We’re In Our 20s With $375K Saved. How Can We Make Sure Kids Don’t Mess Up Our Finances?

My husband and I were married for almost five years before having kids. And during that period, we had a prime opportunity to save money.

After all, we only had ourselves to think about. We were willing to live in a smaller home, drive smaller cars, and make other frugal choices that allowed us to maximize our retirement savings. And not having to pay for childcare meant we got to bank a large chunk of our income.

Since having kids, it’s become a lot harder to save. We still do it. But now, we have numerous expenses that eat up much of our earnings.

Not only do we have to pay for a larger house, but we need larger cars to fit everyone comfortably. We also have expenses like sports fees, music lessons, summer camp, and oh yeah, food and healthcare for a gaggle of little humans.

In this Reddit post, we have a couple in their 20s that’s looking to start a family. But they’re worried about the impact of having kids on their finances.

And frankly, they’re right to be concerned. But that doesn’t mean having kids will thwart their financial goals.

It’s a matter of budgeting and setting priorities

The couple in this post is clearly good at saving money. They have $375,000 socked away in various accounts, including a 401(k) for retirement. They earn $200,000 a year but their annual expenses are only $80,000, which means they do a great job of living below their means.

What this couple needs to realize is that once they have kids, certain expenses will be unavoidable. They’ll need someone to watch their kids while they work, and childcare can be exorbitant. They’ll also need to feed and clothe their kids, and the costs there could add up, too.

Is it possible for this couple to continue saving money once they have kids? Absolutely. But they’ll probably need to stick to a tighter budget and prioritize their discretionary spending.

The good news is that they’re off to a great start financially. And any portion of their $375,000 that’s in investments is likely to keep growing over time. Also, the couple’s income might increase as they gain experience at their jobs, so that could help offset some of their child-related costs.

But the couple shouldn’t expect saving money to come as easy once they have kids. And they’ll need to remind themselves that it’s okay to not be saving at the same rate they’re used to once kids come into the mix.

It could pay to get some financial guidance

It’s not an easy thing to budget for kids ahead of time because children come with a world of expenses, some of which you can’t nail down until you’re in the thick of it. But one thing the couple here could do is meet with a financial advisor.

A financial advisor can help them identify their main goals and figure out how much annual savings it’ll take to pull them off. That’s critical information for them to incorporate into their new budget.

Plus, the couple might want to do things like set up a 529 plan once their children are born or purchase life insurance for protection. An advisor can guide them in that process and help make sure they’re covered financially from all angles.

There’s really no getting around the fact that kids are expensive. But you should know that it’s possible to raise children and meet your financial goals. It might take a lot of work and careful spending, but it can be done.

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