November 2024
Modearn™ advisors Beau Wirick and Stacey McKinnon discuss family planning, how personal this process is, and the importance of being aware of these costs.
Here are some key takeaways from their conversation:
- The average cost of raising a child in the U.S. is approximately $325,000, or $1,500 per month, accounting for necessities like housing, healthcare, food, and transportation. Depending on location and circumstance, this number could be much higher.
- Stacey shares that in California, public adoption costs $20,000 with no guarantee of being matched with a child.
- According to many online resources, IVF costs $15,000 to $20,000. However, if you add up injections, procedures, and appointments, it is closer to $30,000 for one IVF cycle and $10,000 for each time after that. Oftentimes, health insurance does not cover IVF.
- Stacey recommends using an HSA for medical expenses to gain a tax advantage.
- Beau and Stacey emphasize that it is okay to make your own decisions about family planning. Try your best to avoid falling into the pressure of what others expect from you, and make decisions that feel right for you. If you cannot have kids or decide not to have kids, there are other ways to give back to the world and fill your life with joy.
Keep watching towards the end to catch our “This or That” segment where Stacey and Beau ask these rapid fire questions to each other:
- Do you save your HSA or later or use it now?
- Would you rather save for college or spend money on private K-12 school?
- Do you make head or heart decision around family planning?
Watch previous episodes here:
Creative Investments Beyond Stocks & Bonds
Money Questions I'm Too Embarrassed to Ask
Hey. Welcome to another episode of Couchside Conversation. I am Beau Wirick, Morton wealth advisor, and I'm here with Stacy McKinnon, chief operating officer, chief marketing officer, chief whatever officer, chief everything officer Stacey McKinnon.
I don't like to be bored.
So today we're having a pretty interesting conversation. You and I are the same age, and we're in our 30s. Yep. We won't say what part of our 30s we're in, but we're in our 30s.
I don't like to say late 30s, but, you know.
You know, technically, we're probably in our late 30s and a lot of our friends and our community and our generation, is experiencing something where we are choosing or circumstances are choosing for us that a lot of us are having kids later, or not having kids at all. And this is a pretty, a new development as far as American families.
You know, we think about our grandparents' generation. Yeah, only 5% of our grandparents waited until their 30s to have kids.
Only 15% of our parents' generation. But for our generation, it's actually 30% of families waiting until they're in their 30s before they have their first kid.
Incredible.
Yeah. And so one of the things that's interesting about that idea, that dynamic and I want to hear your thoughts to get into on this. But if you wait until you're 30 to start a family, it gets harder to start a family, which causes you to wait longer or something. So what are some of the financial ramifications of this phenomenon?
Well, I think that there's a few reasons for that choice. Number one is that people want to wait till they're financially stable. Like I think that they know more than they maybe used to. Maybe they grew up in circumstances where they were like, oh, we didn't really have anything when we were younger. And I want to give my kids more.
And so I'm going to wait until I feel financially stable. That's one reason I see. Another reason I see is that a lot of families are dual income families where both people are pursuing a career where it used to be, you know, 50 or 60 years ago, maybe, the women would start to have children early in life because that was the role that she had played.
That's not necessarily the case today. I find that both partners, tend to be pursuing career ambition much more than they ever had before. And then I think that, there's an element of people wanting to enjoy their life. They want to go out and they want to travel and pursue things while they're young. And having kids in their 20s feels like it would be taking away from that pursuit.
You know, it used to be where you raised a family and then you went and had fun. But I think the dynamics have changed a little bit there.
And then just really reflecting on what are the costs. And I think sometimes people just don't know what they're in for it, which you've done some research on. What does it actually cost to have a child. Would you mind sharing some of that data?
Yeah. Asking for a friend. I've done a little bit of research of what it costs. Here's the headline number. It costs, on average, $325,000 to have a kid.
Big number.
And, I can't stress this enough. That is the average number across the United States. So we live in a very high cost of living area in Los Angeles. And this includes people in Idaho, Wyoming, Louisiana, you know, a lot cheaper areas. But that average number, 325,000. How it breaks down is this is really just necessities, because the average family doesn't have the means to really pay for a daycare or private school.
Or anything like that. And so when you think about $325,000, that is about $18,000 a year annually for 18 years, which is about $1,500 a month. So when you think about having a kid on average, it's going to cost you about $1,500, the same as a studio apartment.
