• The average American household has 2.3 cars
• Of these, at least one is some form of gas guzzler: an
SUV, minivan, or pick-up truck.
• Apparently, the addition of a child adds $2,200 in
transportation costs per year—probably a combination
of a bigger car and more driving.
•Major Expense #1: Transportation
There are so many ways to save here:
1. Buy a used hybrid as your only car
before having a child. A Prius can very
comfortably fit a family of four!
2. Live close to work to make this more
practical. Commuting is ridiculously
3. Bike more as a family for short-term
trips: it costs nothing, is
environmentally healthy, a great family
activity, and encourages a healthy
•The KISS Solution to Transportation
Let’s factor in an extra 200 miles of driving each month (2,400 in
a year) and that’s the only increase associated with having a
child. With your 50 mpg hybrid and $4.00 gas, that’s roughly
$200 per year.
One-Year Transportation Savings=$2,000
New Total Cost Over 22 Years=$334,000
*7% of cost shaved off so far
• The total cost for child care can vary wildly. In the rural
areas of some states, it can be as little as $3,500 per
month. In urban centers in the Northeast, it can run as
much as $19,000 per year.
• The USDA lumps child care and education (private
school tuition) into one, and over 18 years, the average
family pays $3,800 per year.
•Major Expense #2: Child Care/Education
• Investigate if it’s feasible for one parent to
stay home for the first couple of years.
• If that’s not possible, move near
grandparents or other family members (aka
• Send your kids to the local public school. As
a former teacher, I can tell you that parents
are every bit—if not more—influential as
the specific school your child attends in
their future academic success
•The KISS Solution to Child care/Education
Let’s assume you live near family that can help look after the little
ones, and send your child to the local public school.
One-Year Health Savings: $3,800
New Total Cost Over 22 Years: $266,000
*26% shaved off so far
If we assume that your child goes to a four-year,
public university, the average cost for tuition,
room and board currently runs $18,000 per year.
Over four years, that comes to $72,000.
•Major Expense #3: College
From Foolish colleague Morgan Housel:
• For the first two years of college, have your
child take care of their general education
needs while attending community college,
living at home, and working in their off time.
• Then, transfer those credits to your in-state
four-year institution, and have your child use
the money they earned the previous two
years on room and board.
•The KISS Solution to College Costs
Average yearly tuition at a community college runs $6,200 for
two years, while tuition at the four-year university will be a total
of $17,000 for the last two years.
Total College Savings: $49,000
New Total Cost Over 22 Years: $160,000
*39% shaved off so far
• The average American family will save in the ballpark
of $1,000 on taxes with an extra dependency
• There are also tax credits for child care, but we’ll look past
• Kiss those dinners out with expensive alcohol tabs
• The average married couple with kids under 6 spends $200
less per year at restaurants than they did before they had
kids. Keep that habit up as time goes on!
•But Wait, There’s More
• Though you could easily cut back even more on eating out, your
savings—including the tax break—would look like this:
One-Year Savings: $1,200
New Total Cost over 22 Years: $195,000
• Live near your family, your job, and your schools—
this saves you tons in both transportation and child
• Send your kids to public schools.
• In this case, we eliminated 46% of potential costs
associated with having kids.
• That being said, everyone’s situation is unique, and
won’t necessarily mimic these numbers.
If you really want to maximize your retirement, make sure you’re
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•And one more thing…
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