As an entrepreneur, your business is sort of like your baby, in that you are 100% dedicated to seeing your concept grow into something worthwhile and productive for not just yourself, but also that of your local community. Your business demands time, attention, care, significant amounts of energy, planning and finances on top of a whole lot of grit, tenacity, and perseverance to hang on during down turns.
As a result, due to having one “baby” to manage, many entrepreneurs decide that adding a second baby would be far too much in terms of their ability to handle all of the nuisances associated. And when I refer to the second baby, I’m indeed referring to a real child.
For this article, I will discuss why many business owners are unfortunately deciding to forgo having children, not due to lack of desire, but due mainly to the fact that they can’t afford them.
The Cost of Raising Children
Recently released in 2017, the USDA reports in the Expenditures on Children by Families annual report that the average cost across the United States to raise one child (without accounting for college costs) from birth to age 17 can be $233,610, nearly $14,000 per year, per child. Note that this is based on a collective national measurement, but if you reside in higher cost of living areas such as New York, these numbers will be much higher. The measurement is also based on a married couple with a middle class level of income. This cost can vary from approximately $227,400 in the Midwest to around $264,090 in the Northeast.
In terms of breaking down where the money goes, the USDA estimates that 29% goes to housing costs, 18% to food, and 15% to transportation. The remainder is divided between day care, clothing, healthcare, and other costs.
The above numbers are counted using all income and class related levels, but you can plug in some numbers using the USDA Calculator related to the cost of raising a child to get somewhat of an estimate of what the costs might be.
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Other Direct Financial Costs
To bring the baby into the world, other reports show that initial hospital costs can range from $10,000 to $13,000 if you aren’t properly insured and up to $300,000 if issues occur during the delivery phase. Then as mentioned prior, the calculations above do not include the cost of college, which is continuing to increase by at least 5% to 6% per year, increasing by over 160% from 1988 to 2018. So if you plan on also funding your child’s undergraduate college costs, this could be another $40,000 to $100,000 you have to set aside (per child). If you plan on also funding their graduate college costs as well, that could be another $40,000 to $100,000.
Potential Indirect Financial Costs
If you are fortunate enough to maintain a stable marriage or relationship with your spouse or significant other during the child rearing period, this could help to keep costs somewhat managed. However, if you have to make a trip to the Family Court to help sort out the child custody and cost related arrangements, the costs to raise a child could significantly increase, especially if you (as an entrepreneur) make a significant more in income compared to your child’s other guardian or parent.
Whatever costs raising a family may incur, you can provide a safety net for yourself and your business. Find the best financing options for your business with Nav.
As An Entrepreneur, Should You Have Kids?
With the aspect of retirement becoming more of a luxury these days, many entrepreneurs are looking at the direct and potential indirect costs of having a child, with many deciding that it’s just not worth it. Instead of dealing with the nuisances of raising kids, they are instead saving money, investing back into their business or passive investment portfolios, taking vacations, etc. In addition, they are also enjoying the luxury of having more time, more sleep, more freedom, and more mobility.
On the other hand, there are many entrepreneurs that have found a way to successfully integrate the management of children into their lives, while still being able to successfully fund and run their businesses. No matter the route you take, remember that this is a personal decision and you should not allow anyone to pressure you into either direction. There’s a mantra floating around that people who decide to not have kids are selfish individuals, but in my opinion, that’s only a pressure tactic. The decision to have a kid or not should depend upon your personal finances, time, energy, desire, and the status of your romantic relationships.
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