Category Archives: Family Finance

The Cost Of Raising Kids

There is no job that’s been more rewarding in my life than being a dad.  It’s not always cupcakes and balloons, but raising my kids (now age 2 and 4) gives me more satisfaction than anything.

Being the finance nerd that I am, I can’t help myself but to go back and analyze all of the dollars that we’ve spent (and will spend) raising our two boys.  Just to forewarn you, there are so many intangibles that outweigh any amount of money that can be quantified, but this post is aimed at looking at our true cost of raising kids.

According to the latest annual “Cost of Raising a Child” report from the U.S. Department of Agriculture, it will cost the average American family $245,340 to raise a child from birth to age 18, not counting the cost of college.

So let’s take a look at what the cost of raising kids has been in the Hinson household:

Healthcare

From the moment your children are born you will be paying for their medical expenses.  For the birth alone, we ended up paying about $1,200 for each kid.  Remember, it’s not just the healthcare costs for my wife but it also includes co-pays and tests for your new addition as soon as they enter the world.

My wife and I both have excellent insurance and currently we have both of our kids on her plan.  Her company’s premiums are 100% paid for an employee, but jump to $246 per month to cover both kids.

Let’s not forget all of the doctor’s visits outside of their scheduled checkups.  We meet our $100 deductible for each child every year, pay a $30 co-pay for doctor’s visits and any emergency care. So far we’ve been to the emergency room on two different occassions, each visit costing $300 just to be admitted.  I have no doubt that with our two little monsters they’ll be on a first name basis with the E.R. doctor in no time.

By my calculation, I estimate about $64,476 in healthcare costs (barring braces or other medical conditions…). Continue reading The Cost Of Raising Kids

Financial Predictions and Goals for my 30’s

Recently I covered some of the biggest financial mistakes that I made in my 20’s. Looking back at your mistakes and evaluating the progress you’ve made is a great way to ensure that you not only continually improve your financial situation, but improve as a person as well. It’s equally if not more important to look forward. What do you expect to accomplish in the next 1, 5 and 10 years? What type of financial plan do you have in place? I started thinking about the next decade (as I’ll be turning 30 very soon) and trying to envision not only where I’ll be financially but what my career and lifestyle will be in my 30’s.

NET WORTH

The past decade has been a great starting point for me to begin accumulating net worth and benefiting from the long term effect of compound returns. Financial independence was something that I focused on early in my 20’s but it was a slow process. Although I’ve always maintained a healthy savings rate (as a % of income), my salary and investment balances were low. It wasn’t until we started to see some great market upswings starting in 2010 that I began to see the tangible effect of compound returns. By the end of 2014 I realized that saving early and often is the only way to accumulate substantial net worth at a young age. Not counting home equity or other personal assets, our investment and savings accounts have grown well into the six figures. Looking back, there are plenty of things that we could have improved to better position us financially, but I think that we’ve made some great progress toward our goals. So now as I enter my 30’s, I have high expectations for where we will be financially by the end of the decade.

In order to be conservative, I assume a 5% average annual rate of return on our investments over the next 10 years and that our contributions or gross savings will not change (although I plan to increase my income as well as my savings rate). With these assumptions I project that our investments should total approximately $750K – $1M before I enter my 40’s. I think as long as we continue to invest in a balanced and diversified portfolio, we should be able to hit that goal. Ultimately, I truly believe that if we’re diligent during our 30’s, we may be able to amass even more net worth, especially if we take into account home equity and other personal assets.

Goal #1: $1M in investments and liquid accounts before I turn 40. Continue reading Financial Predictions and Goals for my 30’s

The Difficult Balance of Financial Wellness

Saving, investing, spending, budgeting, insurance, retirement, and the list goes on… There are so many facets of personal finance that it’s easy to get overwhelmed. Where do you start and how do you find balance?

Ever since I started my journey to financial independence I’ve struggled to find balance. I constantly have to remind myself that financial wellness is a journey, not a destination. It’s not about being perfect, but living an overall financially fit lifestyle. Very similar to physical wellness in a lot of ways. The problem is that I find myself becoming fixated on my family’s financial situation. I’m constantly looking for new opportunities to diversify our income streams, reviewing our expenses and planning for the future. A large part of the fixation comes from the pressure of providing for a family of four. Another part is my strong desire to grow our net worth.  If you follow my blog you’ve probably noticed that I am utterly fascinated by the power of compound returns and its impact on net worth. If not, take a second to read Why Investing is Not like Gambling, there’s a great excerpt on compound returns. I attribute part of my obsessive financial focus to this phenomenon of compounding. I’ve seen its impact on our retirement portfolios over the past decade and in my wacky mind, every dollar spent is a dollar that will not benefit from the profound benefit of compound returns. It’s even reached the point where I no longer debate the immediate cost of a simple purchase, but in my deranged ‘finance first’ mind I’m calculating the true time value of money of the purchase at current rates of return over the next 30 years (seriously guys… I need help).

So where do you draw the line? At what point do finances become overly important in your life? Let’s face it, everyone around us is influenced by money. It’s why we work 9-5, it’s why we plan and save, and it’s what makes the world go round. But what I’ve realized is that it all comes down to balance. Once you’ve established a financial plan there comes a point where you need to enjoy today. There is no better time that I’m reminded of this than when I’m playing with my sons. They are truly the light of my life. Their carefree ways and inquisitive minds constantly remind me what life is all about. They always manage to center me after a stressful day at work or remind me to enjoy the small things. Continue reading The Difficult Balance of Financial Wellness

4 Steps to Reduce “Daddy Pressure”

17121929770_f67059429b_zIt’s been a long day at work and you walk through the front door of your home. Your wife is cooking dinner and your kids are playing in the living room. You take off your jacket and slump onto the couch. As you let out a sigh of relief that the day has ended, you can’t seem to fully relax. You look at your wife and smile and watch your children as the play with over-sized Lego’s on the floor. All is well in your life but you can’t seem to shake an overwhelming sense of responsibility. A silent yet alarmingly urgent call to action. This is a common feeling for a young dad and any dad for that matter. It’s the constant pressure of knowing that you are solely responsible for your family’s financial well-being. I call it “Daddy Pressure”.

As a dad from the millennial generation I’ve felt all of this pressure. It’s the stress of being the provider for your family and the burden of ensuring that the future is secure. I’m not talking about putting food on the table and keeping the lights on. I’m talking about ensuring that you are building long term wealth in order to ensure that your family is positioned to succeed over the long haul. As a new dad with a young family you enter into a new level of responsibility. You are no longer accountable for only yourself. I have two boys (age 4 and 1) and I’ve been married for five years. It wasn’t until my first child was born that I began to realize that I have a greater responsibility than myself. As a man, as a provider, I have a responsibility for the entire family. The burden can be heavy, but there are ways to get your arms around it. Here are four steps to take control of your family’s financial situation and relieve some of that “Daddy Pressure”. Continue reading 4 Steps to Reduce “Daddy Pressure”