Now that I’m a 41-year-old father, I’ve been reflecting on whether the financial goals I set in my 20s were necessary in order to have children. I have a couple of friends whose families were ruined because they were always under monetary stress.
We all know that children are expensive. The budget route for each child is ~$250,000 for 18 years. The expensive coastal city route is closer to $1,000,000. If your kid goes to college for four years, add on another $100,000 – $400,000. Further, if your kid expects you to pay for their BMW and starter home as an adult, you’ve got to add yet another $200,000 – $2,000,000!
Here were my goals before having children:
- Have a $1 million net worth
- Own a three bedroom, two bathroom house in a safe neighborhood
- Be in a stable career by age 30 or at least be on the right track
I clearly remember having these goals because a buddy at my first job told me about his $1 million net worth goal before having kids. He was an old 24-year-old first-year analyst at Goldman Sachs because his parents had held him back one year. He’d gone to an expensive prep school and then attended Yale.
To him, he needed at least $1 million before feeling ready to be a dad because he wanted his kids to go the same educational route as he – prep school, private university. As for me, I didn’t know what I wanted. All I knew at the time was that I had a chance to make a good amount of money through my career if I survived.
As an impressionable young man who lived in Manhattan, a net worth goal of $1 million sounded good to me, so I went with it.