra supplies and stuff. So that was also huge cost savings. So definitely insurance is a huge check. And yeah, that can save you because the cost of delivery could be crazy expensive as well. That's a great point. I think that I, my first, daughter was a surprise C-section, and that was, I want to say, $47,000 that got whittled down to $800.

And then the second child was a planned C-section that was different insurance whittled down to my out-of-pocket was $1,100. My pro tip for your giving birth expenses is to reach out to the hospital after you figure out what your insurance is going to pay and what your portion is and ask them if they have a payment plan. So my daughter was born in the beginning of November when all of the bills kind of shook out. It was the middle of December. And here's this UOS $1,100. And like, wow, it's kind of tight. I could do it, but I don't really want to. I called up them the hospital just to see if I could get on like a two month payment plan. Can I pay half now and half next month? And I call up and

I said, yeah, I was looking, you know, if there is any payment options. And she said, I can do 10 months or if you need more than that, I have to send you over to another department. I'm like, nope, 10 months is great. Or no, maybe it was 11 because it was $100 a month. And I was like, perfect. I can do $100 a month for 11 months. That's way better than all of this right now. It was zero percent interest. It was really easy to do. So if you are stuck with a big bill, if you have a large out-of-pocket expense, talk to the hospital about options for payment plans or payment reductions or like out-of-pocket like cash payments. Maybe if you pay it all in cash, you get a reduced price if you pay it all up front.

Yeah, that's a great point. But that's another, like I think big expense because all the other items, really for me personally, anything besides the car seat, I was pretty much okay with hand-me-downs. The other thing was like a crib mattress and the criss. but we bought a convertible crib so that it turns into a toddler bed and now a full bed. So even though we may have spent a little bit more upfront, this is going to last for at least 10 years. So we were okay with that expense too.

So trying to think of things like that. So my framework for thinking like, okay, like what do I need? The first thing I always ask, like, do I really need this item? Like there's so many things you could buy a newborn. But do you really need all them? do you need a saucer and a play mat and a bouncy and a this and a that? Or do you just need like one or two places for them to sleep and then a bassinet? Like that's kind of like really what are the essentials or do you really need a changing station or can you just use your dresser in your

room or get a pad and put it on your bed? So I always ask, do you really need it? And then if I do need, if I did need it, I would be like, okay, does it need to be brand new or can it be used? and if it does needs to be new, is there a cheaper alternative? So for car seat, can you get a different model? Can you get something that then converts from the infant carrier car seat to the turnaround to the booster chair seat, which is what we got? So we, again, ours are still lasting for like at least eight years for this one item. Then if it's used, can I borrow from someone? Do I have friends and family?

That's where I usually like to go first. But Facebook marketplace, there's so many months. Mom groups, buy nothing groups, or even within like our town, we have so many groups of, hey, like, I'm selling, I have these old clothes or I have this or that for, I'm selling it for like 10 bucks. Do you want it? Sure. Like, so many ways to get things on the cheap. And especially if you have other parents who have kids, most parents when you're like,

oh, like, are you using those old clothes that are like, take it. You want another thing? Take it. Because as the kids get older, they don't need it anymore and they don't want it. It just takes up room in their house. So borrowing from friends and family. is a great way. The only thing I will say, though, if you are buying, like, strollers or maybe some of the other things, one, just check to make sure it wasn't recalled. I know, especially for

strollers, like, anything made before 2015, there's, like, new requirements and things. So things like that make sure it's up the code and also make sure it's really not damaged. You don't want to hurt the baby, but other than that, it's fair game. Clothes, like, you wash them. Even bassinets, we borrowed, we host them. down okay or baby was in it for like you know seven eight months before we went to the crib so it you don't need and most parents too that's why if you know someone who's a little bit ahead of you or even again someone in town again clean it and make sure it's okay but for the most part people like people aren't using it that long anyway so it doesn't have time to get ridiculously dirty or

