It’s a fair bet that Prince William and Kate Middleton aren’t sweating the financials when it comes to having a second child. (Yes, the royal couple is expecting once again.)
But as for the rest of us? Well, that’s another story.
The government says it will cost $245,340 to raise a child born in 2013 through to age 18. The government also says the cost per kid can go down in families with more children. “The children can share a bedroom, clothing and toys can be handed down to younger children, food can be purchased in larger and more economical packages, and private schools or child care centers may offer sibling discounts,” says the Department of Agriculture in its most recent “Expenditures on Children” report.
But many parents say otherwise. So do many financial pros. And as the father of two children myself — a son in graduate school, a daughter in high school — I’ve done the math and can say without hesitation that one plus one doesn’t equal two (or less). If anything, it’s more like one plus one equals three.
What are the extra costs of having a second (or third) child? I’ll give you four of them:
When my second kid was born, a move was in order — from a rental in a townhome to the purchase of a new home — just so we could have the necessary space. That added about $1,000 to my monthly costs right there. (And that’s not factoring in the cost of the move itself.) Redfin, a real-estate brokerage, says that each additional bedroom adds about $86,000 to the cost of a home — or $7,600 extra a year in mortgage payments (with a 30-year loan). In some markets, it can be much pricier. (Having that second kid in San Jose? Redfin says the extra bedroom can equate to $20,000 extra a year in mortgage payments.)
Of course, you can double kids up in bedrooms (or even triple them, “Brady Bunch”-style). But the situation becomes all the more complex if the children are of opposite sex.
There’s a reason why the minivan is such a suburban stereotype. Namely, when you go from one kid to two, you need all that space — not just for the kids and their friends (and their car seats), but also for their gear. Ever try taking a family vacation with two kids in a compact car? Trust me, that’s a mistake I won’t repeat again. But the cost of going from that compact car to that minivan is another financial bullet to bite: In my case, I went from a Ford Escort (purchase price: about $12,000) to a Honda Odyssey (about $27,000). The differential can be higher today, particularly with prices of new cars on the rise.
Sending your kid to college is a biggie. But it can get even bigger with the second kid. That’s because the cost of higher education has been something of a runaway freight train economically, with prices increasing by 7% a year (“for decades,” as one publication puts it). For families, it simply means you can’t assume the second child’s college bill will be the same hit as the first child’s, even after allowing for inflation.
Consider that when Jonathan Blumenthal, a financial adviser and managing director with United Capital in Dallas, had his first child 11 years ago, he considered a $100 monthly college-fund contribution a good start. But when he had his third child a couple of months ago, he knew the figure had to be higher — as in $500 a month. “I’m thinking I need a million dollars for all three kids,” he says of his total education bill. As for me, I’ve already paid for one private college tuition, but I’m dreading what’s in store in a few years. (Let’s just say I’ve been talking up state schools to my daughter.)
What’s stuff? It’s car seats and cribs, summer camp and soccer league. All of this adds up. But more to the point, it multiplies in odd ways the more kids you have. For starters, the whole hand-me-down thing doesn’t play out as well as many parents anticipate. Some of it may be because the children are of opposite sex. (As Blumenthal says, “the princess crib doesn’t quite work” for your newborn son.) Some of it may also be because the products you’re hoping to pass down are simply out-of-date — or even worse, have been subject to safety recalls. (SafetyBeltSafe U.S.A. publishes a 13-page list of car seats that have been subject to such recalls.)
But perhaps just as significant: We want the best for our kids. And the things we buy for that first child (even if the purchase was a “treat”) become a built-in commitment for the second (even if financial circumstances have changed). “You feel like you don’t want to play favorites,” says Rochelle Gilken, a Florida mother of two who’s been instrumental in helping parents come to terms with their finances through a program she’s coordinated at her church, Christ Fellowship. Ultimately, Gilken says parents have to budget that “stuff” — and plan appropriately for that second child — or their budget will go quickly out of whack.
Which is almost what happened to me this summer: Knowing that I had encouraged my son to attend a particular summer camp, I made the same offer to my daughter — without realizing the cost of the camp had more than doubled! But a promise is a promise, as any parent knows. Besides, the smiles on my children’s faces are priceless, which is perhaps the real reason why any of us chooses to have a second kid. Now, I’m just hoping I can afford to spoil my grandchildren.
Charles Passy covers personal finance, consumer spending and all things food and drink for MarketWatch in New York. Follow him on Twitter @CharlesPassy. This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, ©2014 Dow Jones & Co. Inc. All rights reserved.