Yeah, exactly. Yeah. Exactly. And so about 30% of that increase in expenses in housing costs. And so you think about it, you know, you bring a baby home, you probably don't need a new room or anything. But eventually, as the kid grows, you need more space.
Everyone needs space for each other's space. Exactly.
And some distance that, close the door, go to your room. And so, and so that accounts for you. Eventually you need to go from a two bedroom to a three bedroom, or a three bedroom to a four bedroom, and on average, that'll cost you about $450 a month more for the life of that kid. Yeah. The other expenses are necessities.
Health care, food, transportation. Clothing, you know, these kinds of things. And that accounts for about $725 a month over the life of the kid. Wow. Which again, when you put it in monthly terms, is not that doesn't it's not insane like that makes sense. Yeah. You're going to spend a little bit more on food and gas.
And when the kid becomes a teenager, they'll probably buy a car and you have to put them on your auto insurance or your health care premiums go up. All of this makes sense. But when you think about the decision to add a person to your family, that's the number that you should have in your head. Now, obviously it goes up over time.
Kids are cheaper when they're younger, and as they get older they get more expensive.
They go to like other friends' birthday parties, and then you have to buy gifts for those friends. Birthday parties. And now it's just compounding, right?
And that's the miscellaneous. That's like the extra 5%. The part of the study that I found was really interesting was education and childcare costs only accounted for 15% of average cost for a kid.
Interesting.
And which is about $300 a month. Oh, yeah.
And people spend a lot more.
Yeah, yeah. And every dual income family in, in Los Angeles just did a split take like, no, Beau, you're missing a zero, right? It's a lot more like $3,000 a month.
But it's crazy because 90% of kids go to public school in this country. And so that number really doesn't account for a lot of Angelinos or people in metropolitan areas that send their kids to private schools, or they have dual income families where they have to hire help to come in. Right. And so the the cost for you as a family are going to be very different from the average depending on your circumstances.
Yeah. Especially if both people work.
And lastly, that doesn't include college for it, which is another however many dollars per month you have to save for college. So that's kind of the landscape on the financial considerations. But that's just after the kid has arrived. Yeah. And there's a lot of costs that go into getting pregnant, delivering the baby, and hospital costs. And I know you've done a lot of research and have a lot of experience on this.
Well, I think just, the basics are if you want to have a child, oftentimes you should plan for like $20,000 in hospital, do, therapy, whatever the costs are to just have a child. If you're able to get pregnant. That's kind of the basics, but a lot of people don't talk about the costs. If you can't get pregnant or if you have to go through a different type of journey.
And I'll just share my personal experience. My husband and I started talking about having kids about 7 or 8 years ago, and we went on this journey. We pursued it, and about a year later we were like, oh, it's not happening. Like what? What else could be the circumstance? And so we went through a bunch of testing, which those were, you know, $400, a test or whatever test we needed to take.
And we found out that I wasn't able to have kids. And so I had to then go through a few different options for myself, like if I wanted a family, what was that going to look like? So the first option was surgery. And he did that surgery. That surgery costs about $8,000 between medical expenses. My max had a pocket, and that surgery allows you a window of about six months to potentially have kids.
And we didn't have kids. So then we were like, what's the next thing we should pursue? So we started looking into adoption. And in California, the way that you do public adoption is you actually pay $20,000 to a matchmaker, that cost is probably gone up. That was about five years ago that I looked into it. And that matchmaker has two years to match you with the child.
And if they don't match you within that two year period, you just lose your $20,000. So that was a different journey that we went on where we were like, oh, are we going to commit to this not knowing if we're going to be matched with a child? And at the time, it was during the pandemic, adoption, like rates had fallen off a cliff because the state of California had given so much additional subsidies and unemployment that a lot of people who would normally put their children up for adoption decided to keep their children because they actually had the money coming in from the state of California to support that child.
So that was a bet that we were going to take. And we eventually said, oh, I don't know if I don't know if we're willing to emotionally and financially go through it. Then we started pursuing IVF everywhere online. As advertised, the IVF cost 15 to $20,000, but we met with 3 to 4 different medical professionals and unfortunately, I'm not sure that, a lot of the doctors that are like specializing in IVF treatment are all on the up and up.
