Click here to read a text only version of Dr. Crawford's article

Kids: Now or later?
Trade-offs of starting a family early vs. later in career

By Kristen Gerencher, CBS.MarketWatch.com
Last Update: 2:30 AM ET June 5, 2002
SAN FRANCISCO (CBS.MW) -- Financially speaking, there's rarely an opportune time to have a child.

Start a family early in your career and you may have trouble putting in the hours and chasing the jobs that make for bigger paychecks. And pursuing a degree program that would advance your earnings might be out of the question as your baby occupies time you'd spend doing homework.

Wait until you're older and more financially secure and greater work responsibilities may keep you from seeing your children as much as you'd like. In addition, grandparents, aunts and uncles may not be able to offer childcare help as abundantly as they would if they were younger.

Such are the tradeoffs many couples face in deciding when to start a family. As more delay marriage and childbirth into their late 30s and 40s, the question of whether waiting to get pregnant pays off depends largely on their priorities, psychologists and financial experts said.

"The money just seems to pour out when you have children," said Susan Newman, author of "Parenting an Only Child: The Joys and Challenges of Raising Your One and Only.

"Yet the financial struggle of having children in your 20s or early 30s, an age marked by many frivolous pursuits, means more time later in life to enjoy the fruits of years of labor. "Empty nester" is a pejorative term, even though it's one of the most fulfilling periods in a person's life.

"Those who have children earlier in life seem to be happier," said Ric Edelman, a registered financial consultant and author of "Discover the Wealth Within You." "All that's behind them and here they are in their 40s and 50s and they see freedom ahead." In 2000, the median age of women upon having their first child was 24.6 years, up from 21.8 years in 1960, according to the National Center for Health Statistics.

One vs. two incomes

To be sure, not everyone who wants a child is part of a traditional two-parent family. And many couples hold off for a few years to ensure their union is solid before bearing children who otherwise would end up contested property of divorce.

Realistically speaking, couples at any age should be able to shoulder the additional costs of food, clothes and a modest college fund. They'd be wise to avoid getting hung up on a target savings figure as a prerequisite to conceiving a child, said Bill Crawford, Ph.D., a psychologist and author of the forthcoming book "How to Get Kids to Do What You Want!"

Important considerations such as whether a spouse will stay home with the child or if day care is appropriate don't revolve around finances alone, Crawford said. "Are we as a couple ready to devote a significant part of our lives to helping a human being reach adulthood? When you're ready to say yes to that, then I think you're ready to make the decision to have a child almost regardless of finances.

"But at an average of more than $10,000 a year, full-time day care is a big expense, and one that's a poor investment if a parent's unhappiness about the alternative - delaying a career -- rubs off on the child.

Of course, whether to remain a dual-income household once a baby arrives is a personal decision that varies with every family's needs. But parents often overestimate the monetary value of a second income after factoring in opportunity costs, like not having a spouse available to cover when a child is sick, Edelman said.

"For the second parent making $30,000 to work, after taking out the cost of commuting and day care and all the attentive costs of maintaining a child, the parent is working effectively for about $2 an hour," he said. "In many cases, the parent feels they need to work for the money when in fact there is no money left and the job is adding stress to the family.

"Over the long term, interrupting a career by staying home for a few years typically doesn't do any more damage to earnings in the early stages than it does later on, Edelman said."It's difficult if not impossible to ascertain a difference between taking off a few years at a young age in your 20s and doing so in your 40s," he said. "It doesn't matter so much because the law of compound interest is going to flatten out the difference. The bigger issue is lifestyle.

"Choosing the right time to welcome a child into the household can be a tougher call for women, many of whom fear that parenthood will make them lose status in the workplace as well as on the home front, Newman said.

"The division of family labor is still not equal," she said. "Women do 75 percent of the childcare and home care. There are exceptionally fabulous husbands who do 50 percent, but they're minuscule in number.

""If you're trying to build your career, it's going to be more difficult if you have a husband who won't put dishes in the dishwasher or who refuses to change a diaper, although physically at 25 you're going to have more energy to 'cover' for him."

Youthful energy vs. experience

To be sure, there is no perfect formula for having both personal time and a high standard of family living at any age. But there are many examples of how to adjust expectations to adapt to whatever path a couple chooses.

Younger parents often can tap the childcare resources of relatively spry grandparents who can watch kids for longer periods of time compared with family members in their 70s, Edelman said. But waiting worked out just fine for Michael Goldstein, an associate finance professor at Babson College in Wellesley, Mass.

After an earlier career as an investment banker, he and his wife, also a professor, now can afford to pay $18,000 a year for day care as well as $6,000 a year for their one-year-old daughter's college fund, said Goldstein, 37.

The ability to purchase high quality day-care gives him peace of mind he wouldn't have had as a younger parent on a leaner salary, he said. "Money buys things, and one of the things it buys is some flexibility and extra help."

His little girl also has the benefit of growing up with a mother who works because she enjoys her job, and he doesn't worry about resenting the child for making him miss opportunities, Goldstein said.

"I'll never look at my daughter and think she prevented me from taking the career I wanted," he said.

Even so, couples should be realistic about risks like declining fertility that come with delaying parenthood. The body's optimal childbearing years don't always match couples' family finance goals.

"You have a higher probability of having a baby and having a healthier baby" at a younger age, Goldstein said. "If you're not comfortable with the idea of adoption, that should factor in to not waiting."

Kristen Gerencher is a reporter for CBS.MarketWatch.com in San Francisco.