Last week, I wrote about the regular moving of the goalposts when saving for retirement. In that article I wrote about a big part of the reason being due to the cost of raising kids.

I am no expert as my kids are just 4 and 2, but we have already experienced a large increase in costs, some of which I didn’t really think about and did catch me on the hop.

I knew our annual expenses would increase somewhat for food, kids leisure activities, daycare, saving for their education or first home help, and general purchases such as clothing, kids furniture, wipes and so on. We will also leave plenty of fat in our future budgets for greater travel expenses, food, leisure activities and clothing in the future. These won’t get cheaper as they age!

But for some reason I didn’t think too deeply about some of the larger, one off costs that really snuck on us, and I thought if I write about them maybe it will help with someone else’s planning or thinking. Maybe you aren’t as ignorant as I was so that would be good too.

Costs of children that were unexpected

1/. A bigger car

We had a Mazda 3 before our kids were born. For some reason I didn’t think about needing a new car. We had it for a while but just found it hard work moving car seats around and fitting the rear facing child seat. It was not much fun for either of us, and was quite a challenge for my bad back too. We knew we wanted more kids so we made a decision to buy a larger car.

We could have stuck with the Mazda 3 I’m sure. But it would have not been a nice existence. We don’t regret the decision at all, but it did set us back $12,000 to upsize.

Unexpected cost: $12,000

2/. Health insurance

I originally didn’t think about health insurance for the kids. I guess I figured NZ has a decent enough public system for kids. That may be true enough, but the more I thought about it, the younger someone is the more there is you don’t know about them yet. They still have so much to develop physiologically and who knows what conditions they may develop. Some of which could be debilitating to us financially.

We decided to pass that risk of the large costs such as surgery and drug funding to the insurers.

Unexpected cost: $650 a year for two kids

3/. Bigger house

This is the big one. I thought naively that our 80sqm 3 bedroom house would be ok for our family of four for many years. Some people may be able to make that work but it is not for us. We can see that already and the kids are so young. It’s not going to get any easier for us so we made the decision to upsize house.

The upsized house is going to set us back at least an extra $600,000. We could probably find a larger house for cheaper than that but we have decided to build a new house and have it plenty big enough for the family to grow into. Not only that but we decided to build above code so that we are comfortable when inside our home.

Unexpected cost: $600,000

One other cost that we did actually consider was travel. Everywhere you travel as a family of three or four can cost so much more than it did when it was just the two of you. Airfares, insurance, accommodation. Just one to consider in case you hadn’t thought of that or are regular travellers.

So there you have it. Those are some of our unexpected costs that have delayed our timeframe to retirement. But they are important purchases for us that improve our daily lives and give us peace of mind. We could retire earlier and be more miserable or buy what will make us happier and delay retirement.

If money is not to be used to buy things that will make you happier, then what is the point of money? The key is being very deliberate and knowing exactly what it is that will make you happy. And not just that quick hit type of happy, but enduring, long term contentment.

Call me silly if you like. Most of those costs I could have probably predicted, but to be honest, when first having kids the thoughts weren’t on the car or the house. It was on how can we provide for our additions. How can we survive!

It wasn’t until we were actually living with kids, that the reality hit home for some of these things. By writing about this I hope to get any aspiring parents to think about some of things a bit more than I did. I am just thankful from a financial perspective that we were already well set up when we had kids thanks to our previous years savings and also I was pretty old when our first was born – age 37.

If we didn’t have kids then we wouldn’t have needed these extra things. But life wouldn’t be as we wanted.

So yes, kids are expensive. How much so, depends on your personal circumstances and desire for comfort. But based on the number of SUV’s and larger houses out there, many other parents are also making the decision to upsize too.

I’d love to hear in the comments from any parents that had any unexpected costs as a result of children.

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