It's not quite the best industry ever because they'll advertise 15 to 20,000 for IVF on the front of the paperwork. But if you turn the paperwork around, it shows all the line and costs for like injections and procedures and all the appointments you have to do. So it ends up being closer to $30,000 for one IVF IVF cycle, and then 10,000 each time you, try again.
If you were able to get that many embryos. And so you might be looking at a closer to like 50 to $70,000 to go through the cycle.
Just to attempt.
Yeah.
And there's no certainty around that.
And those financial-like decisions like are paired with obviously emotional decisions. And it's just tough. Yeah. My husband and I ultimately decided not to pursue it because we felt like it was going to be, distracting from the way that we wanted to give to the world. We felt like we had a place in this world where we could give to a lot of people and a lot of things, and we didn't feel like we had to have, parenthood be the journey that we took.
We felt like there was a lot of ways that we could, impact people's lives. But, you know, if I was to be honest, if health insurance would cover IVF, I might have done it. And so you have to kind of think through, like, what are the financial aspects of these decisions? And are they leading us to make the ultimate decision we made?
Now, it's been a few years since we kind of made that call, and I feel good about it now, but it certainly is like such a hard call to make and such an emotional decision for so many people.
Yeah. And I think, I think it's something that people don't talk about very publicly. It's something that, you know, it's naturally very private. There can be a sense of embarrassment or shame or confusion around it. I think you're really brave to just share your story with us and very thankful for you, for you doing so.
I wish people would talk about it more because, you know, it's like, nice to not be alone in these types of circumstances. You you want to feel like you have family and community. And so I would just even encourage like if this is something you're going through, maybe somebody can offer you a solution, maybe there's a good referral source for you.
I think finding a doctor who's willing to, do, especially IVF where it's trusted, it's been proven you've had friends or family work with that doctor before. I think that's going to be your best bet to make sure that you're not wasting the financial investment that you're you're putting into it. Because I'm not sure that it's all, on the up and up.
And I feel like having that, like feedback from somebody who's gone through it before is so important. So definitely encourage people to be even more open about this. And then that way we can all understand what we're going through together.
And I don't know how valid these statistics are because again, they come from the fertility industry, but from what I've heard for couples in their 30s, it's somewhere between one for one and three couples who are trying or going through infertility.
Right? You're not alone in this. A lot of people are going through it. And just in our circle of friends, I mean, I know plenty of people who are going through that same question of, do we want to make this investment both financially and emotionally? And what if it doesn't work and...
It's hard, and how are we going to do it? One thing that we did early on that I was grateful for is my husband and I started an HSA, a health savings account, and we were making big contributions into that health savings account, because then we could use the health savings account to pay for all of our expenses.
So, while it didn't like, help the sticker shock completely, if you put money into an HSA and then you use that HSA to pay for those expenses, it kind of is like a 30% discount if you think about your tax rate to the actual cost. So even that tip, if people talk to each other about it and they planned for it far enough, advance and built up that health savings account, that could even help with some of these, like, decisions and complications.
But certainly something to think about and to discuss with friends, family or even, I think as advisors. Sometimes we help people navigate through this and help them make decisions if like, where do I invest my money? Sometimes you have to invest it into yourself in your life, in your own family. Yeah. One of the other things that you've shared with me, though, is that it's not just financial planning for before.
It's not just those costs that you shared earlier, but then there's other dynamics, maybe a play and maybe a play even for you personally, where you're like, what does a family mean to us and just how we live our life?
Yeah. You hit the nail on the head with, what you said earlier that a lot of a lot of people in our generation are enjoying life in a way that I just think is culturally different than a lot of previous generations, earlier, generations. I think it was just like you graduate college, you get married, you have kids, and that's what you do.
You work for the same company for 40 years, you retire, you go fishing. And, I think for our generation, we really have flipped that script a lot, where, you know, we want to we want to live life. We want to travel in our 20s. We want to get married later, date around more before we settled down with a life partner.
And so all of those decisions push back this to this, family planning decision. And so for me personally, you know, Daniella and I got married six years ago, and, you know, we decided early on that we didn't want to, you know, even start the process of talking about having kids for at least five years. We wanted to have that time just together.
And I think that's a very common theme. And now that we're in that phase of life where we are having the discussions about having kids, the financial conversation has come to the forefront.
And so we are of the mindset that one of us wants to stay home. If we have kids, one of us wants to stay home for at least the first three years of that child's development. And that can be kind of controversial. But that's where we land on that opinion. Right. And and so we've had to decide, you know, if we're going to do this, one of us has to take a step back from our careers.
