Due to culture, social pressures, or self-imposed obligation, providing for our children has always been a priority. This care starts with food and shelter, but quickly escalates beyond true necessity as our income rises. For many professional households, the cost of raising a child easily exceeds that of the $245,340 average that is often quoted.
Where does that money go? Start with toddler toys or that quintessential toy lawnmower that most kids have. Add in rotating collection of brand-name wardrobe that your child outgrows, fancy German and Italian model race cars, fancy family vacations, and you’re already behind the average before your child turns 6. How about daycare, the multitude of extracurriculars like little league baseball, tae-kwon do, soccer, tennis, and [insert your preferred after-school activities] you’ve hit enough to pay for a year of Ivy-league education. Oh, even though you went out of your way to buy that fancy house in the top school district of your area, you still need to send your kids to private school. Better yet, with 12 years of private school, your child will definitely get into an Ivy League college of his/her choice.
It’s okay, you’re a doctor. You can afford it. Your financial advisor has mapped out your future. Your child’s education will hopefully be funded through your 529 plans, taxable accounts, and maybe even your cash-balance plans. If the future doesn’t treat you as fairly, maybe you can work an extra few years. Have a second or third child? Wash, rinse, and repeat.
You Need To Put Your Needs Ahead Of Your Children
With all jest aside, you are only obligated to provide a safe and nurturing environment for your children until they become adults (age 18). Financially, this approach should be the default. The better of you are prepared for retirement, the better of your children will be—they won’t have to worry in their budgets to fund your retirement. Remember, the fact that your kid has the complete line of SpongeBob accessories doesn’t mean that she will get into Harvard. What if your kid becomes the next tennis star? The $150,000 that you funded into your 529 will be left to their heirs or taxed out of your retirement fund. Worst yet, your kid may flunk out of her private high school and not even make it into college. The worst thing you can do for your kid is to give her a million dollars when she the best job she could obtain is the at the local car wash.
Take a Step Back and Assist Your Children As Needed
The best step to take in helping your children make it through this world is to become financially secure yourself. Build up your nest egg, achieve financial independence, and help them as needed. They will thank you for it in the future.