you know broken and all that Jen how about um uh formula uh for for for for folks who uh need to formula feed yeah so there are i would definitely call call up the companies. Some of them offer discounts, especially if you're going to be using it on a regular basis. So I know some of the big ones like Simulac and I think Infamil offer. I would check with insurance too to see if any of it is covered. Do not be afraid to coupon shop because these things can be expensive. Obviously, if you can nurse, that's the ideal, but not everyone can. So there's no judgment there if you can't. But that is then just going to be another expense that you factor in. But also usually around, I think, six months you start introducing more solid

food so it doesn't have to necessarily be forever either. It might just be a more expensive upfront cost in the beginning. But definitely call the companies and see what coupons they have, what discounts they offer. And like I said, also check with your insurance company because some offer benefits with that as well. Yep. And also talk to your pediatrician. My pediatrician has a ton of formula samples and will give them to you if you request them. They did when I was, when I had infants, they don't offer them anymore. My kids are 15 and 13. I have a car seat tip before we get too far away from this. Target offers 20% off for when you return in a car seat. They will give you 20% off a new car seat. So I think a car seat is something that you should buy brand new. You could get

someone's used car seat to turn into Target to take advantage of this 20% off deal. Carseats can be damaged in car accidents and you should not use them if you don't know the whole history of the car seat and blah, blah, blah. But I wanted to get that out there before we got too far. Yeah, I think other companies do that too. I remember looking and seeing that's, I don't know if it was as much, but that give a little bit of a discount or some money gift cards or something if you return a car seat or other products as well. So that's definitely something you can look into. Also, when you're buying this stuff, look for when the discounts are. So if you know you're playing and having a kid, let's say you get pregnant, you know, you have 10 months. So there's

definitely better times that, you know, Target or even Amazon, like Amazon, their prime day, you may want to, you know, get some of the stuff, you know, that's coming or during, I think, like Memorial Day, Labor Day sales, they have different things for, you know, buy-bye baby and all that stuff. So definitely use that. And the same thing, I wanted to go back to the formula. I'm not necessarily recommending this, but, you know, when you're shopping around for pediatricians in the beginning, you know, you can ask for different formula samples of different pediatricians. And, you know, if you go visit maybe five, you might be able to get a couple of samples from different places as well to kind of save on that end. Well, what else? You know, what are some other good

tips that we should be thinking about as new parents? So one of the things I will also say is make sure you do have an emergency fund. I know like we talk about this just in normal planning, but when it comes to having a kid, you should always have an emergency fund because there's always expenses that come. I mean, the biggest surprise for us was just medical bills and things that we weren't expecting or maybe you really are planning on nursing, but it doesn't work out. And then you have to spend money on formula and different things. But I would just say, yeah, the cost, just have that fund. It'll just also make you feel better so that you can sleep at night and not have to stress so much about all these little things. It'll also give you a little bit

more freedom and flexibility to make better decisions that you want for your kids on things you value. Another thing, too, is when we had like, I didn't have a baby shower or anything like that, but a lot of parents, like people wanted to know what to get us. So we would ask them to chip in on one item, like one big item that we wanted that helped put towards, I think it was for the crib was a big one. And the other thing, too, is when you sign up for registry, sometimes they'll give you discounts on one item.

So be strategic too. And when you're signing up for your registry, there might be different benefits and different free samples, also that you can ask from different stores. So it's another way to get some free things. I think that is a good point about the emergency fund. And like you said, you have approximately 10 months to build this up. So start throwing money into your emergency fund for kids

because, yeah, they're going to break stuff. they're going to need attention, they're going to create emergencies. You are crafting, you are creating a little emergency tornado growing it. Oh, spoiler alert, Scott. Okay, Jen, let's pivot a little bit and talk about parents and money mindset with parents. Do you think the average person can have children and still invest? Oh, 100%. That's actually one of the biggest questions I get from moms specifically, of that they're worried