Both of us really like our careers. Yeah. So who has to do it so hard? And how do you how do you navigate that? We don't have family close that can help us. We're not really big on paying for daycare when the child's 12 months old. Yeah. And so the conversation has really been how do we become a single-income family?
And so not only is that $1,500 a month number in the back of our heads, but then we have to reduce our income by whatever.
And so Daniella has been, you know, very generous. I think she's going to probably pull back on her business when she becomes a mom. And I think that's a huge cost. It's a huge sacrifice. It's very hard work to to make that decision. And then some people don't have that option. I know, and some people don't have family in town.
They do not have the option of one person to stop working. And so logistically, how do you manage bringing this third person to your house who needs your constant attention?
So I work hard to pay for. Yeah. And a lot of times in a lot of circumstances.
Yeah. And so and then some families have to do the calculation of, you know, if you're paying for childcare is the income that you're bringing in after tax enough to, to make sense where you're paying for childcare? Or would you rather just stop working, take away that cost of childcare and stay home.
Big, big decisions people have to make. Yeah, I know that. That's hard. And it's hard sometimes, even emotionally, for someone to say, oh, I'm taking that step back. Yeah. But then you also have to remember that you're investing into your life. You're investing into your family. It's not necessarily that you're giving something up, it's that you're giving to something different.
Right. And having that perspective I think is really helpful.
I love that that's such a good perspective. Is there anything else, just on the emotional side of the discussion that you would want to add?
Yeah, I, I think that people should just, know that it's okay to make whatever decision you make. It's okay if you decide to have children. It's okay if you can't have children. It's okay if you decide not to have children. I think that we should be okay with that inside of ourselves, but I think we should also be okay with that for other people, too.
And making sure that these conversations around family planning and child planning don't come from a place of judgment, but they come from a place of people really, looking inside themselves, making a decision on what is important to them. Where are they going to invest their time, their love, their resources. And there's a lot of ways you can do that in the world today.
It doesn't always have to be through a family. And so if that journey doesn't pan out for you, doesn't work out for you. A similar way to how it hasn't worked out for my husband. And I know that you're not alone, and also know that, there's a lot of opportunity to, like, give to the world around you.
Thank you Stacey.
We've arrived at This or That. All right. First this or that question for you is, do you save your HSA for later or use it now?
Okay. If you have the money to spend on medical expenses, you probably can spend it outside of HSA. An HSA is like a great account for medical expenses, but it's also kind of a pseudo retirement account. It can save you money on taxes today, and hopefully you can have less tax burden later in life. That being said, I am a bucket person.
I like having different accounts for different things in life, so I like it that my HSA is my medical expenses bucket and I so I use it, for that reason, even though I think probably be more financially wise to if I had the extra money outside of it to use that money. I just like it that it's there for medical and then I use it for medical.
Yeah, I definitely just go to the doctor to buy every single thing I say.
It's going to. Yeah. All right. Question for you. Okay. When you think about family planning and you mentioned staying home for three years, then you're going to have to think through education. Would you rather save for, eventual college or would you rather spend money on private school?
I'm like a public school fan, okay. To just like, that's my bias. I like, was a public school kid. And so I like good public schools. Yeah. I think I would rather save for college.
It's so challenging to do that. You know, we actually have another Couchside Conversations episode on that. With Patrice, who's our in-house college education specialist, she really does such a good job of viewing what you actually have to think about to make that decision.
It's so complex, so complex. So, yeah, definitely watch that. I'm going to rewatch it. Yeah. Okay. Last one for you is do you make a heart decision or a head decision around family planning?
I think that if you like, have the financial means to, you should 100% make a hard decision. I think that regret often comes from doing things that are disconnected to our value system, or disconnected to the things that are most important to us. We can make all the hard decisions we want and justify it, but there'll still be this emptiness inside of us that feels like we didn't pursue the thing that was most important to us.
So I would probably vote for making a hard decision over ahead decision.
I think that's why, you make a great financial advisor.
Truly. I think, you know, it's easy for us to be, Excel spreadsheet nerds and just to say, like, hey, here's the right thing to do financially, but to really tap into to what someone values is a much more complicated thing. And I think you do it really well. So thank you for being a good advisor.
Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances
