Opportunity costs of having a baby

Oh my! Who is that poor poor woman? Yup, that's me just days before the birth of my son.

Ok, now that I'm done embarrassing myself....

Jonathan over at Master Your Card recently wrote about how to get your finances in order before you have a baby. I agree with everything he said. I've also explored the cost to raise a child. But both his post and my own neglected one huge cost. Opportunity cost.

I avoided the topic because it's impossible to calculate and it's different for everyone. But it's not something to be overlooked when thinking about getting pregnant. Here are some things so think about.

Your ability to work may be reduced. It's a lot harder to work overtime when you have a little one. Daycares often charge late fees if you don't pick your child up by a certain time. Or right now your spouse might not mind a Saturday afternoon alone while you pick up a few extra hours, but that might not be the case once junior arrives. Even if you don't work for an hourly wage, staying late to impress the boss might not be an option anymore. Do you take frequent business trips? Is your spouse ok with holding down the fort while you're gone? Make sure you discuss this situation with your partner so there are no surprises or building resentments.

You might have to stay in the area. Is the big promotion you've been working for out of state? Are you prepared to leave your support system (free daycare!) behind? Have you or your spouse always dreamed of raising your child around their grandparents, aunts, uncles, and cousins? Or worse, what if you and your partner separate? Would you be prepared to leave your child behind? I face this situation right now. If I wanted to leave the state my ex could take me to court and force me to either stay or leave my daughter with him.

Speaking of divorce. I know it's hard to imagine when you have baby dust in your eyes but what would you do? When my ex and I separated I was left with my daughter in a two bedroom apartment I could barely afford, even with child support. When I was childless getting a roommate was the obvious choice, but that was a lot more difficult with a two year old in the house. I got some very creepy responses to my ad. Do you have a savings account of your own to rely on if you find yourself as a single parent?

What if your child isn't healthy? It's horrible but it happens, not every baby is born perfect. Someone might have to stay home to care for your child's special needs. It's definitely a worst case scenario but it's still something you should discuss.

By the pool

I was watching the news last night and they advertised an alternative to going to the park. Arizona is backwards in that way, we can’t go to the park in the summer time because it’s too hot. Even if you want to brave the 110 degree heat, the equipment is too hot to touch. So their teaser ad for an alternative caught my attention.

They did a piece about a local indoor play area. It really did look pretty cool. It has an arcade, a café, a great big jungle gym thing. All done up in a jungle theme. Pretty neat! They didn’t mention until the end that it costs $8.50 for kids and $3.50 for adults. That means that it would cost me $20.50 for my kids and I to go play. I don’t see how that is an alternative to the park. The park is free.

So today I rediscovered something that is free, the pool in my neighborhood. Technically, we pay for it with our association dues but it doesn’t cost extra to use it. I’m already paying for it so I might as well get my money’s worth. We went up there today and had a blast. We swam for almost two hours. It was great. Everyone was wiped out. And it was totally and completely free. No gas used, no miles on the car, no eating out, no charges to get in, nothing. I will even confess that I didn’t get dressed today. I went from jammies, to bathing suit, and back into jammies. So it even saved on laundry! Now, that is what I call an alternative to the park.

What are some free or low cost things you are planning this summer?

Pic by: Brunna Peretti

Related Articles:

Summer Break

Teaching kids about savings

Money lessons from my parents

A sweet gift and some jealousy

My daughter surprises me the heck out of me sometimes. She gets money for doing certain chores around the house and sometimes she impresses me with how she spends it. Obviously, sometimes she heads blindly into the toy aisle and buys the first thing she sees, but usually she doesn’t. I’ve already mentioned how she saved up $76 to take to Disneyland and when she donated some of her money to her school.

Well, yesterday she came home from school and said she wanted to buy her teacher an apple as a present. I suggested buying a fake apple and painting it, that way she could keep it forever. My daughter really liked that idea. So we went to the craft store with $5 worth of quarters in a ziplock bag. She ended up picking out a wood box that looks like a book and an apple decoration to glue on the front. It cost a grand total of $3.50. I thought that was so sweet of her.

While we were at the craft store my son, age 2, fell in love with a teddy bear. It was only $7 so I just went ahead and got it for him. He was just so dang cute with it I couldn’t resist. I have a general rule that I don’t buy the kids impulse items at the store. I don’t think that sets a good precedence. But once in a while they come across something I just have to buy.

Well, apparently this upset my daughter quite a bit. This morning she burst into tears when I asked her what she wanted for breakfast. After some coaxing she told me that she is sad because my son got something brand new but she didn’t. I reminded her about this weekend when she got a new bathing suit and a new dress but my son didn’t get anything. That made her feel a little bit better.

I tried to explain that if she is going to be jealous every time someone else gets something she doesn’t she is going to be sad all the time. I don’t know if she really understood, but I hope she did. I know it’s hard when you’re six, but if this is an attitude she carries over into her adult life then she is going to be a creditor’s dream. I can’t let that happen!

Pic by: Zohar Manor-Abel

Summer break

Here in the Arizona it’s hard to find activities to keep the kids busy on summer break. It’s not like normal places where the kids can go ride bikes with their friends til dusk, temps regularly get over 110, even in the shade. It’s dangerous to spend any extra time outside. So come summer break, all the parents start looking for fun indoor activities that will keep their kids busy.