about, oh, like, do I pay for my kids? Do I invest for my kids college or should I be for my retirement? And my whole thing is pay, like get your financial house in order first before you start with your kids. Because kids can always figure out later on down the road how to pay for college, whether through scholarships, who knows that they're going to go to college, what college is going to look like in another 18 years. You can always figure that out. But if you are, if you are going to have to move in with your kids because you have no money, that is going to be a huge burden. And I feel like so many of us already are experienced that we're already the sandwich generation. Let's not be that for our kids. So definitely save even a little bit. Or like if you

really want to save for your kids college, like I love Brandon Turner's, you know, buy a house. But even if you can't do that, just maybe put a little bit into a college fund. So maybe this is not financial advice, but instead of paying your Roth IRA for that year, put the $5,000, into your kids college fund. And at least that's a start for your kid. and let that ride for 18 years, it's not going to be a lot of money, but through birthdays and other things you can continue to add to it. But at least you're giving them something, but then definitely continue getting your house in order. So if you have a ton of debt, you also don't want to teach that to your children. You are their example. And I feel like we have a responsibility

as parents to also educate our kids on the money. And so if we're not doing it right, how are we going to ever expect them to do it right? I completely agree with that. I obviously not enough time has past, but my tentative plan right now is to put all of the, build all the wealth in my name and earmark some of that for my daughter's college education. So I'll probably do, I'll probably buy a property like we put on a 15 year note, the Brandon Turner approach that Jen just referenced here, let that note pay off. But that'll be in my name and I may then cash out refinance that. So it's not going to be a property in her name, for example, at this point in time. Because I think that's right. I think you build your private wealth and then use that.

to pay for the college education downstream is my philosophy that I'm up playing. Yeah, I love that. And like we still have a 529 plans for our kids because when I was working in the city, I had a lot of tax benefits for doing that. So that's something depending on your state and your work. So we got a lot of state benefits. So we contributed to that. I also, we have the UTMA accounts because I want my kids to have some money. They don't have a lot. They have very little. But at least when they're older, they'll be able to control it because I want them to manage their own money. And I want them to learn how to use money. And I'm okay if they blow it. I mean, I don't want them to, obviously, but at least I want to teach them how to use it with me teaching them versus

them trying to figure it out the hard way later on in life. So that was important to us. And Roth IRA for kids is also, we can go, that's a whole other avenue, but that's another great way to start getting your kids on the right foot. Yeah, let's talk about that. Don't you need income to contribute to a raw? You do. But if you, have, there are ways to hire your kids. I'm not a tax accountant, so this is not my area of expertise, but I have had people on my show talk about ways that you can hire your kids. So, especially if you have a side hustle or something that as long as you can be realistic, you can't fund it fully necessarily, especially if they're really young. But if you are content

creator and they're helping you, like, you know, models, you can pay them like minimum wage for like a couple hours that you would pay something normal. Again, check with your CPA and all this. But there's definitely ways that you can open up a Roth IRA for very young kids. So if my one-month-old daughter, for example, was the stock, the image on this podcast, I'd be able to compensate her for marketing services. Yeah, I mean, you have to, it has to be a business that you have. Like, you need your, I think you need a 1099 or some form of tax document to show your

credible business, and then you can give some too. But again, I'm not a tax accountant, so I don't want to speak, but I definitely know there's ways. And I've been going down the deep diet. That's my rabbit hole lately is figuring out how to hire my kids more and pay them more for their Roth IRAs. Well, let me ask you another question then on that front. If you wanted to, if you're a financially independent household early in your kid's life, you have a very good chance at accumulating a large net worth. And you have a choice you can make early on. I think you can gift $18,000, $12,000, something that is in that ballpark to your child per year. Yeah, I think it's 16.

