By Dr. Joy Eberhardt De Master, WCI Columnist

What is your luxury item? Mine is children.

We all have a luxury. You know, that thing we keep sinking money into “just because” with no clear prospect of returns, be it coffee, clothes, cars, or . . . kids. My chosen luxury is my two children.

Yes, I said my children are my luxury. Sometimes I wish for a red sports car or to be a boutique clothes shopper, instead of my second-hand finds. And then my daughter runs down the sidewalk yelling “Mommy” and jumps into my arms. Or my son excitedly explains to me how if his nails grew one foot in a day that would mean they’d grow a half an inch an hour! They are worth it, my luxuries!

We assume having children is an emotional choice, something for posterity, to continue a legacy, to bring joy. But it is also a financial choice. Let’s take a look.


Children as a Financial Choice

In 2009, I graduated from pediatric residency and easily slipped into homeownership in 2010. No, it was not a “doctor’s home” but a solid home nonetheless. Soon after my first luxury arrived. It was a baby boy.

Ok, you might read on and conclude that I’m a cold-hearted person but I want you to know two things about me:

  1. I love children. I really do! That’s why I went into pediatrics.
  2. I am practical. I didn’t grow up with a doctor’s income. I thought $100K was an enormous salary—enough to support a partner in school, own a house, and have a kid in a West Coast City. Soon my practical side kicked in, and I began eating beans and rice to make ends meet despite working as “an attending”.


Family Leave

One of the first shocks was not only how quickly I had to return to work to keep us housed, healthy, and fed but also how expensive childcare was. I was able to squeak out 12 weeks of family leave—one week prior to birth and 11 weeks postpartum. My first solid investment in children amounted to 23% (12 weeks divided by 52 weeks in a year) of my yearly salary, not including pregnancy costs, birth costs, and general baby stuff (clothes, crib, etc.). Disability insurance dripped in a few hundred dollars for four weeks. Then the real sticker shock set in . . . childcare.



Cost for childcare in a West Coast city can range wildly. Back in 2012 with my first child, it was anywhere from $800/month to $1,200/month for an infant. (Current rates in 2021 are closer to $2,000/month.) I chose the lower amount because it was what I could afford, it was close to my work, and, most importantly, it was a loving environment for my son. At eleven weeks old, my son transitioned to daycare and that $800/month quickly turned into $1,200/month. Soon after, I took on a new job in 2013 that, thankfully, doubled my salary.


Childcare Can Be Significantly Higher for Physicians

The USDA calculates childcare costs at only 16% of child-based expenses. Housing is 29% of the cost, and food accounts for another 18%. I postulate that childcare costs are a significantly higher percentage for many households working in healthcare for a variety of reasons—long hours, odd hours, on-call status. “After-hours care” can also be more expensive and harder to come by.

So, what is the cost of raising a child? In 2015, a USDA report calculated the cost at $372,210/child for high-income households (income >$107,400/year). And it only goes up from there. Private school. Club sports. Enrichment programs. All of these are liabilities of having a child in a high-income household—or can be. They are not inevitable but easily become expected and necessary. The above cost does not include post-secondary expenses, aka college.



In 2016, I moved houses prior to my second luxury—a baby girl. The new house had more space and more bedrooms. It again was not a “doctor’s house” but still comfortable. I also managed to keep my first house and rent it. Being pregnant and working as a physician, I opted for a management company. Later I took over and learned the art of short-term rentals. But that is a conversation for another time!

Housing makes up for 29% of the costs of having a child and is said to decrease with subsequent children assuming resources are shared: bedrooms and bathrooms and living spaces. In my case, the expense increased with the second luxury but not the first.

To offset this, I rented space in my home. I had bought a larger home with a basement that allowed me to rent out the basement space.

The extra $1,190 a month didn’t put me ahead, but helped me to cover the increased housing cost and—surprise, surprise—the astronomical increase in childcare cost. My childcare expenses jumped by $2000/month; yes, I still paid the $1,200 for my son and now also paid $2,000 for my daughter. I was now paying a grand total of $3,200/month for childcare.




Five years old and kindergarten ready can be as much of a reprieve as three years old and potty trained. I chose to increase my cash flow at this point and enrolled my son in public school. Thankfully, I found a language immersion program that was a great fit for him and supported his academic prowess. My liability dropped by $1,200 and then another $600 as my daughter got older. The childcare costs went from $3,200/month down to $1,600/month.

That trajectory shifted greatly with the pandemic in 2020 and 2021. Suddenly, my newly found cash flow was relegated to paying for someone to come into my home and teach my son online school. That now costs $1,400/month.


A Few Financial Tips for Soon to Be Parents

For those of you planning to bring your own little luxuries into this world, here are a few tips that you may not have thought of to help prepare financially for them.


#1 Know Your Employer

This means how does your employer financially assist if you have a child (through birth, adoption, etc.)? Some employers are starting to cover parental leave, even if not at 100%. This can net you thousands of dollars.

And how does your employer support you financially while parenting? Do you have paid sick time separate from other PTO? Any other support? My employer gave me a weekly grant of $200 to help cover the costs of school closure due to the pandemic. Yes, $800/month tax-free to cover the unexpected cost of care for online school. My childcare costs decreased from $1,400/month to $600/month due to this!


#2 Know Your State

Certain states require paid parental leave. It’s as simple as that. Or should be. You actually may need to know your county or even your city. Check out this article, Paid Family and Sick Leave in the US for details.


#3 Know Your Financial Situation

A good starting place is to subscribe to the WCI Newsletter where you can receive the White Coat Investor Boot Camp emails for free. Boot Camp will give you 12 weekly assignments to strengthen your financial situation. I’ve used it myself and it helped me examine my spending for—you guessed it—my kids! Pick the free email version or buy the book. I recommend you do it even if you are not planning a luxury. It becomes a necessity before a luxury.

In the past, children were a financial asset. They were needed to help the household, run the farm, and care for us as we age. Now, they are a financial liability due to cost and, hence, should be considered a luxury. Still, I am a proponent of the luxury of children and cherish my two little luxuries. Well . . . most days that is! Do you have $370,000 to spare? If not, begin to make raising children a part of your financial planning today.

What do you think? Have you calculated the costs of raising your children? Comment below!