In an effort to fill that need the movie theater has a pack of 10 summer movies for $7. They play a kid friendly movie once a week for 10 weeks. You buy the tickets to all the movies ahead of time. It would cost me $21 to participate because there are 3 of us. But that is still a really good deal. The problem is that I don’t know if my 2 year old would sit still for a movie. I know it’s a kids movie and that there will be lots of other little ones there, it’s not going to bother anyone if he gets a little rowdy, but still… I don’t know if he would have fun.

If you don’t want to buy all the tickets at once you can also pay $2 per movie. While it’s more expensive over all, it’s great if you know you can’t make it to all 10 movies. It will cost me $6 per movie but then I’m not committed to go every week. But if I end up going to all 10 then it’s going to end up costing me $60, which is significantly more than the $21 I could pay right now.

Decisions. Decisions. I will probably just go with the $2 movies this year to see how it goes.

pic by JanneM

A trip to the store.

My daughter is in Kindergarten. She wanted to go shopping at the student store. I knew nothing about this student store but she had $10 saved up from her allowance so I let her take it to school.

I really had no clue what she was going to come home with, but I ended up being pretty impressed. She bought three very cute pens and two erasers. She also donated $1 to the school. They are trying to get donations for a new sign out front. I was so proud!

She gave me her change, which was $7, and I asked her how much she spent at the store. She had no idea. So carefully we went over each transaction.

Me: Well, if you had $10 (holding up 10 fingers) and now you have $7 (taking away seven fingers) how much did you spend?
Her: Three!
Me: And if you gave $1 to the principal for the new sign (taking away one finger) how much did you spend at the store?
Her: Blank stare as eyes drift to the TV.

Ahh well, maybe next time.

Money lessons from my parents

My parents never sat down and talked to me about money. But that doesn’t mean they didn’t teach me anything. They certainly did, but not with direct instruction. The vast majority of what I learned about money from my parents came from their actions

One memory I have is of my mom standing in the kitchen saying “you mean, take it out of savings?” in a tone that said “you’re an idiot”. I have no idea what they were talking about but it still conveyed quite a bit of information. First of all I learned that people have savings accounts. That saving your money was a normal and expected thing to do. Secondly, I learned that you don’t go dipping into savings for every little thing. I could see that the savings account was sacred.

Another lesson they taught me through their actions was to live within your means. To start with, my mom drove the wheels off every car she ever owned. We never went out to eat and we never went on vacation. And during the recession in the early 90’s they barely even spent money on groceries. I remember my mom’s student loan company calling every single day looking for a payment during that time. (Maybe fielding calls from creditors every day at age 13 is what gave me my fear of debt.) But no credit card company ever called. I’ve never seen my mom use a credit card.

But they didn’t teach me everything. There are several things I wish I known when I went out on my own.

I wish they had taught me how to balance a checkbook. I figured it out on my own and have only bounced a few checks in my life, but I could have been more prepared. I also wish they had taught me how to make a budget. Again, I figured it out, but it would have been nice to be taught. But mostly, I wish they had taught me about investing. Investing for retirement especially. I think they reason they never brought it up is because they themselves were not saving for retirement. In reality, I was the one telling my mom the importance of an IRA. She does have one now, but I had one first.

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Picture by digitalsextant

Teaching kids about saving

One of my main goals as a parent is to teach my kids about money. I want them to know the value of saving and the dangers of debt. I’m not 100% sure what is the best way to go about this though. This is what I’m doing so far…

I have a six year old and for the past two years or so she has been getting an allowance. But I don’t just hand over money. She has five chores she has to do and when she has done them each five times she gets five dollars. The goal was for it to work out to be about $20 a month, although in reality it is much less than that. We have a chart on the fridge and every time she does one of her chores she gets a magnet next to that particular chore. Then when she has done each one five times, she gets her money and we start over. It is up to her how hard she works and therefore how much money she makes.

When she would point something out at the store that she wanted that is more than $5.00 (which is pretty much everything) I would explain that she would have to save her allowance up in order to buy it. I would tell her how many times she would have to do her chores to be able to afford it. Hearing that she had to do her chores every day for six weeks just to buy a Polly Pocket Dress-Up Set was very overwhelming and she never once did it, or even thought about it, so I was feeling like this wasn’t really working. But I will have to say that it’s a great guilt reliever on the “not-buying-your-kids-stuff” issue. I can say “You can buy it with your allowance” and just move on, knowing that if she really wants it then she can buy it herself.

We had a trip planned to go to Disneyland last December. We had been planning it for about a year and my daughter was very excited. One day in June she wanted to know how many weeks it was until we left for Disneyland. I counted it out and there were20 weeks left. I said to her, “You know, if you do your chores everyday until we leave for Disneyland you will have saved up $100”. Think back to being a kid. Do you remember how much $100 was when you were five? I remember it was pretty much the most money a person could ever have. It was pretty motivating to her. She loved that idea. So for the next six months she did her chores almost every day. I had purposely worked in free weekends because I wanted her to be successful and give her a little wiggle room. This was already a lofty goal.

We got an envelope and taped picture of Cinderella’s castle to the front. She kept it in a special spot in her room. We would put the money in there and every time we added another $5.00 we would count to see how much she had. She loved it! She stayed motivated for the whole six months and she saved up a grand total of $76. Which isn’t the full $100 she was aiming for, but it’s still great.

Now when she sees something at the store she wants she tells me she is going to save up for it. Saving $30 seems like a very attainable goal after working so hard and saving over $70. But I have to say, she hasn’t actually saved up for anything yet. She usually forgets about whatever she saw by the time we are in the next aisle.

Well, that is what I have done so far on my quest to teach my kids to be responsible with money. If you have any ideas that worked for you and your kids please let me know!

*picture by Lemoncat