16, something like, yeah, something in that range. I think so, yeah. Don't quote me on that, but yeah. Okay, so over 10 years, that's 160 grand, right? Over 18 years, over 20 years, that's 320 grand. And if you invest that reasonably well, then things like real estate, you know, whatever, that could be millions, million plus. Oh, yeah.

and that can compound with whatever they earn in their teenage years. Your child could easily be a millionaire in their name without you passing your estate to them if you wanted to play that game. And on top of that, you could find ways to do what you just described there with the Roth giving them income. That's on top of that. So there's a very clear path to putting your kids at millionaire, $2 million net worth status in their late teens, early 20s.

if you wanted to play that game, we're willing to get aggressive. Should we do that? I am a believer of kind of, like the whole thing. My husband and I have been on our FI journey, and I love the journey. I don't want to just do that. We can, yes, but I want them to learn and grow. Like, we're going to, we're creating now, even with our daughter, she knows that we have rental properties, and she comes with me to screen our tenants.

and she knows that we buy houses for people and we make them look pretty and she's five. And she knows that we buy things that make money. And we're all this money stuff, we're talking to her now. And so she's the little one like, yeah, mommy, I'm going to buy that house and that house and that house. And people are like, what are you teaching your daughter? I'm like, yeah, don't worry about it. She's good.

But like, I want her to learn. I want her to do it herself. So I love the idea of having it. Me personally, I would not. just hand it off. Now, if you're teaching your kids and when they get to that age and you feel comfortable and you're working with them, like maybe you build the business together, maybe you go into real estate together, that's really a personal decision. But for me, at least where I'm at right now in life, I could change my mind later. I would not just hand off $2 million to my kids.

Like that just to me seems like cheating for them and taking away from them, like the fun of it. Like, it's fun being honest. It's fun to optimize. It's fun to strategize. It's fun to talk money. It's fun to figure out, am I going to go real estate? Am I going to start a business? Am I going to go index funds?

Am I going to do all these different things? Like, I wouldn't want to take that away from them. And, you know, it's, I'm not telling you not to go out and accumulate that well so that, you know, to have the option to do it. But I don't think I would just hand it over to them. This is a good problem that many in the fire community will have. Yeah. It's a great problem. I agree with Jen.

I wouldn't just. give it to them. I love the idea, Scott, of taking advantage of the tax-free gift to give to your child in secret. It's 16,000. I looked it up, Jen. 16,000 for this year, 17,000 for next year. You could give her $16,000. She doesn't understand that right now, Scott, so you don't have to keep it secret from her. But when she's 15 years old and she doesn't need to know that she has $425,000 in a stock market account because maybe she'll start to spend that. Or she'll be like, look, I got into this account and I sold my Tesla stock because I wanted to buy a cute sweater at the mall and you're like, oh, I taught you nothing.

Because not every lesson sticks, Scott, let me tell you this from 15 and a half years of momming. Not every lesson sticks. And sometimes they do dumb things. And yes, you should let them make mistakes, but you let them make $20 mistakes, not not $425,000 mistakes. That's my jet ski. Yeah. And you learned, but that's, you know, that's a $5,000 mistake.

So what is that phrase? Give a man to fish and he'll eat for a day. Teach a man to fish and he'll eat for a lifetime. I think that you could balance it out a little bit by taking advantage of the time and giving her the money without letting her know that it's there. And then maybe on her 18th birthday or her 21st birthday, you say, hey, congratulations, you're a millionaire, and it's in a trust. Or, you know, here's all of the things that we've been teaching you about money. And now here's this surprise.

We've been gifting you money your whole life that we have been investing for you. And here's where it's at. Yeah, plus, I want my kids to work. Like, I want them to learn that they don't like it. And I want them to have a business. So even if they are millionaires by 20, I still want them. I want them to be productive in society. I don't want them to have the easy road.

