Recently I guest posted on My Money Blog about our baby expenses so far with our first kid. Jonathan shared the happy news that they were expecting their first kid. He also put out a call for readers to offer their own experiences and the financial impact of having kids:
In financial terms, how was having a baby different than you expected? Did it cost more money than you thought? Less money (ha)? What items were really important to buy properly? What things did you buy that weren’t very useful? General advice, specific recommendations, whatever.
I submitted our story and it got published. I was going through the comments on the post, curious to see how other families adjust their finances with children. There seems to be a few points that people debated. I understand our expenses are lower than normal, but I don’t think it’s unrealistic. As I mentioned in the post and my follow-up comment, a big reason why our expenses are lower than the typical family is due to decisions we made early in our marriage.
After talking over with my husband I thought it would be helpful to show how decisions we made 5 years ago affected us- the good and the bad.
Live on One Income
When we got married I was still in college as a full time student and had an internship. My husband was at his first post graduate job working in programming. Our income wasn’t great, but we could live decently off of it. However with the school and workload I had, we thought it would be smart to not rely on my internship pay. Instead we looked at my husband’s income and we devised a budget that would take care of our necessities.
As our income grew we did our best to fight lifestyle inflation. One of the My Money Blog readers commented that keeping living expenses under one income was not feasible for most couples. I will say that learning to live on one income was just a bit easier for us because we started off with that mentality, but I do think it’s doable for some couples.
This financial decision allowed us to explore different avenues, one of which was working from home. With not having to stress out about paying the bills while making the leap to self-employment, it made the transition doable. We’re grateful it has worked out so far.
No Car Loans if Possible
This mindset has also led us to work towards not having a car loan. I know some people feel that buying used cars means more bills with repairs, but the numbers don’t support that. If you’re willing to hunt and find a reliable used car in your budget, you can save a bit of money and not have to stress over about repairs.
You can then use that money that was going to be for car repairs for other goals, perhaps contributing to your child(ren)’s college fund.
Paying Down Debts
I wish I could say we started off our marriage with no debts we would be rolling in the dough, but that wasn’t the case. When we got engaged we chatted about our finances – what we owned and what we owed. I made it a personal goal to pay off my credit cards before I headed down the aisle.
That said, having debt does slow down reaching our financial goals. The money spent to pay these debts off could’ve been invested or spent on other pursuits.
Once we were married we worked on paying down a car loan I took on that was hurting our monthly budget. Happy to say that we paid that off early. While it was good we were paying down debts, having those debts in the first place was great. Most of it was mine that I acquire while attending college.
Much of the debt reductions was to reduce our monthly expenses in the long run. Looking at our financial game plan, we like to be in a position where both of us could work from home (not saying we would).
Making the Leap – Moving
The job market where we were living at while I was in college was fantastic. I had a great internship, but it involved at like a 45 minute commute. My husband also had to work in a different city to find a suitable job for him. If we wanted to buy a house, it would be extremely expensive for our budget. We decided that after I graduated that we’d look at jobs in different cities to see if moving was a possibility. We wanted to stay close enough to our families that we could do weekend trips so the areas we looked at were in the 4 hour or less range.
It happened that I heard about a job opening in the Triangle area and after looking at the city as a whole, we decided to move. I’ve since left that job and my husband actually moved to an area where his programming skills could be put to good use with better pay.
This decision also meant we could find a townhouse within our budget to buy and to keep our living expenses under one income.
Thoughts on Financial Decisions and Their Impact
I don’t think we’re much different from many couples- we worked hard plus certain circumstances worked in our favor (and we’re certainly grateful). We’ve made mistakes with money and we’ll continue to make changes. But enough about us, what about you? How have your past money choices affected your finances today?