We recently celebrated our third child’s first birthday. I can’t believe it because it seems like just yesterday we that we had round 5,437 of the debate over whether to have a third child. For my husband and me, the decisions to have our first and second children were not difficult. We always wanted children and we wanted our children to have a sibling. So after having our second child, the yearning for another had caught me (and especially, my husband) off guard. I felt greedy. We already had two wonderful, healthy children. A third child would mean less of our already stretched time and money for the existing two. In the decision-making process, the health question was the biggest hurdle for me and my husband to overcome. But after that, our concern was money. To be honest, if I had not taken a job that significantly increased my income a few years earlier, we could not have entertained the thought. But the new job gave us the freedom to consider it.
I started researching how a third child affected family dynamics. I read many stories about what amounted to, in my mind, minor inconveniences: having to wait longer for tables at restaurants, having more difficulty finding travel accommodations, and having additional sibling relationships to manage. In response, I kept thinking: but there’s another person to love, those vacations make great memories, maybe the extra sibling will become one more forever friend. In short, none of these considerations swayed my feelings. I had someone else to meet.
Taking the Third Child Plunge
A year in now, I’m so thankful that we made the decision, but I understand that it’s not an easy one. In case it should help your decision-making process, below are five ways that our third child impacted our finances.
1) Added a Short-term Disability Policy
This one is not unique to a third-child pregnancy, but we decided to get a short-term disability policy to cover the portion of my maternity leave that would not be covered by sick and vacation time. Many of these policies have at least a nine month waiting period, so we had to sign up before I was pregnant. We were still unsure about our decision, but I knew the policy would be remove the question about how to fund any potential maternity leave. This “peace of mind” added $74 to our monthly budget in the form of premium payments. (In the end, this was a good decision. I had to pay two years of premiums, but received a benefit of about $5000, so we came out about $3200 ahead).
2) Increased Health Expenses
Despite the fact that I signed up for a short-term disability policy in advance, I did not go with the insurance plan that was most beneficial for pregnancy. During open-enrollment, I had to choose between a high deductible plan with an HSA account, or a different plan, which covered maternity expenses at 100% after paying an initial $25 fee. I had been reading about how an HSA is the ultimate retirement account, and was eager to open one, so we opted against the maternity-friendly plan. In hindsight, even though I saved on the monthly premiums, the medical bills from my pregnancy and delivery exceeded the amount I could save in our HSA (in 2015, this was $6650 for a family). I don’t know exactly how much this decision cost us, but I’m sure that paying the higher premium in exchange for $25 of total maternity related expenses would have been the better deal. Ugh.
3) Additional life insurance policy
When I was pregnant with our first child, we got life insurance for the first time. When I became pregnant with our second, we reconsidered life insurance, but decided that what we had would be enough for two. By that point, we owned a home which had appreciated somewhat, and our retirement accounts had grown a bit too. When number three came along, we felt that our current assets plus life insurance, were insufficient, so we bought another policy. This cost $91 more per month.
I am not a car person, but I had a Honda CR-V that I really liked. It also had no car note, which I loved. I researched and tested how to fit three car seats across the back, but it didn’t seem that we could comfortably do so. We also occasionally have another child in our car, and the CR-V would have been unable to accommodate four children. In our search for a new car, we compared larger SUVs and minivans, but ultimately settled on a minivan. The van seemed more comfortable for long trips, and we frequently drive to our hometown which is 6 hours away. The captain seats also made it easier to access the back. We could have bought used, but prefer to buy new and drive it into the ground. It’s been more than a year since we bought the car and although I’m not claiming minivan-love, I’m definitely in like. The minivan has proven to be the convenience we needed, but at a cost of an additional $500 to our monthly bill.
5) Child Care Costs
This one seems obvious. I work full-time and had considered the cost of day care. But I had thought we would realize economies of scale in the babysitter category. We live in Houston, TX and paid $12/hour for 2 kids. I assumed we would pay $15/hour for three, but when it came down to it, I was so desperate grateful that any of our trustworthy babysitters would watch all three at once, I offered $18/hour. Definitely costly, but for us, a worthwhile expense to preserve our sanity.
Other than these costs, we have incurred increased food, diaper, health, and education related expenses. However, these are not unexpected. In the end, we most definitely have had less money in the short-term because of our third child, but I couldn’t care less. We have our little Peanut, my heart is full, and our family feels complete.
I wish you all the best in your own decision-making process. Are there any other considerations that you would take into account?