Like we already, with our five-year-old this year, she opened up an ice cream stand, and she, for an hour, sat there while her brother went to the playground, and she made money, and she was very excited. But she was also kind of like, you know, I'd rather go to the playground than sit at this ice cream stand. But afterwards, we debriefed, and we talked about it, and we let her buy something, because I'm a believer, too, that you should spend money, and you should teach. your kids to spend some money so that they find it fun because I want her to like business. I also don't want her to hate business at five years old. But it was a really great experience for

her to see. She said, mommy, oh my goodness, someone I don't know bought an ice pop. Like, I don't even know who they are and I got money. She's like, I'm rich. I have so much money. It was like $2. But to her, she was so excited and I would have never want to take that away from her. Well, Jen, this has been awesome. Thank you for coming in sharing so much wisdom with us so many tips and tricks and good advice here. Where can people find out more about you? Sure. You can check out the Investor Mama podcast. You can also find me on social media. I'm at Investor underscore Mama or you can go to investoremama.com. And definitely feel free to reach out. I'd love to connect. Definitely any questions you have, you're thinking about becoming a parent

or you're hesitant or not or anything else related to investing and being a parent. I love talking shop. So you can connect with me also. You just go to investor mama.com slash connect and you can find me everywhere. Jen, thank you so much. This was so much fun. And we'll talk to you soon. Thank you guys. This has been a pleasure. All right, Scott, that was Jen Narcississot. And that was a super fun show. You know, I noticed that we spent a ton of time talking about child care costs. And I like what she had to say about get creative. Here's the bottom line. There's no easy button for. child care costs. It is going to cost you and it's going to cost you a lot of money. Unless you have a family member who is going to watch your kids for free and those are few and far between. And you

should not count on that. You should have a backup plan for sure. It's going to be expensive to take care of your child. And I thought you had a really great point. Scott, the $100,000 for the first five years is very doable, and that brings my $225,000 to age 18 well within reason. Yeah. Well, when we're talking about how in the context of a child can cost you $225,000 or whatever the number is over the course of 18 years, if 100 of that is child care, then that becomes really easy to get to that, right? Because I believe that the cost to raise a child, you know, per gen is somewhere in the

to 10 range, if you want it to be, with excluding child care, right? Especially in the early years, how much can the food really cost with a lot of those things? The activities, you can go as crazy as you want, right? I probably will spend more than that on our little girl over time, I would imagine. But the child care piece is what's really a full-time job that you're going to have to pay for or do yourself at some point for five years. And I think that that's the elephant in the room here. That really needs to be planned around. And there needs to be something that you're doing there.

Yeah. Yeah. If you are not pregnant and considering having a baby, how are you going to take care of this child? Who is going to be there? Because, Scott, I think you said this after we stopped recording. Somebody needs to be with this child all day long until they're five, six, seven, eight, nine.

Like, when can you leave your child alone? Scott said, you can't leave them alone until they're 10. I'm like, ooh, don't call DCFS on me. I think we left them alone when the littlest one was eight. But, I mean, we went to a movie. It was a minute away. But still, this is a long-term, I don't want to say problem. Challenge, what is the right word here?

Because it's not a problem, but it is something that needs a solution. Constraint. Constraint. This is a long-term constraint that you need to figure out. And if you are pursuing financial independence, this is going to affect that. And I'm not saying, don't have a baby. My life would not be complete if I didn't have a baby. I had two babies.

But what are you going to do to cover these costs and cover this obligation? It is an obligation. You are bringing a child into this world. Somebody has to be there to watch this child 24-7 for the first five, six, seven, eight, nine, ten years. Yeah. And I think, you know, there's a little. lot of good ways to work around it. Jen had a lot of good suggestions. You know, the conclusion I reached a while back, you know, was might as well try to get as far along toward financial

independence before I want to have kids as I possibly can. And that's, you know, for those who are listening who are in college or right out of it, it's a really good idea to try to get as far along because it's just going to be, there are going to be constraints that come on once the baby's born. Yeah, I think we spent a lot of time talking about this, and I think it's an appropriate amount of time because I don't think that this is something that's really discussed. People talk about how much diapers cost and how much formula costs. And we talk about that too. But it's really the child care cost that you really need to consider. Babies aren't unit of productions. Babies aren't units of production. Oh my goodness, Scott. You can email him at Scott at biggerpockets.com and tell him all about your thoughts on babies aren't units of production. They're units of love. There you go.

Oh, okay. Scott, should we get out of here? Let's do it. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench and I am Indy Jensen saying bye-bye, butterfly.