The Journey to Parenthood

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It’s been quite awhile since I’ve posted, but there’s good reason: in early September 2020 we became first time parents! Our hearts are so full, and we’ve been enjoying this new adventure! It was a long road to get to this point, as we underwent unexplained infertility for almost two years before finally having Baby Spills. We feel blessed every day that he’s now here with us.

September was a bit of a whirlwind, as we moved into a new apartment and then five days later we were at the hospital waiting for our son to be born (three weeks earlier than expected!). Since bringing him home it’s been a series of adjustments – crazy sleep schedules, being on maternity/paternity leave and then transitioning back to work, and settling into life as a family of three.

Someone once described to me that having kids was both the best and hardest thing he’s ever done – and so far that sums it up perfectly. I’m loving life as a dad, but it has also brought new challenges. One of those being that I have less free time than I used to, and it’s crazy how that essentially happened overnight.

When I do have free time, I find myself mostly gravitating towards relaxation activities – such as movies, watching sports, YouTube, and music – with some reading and chess mixed in (Queen’s Gambit anyone?). The pandemic also sparked spending more time on hobbies such as walking, cooking, and getting back into buying/selling sports cards.

Creative endeavors such as blogging have fallen further down the priority list – as lately uninterrupted time blocks with an energetic brain are few and far between. Our finances continuing humming along in the background. With the budget and systems that we’ve put in place over the past few years, our net worth continues to grow steadily while the time and energy I spend on our money each month is minimal.

It was a huge blessing having no worries about how the hospital stay would be paid for, how we would afford a larger apartment, and whether we could cover our bills while taking time away from work as we adjusted to parenthood. We feel very fortunate to be in the position we’re in, and I’m thankful for the time and effort we put into becoming debt free and building up some financial runway.

For those who are new parents or are thinking about how having kids will impact your finances, I’ll pull back the curtain a bit on how our finances have changed since having a baby.

Baby Budget and Increased Costs

In general, we didn’t set up a “baby budget,” we have kept the same monthly budget for awhile. However, for the past couple years we made an extra savings bucket called “Baby Fund” and tried to stack as much cash in there as possible. This acted like an extra emergency fund so that we could feel more comfortable about everything – as we knew there would be surprise costs that we hadn’t accounted for. This extra savings ended up reaching $15k, but there’s no “right” number. We wanted that high of an amount since we live in a high cost of living area, my wife’s maternity plan wasn’t the greatest, and she was going to be reducing her income. So far that money has remained mostly untouched, but we still plan to keep it in cash for now.

As far as the costs we’ve incurred through Mrs. Spills’ pregnancy and our first 8 months of being parents, it hasn’t been as much as we initially thought. Thankfully there hasn’t been much we’ve needed to buy because our siblings and church have been so generous with hand-me-downs and friends/co-workers/family gifted us the essentials at the Baby Shower.

Mrs. Spills has Kaiser for health insurance, so the hospital stay ended up being $600 total for the two nights and all co-pays are $10. If you’re planning on having kids I’d recommend looking into your health insurance plan to figure out the various costs of the appointments and delivery, along with your work maternity leave policies.

As for the increased costs that are ongoing, we’ve had the following:

• Increased rent (needed to move from a 1-bedroom into a 2-bedroom place) – about $400/month more
• Increased healthcare – about $140/mo to add him onto my insurance plan
• Life insurance (haven’t done it yet but need to very soon) – likely $15-25/month
• Reduced salary/childcare (thankfully we don’t have to pay this other than some babysitting money since my family has helped us watch Baby Spills, but Mrs. Spills dropped down to a 4 day work week which decreased her income by 20%)

Food/diapers/wipes/medicine/clothes will all be on-going expenses, but so far it hasn’t been too significant.

Intentional Lifestyle Inflation

A powerful concept in personal finance is called lifestyle inflation, defined as an increase in spending when an individual’s income goes up. I wrote an early post about how avoiding lifestyle inflation was a key way to build wealth. Ideally, you lower your expenses and increase your income – creating a gap between the two. Then you invest that money to build wealth over time. If your expenses increase each time your income does, you aren’t left with much of a gap to work with.

Over the years as we’ve grown our careers, our income has increased. However, we’ve maintained a very similar level of spending throughout. Early on, our biggest focus was paying off all our debt. Once we reached debt freedom, we loosened the budget a bit and saw some small increases – such as eating out, travel, and entertainment – but for the rest we largely kept the status quo. We lived in a one-bedroom apartment, drove the same cars as before, cooked most of our meals, etc. No large upgrades, which enabled us to increase the amount we were investing each year.

After having our son, we have experienced some lifestyle inflation – intentionally. We lived in a one-bedroom apartment for as long as it was practical (when it was just the two of us), but we reached a tipping point where it was time to upgrade and have some more space. There’s nothing wrong with intentionally inflating certain areas of your lifestyle if you have the means to do so. The danger is inflating your lifestyle regularly as your income increases, and not noticing and appreciating the difference.

Quality of life and our pursuit of financial independence

We were extremely fortunate that money wasn’t a consideration during the hospital stay, or as we adjusted to being new parents while taking time off work. We had spent years building up financial cushion, living on a budget and no longer worrying about how things would be paid for. For the past few years it feels like we’ve been sprinting along. We paid off our debt, we’ve been maxing out our retirement accounts, and growing our net worth. 2020 was a difficult year for everyone. We certainly felt the effects of the pandemic from an emotional standpoint, but financially we continued to push along.

I would say becoming parents has slowed our pace a bit, and that’s completely ok. We knew this next chapter was coming, we prepared for it, and that’s why we sprinted hard these past few years to get where we are today. Quality of life has become even more important to us. Our time is limited, and we’re reminded of this as we watch our son grow each month.

With our jobs, it’s not about chasing more money that could potentially be out there. I value the flexibility and work-life balance even more than I used to. While our pace may be slowed down a little for awhile, pursuing financial independence has become even more important to us. I’m glad we’ve spent years on this journey to build this foundation. We haven’t reached full financial independence, but we’re further along the spectrum and have built up flexibility. The further along the path we get, the more options we have. For now, we’re enjoying this new journey!

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