Hi Emily,
I am a stay-at-home-mother to my first child (two months old). I’ve essentially dropped out of the workforce to stay at home with the baby. My husband and I want to have another, but where we differ is on timing. I want to have a child fairly soon, and he wants to wait three or four years. I’m thinking of the synergies of baby equipment (car seat, stroller, etc.) and my energy and time. If we space our kids out, then my return to work will be fairly late. My husband wants to wait to save up a little more cash. Also, his work is demanding, and he thinks his performance will suffer more in the short term if we have another baby too soon.
—Gina
First, let me say how impressed I am you are thinking about a second kid with a 2-month-old at home!
I suspect you are overstating the equipment synergies (two little kids = new double stroller). But I also suspect that your husband is overstating the importance of savings at this point in your life. The much bigger issue is lost wages for you, and possibly for him. I think you want to try to be very precise about the size of those losses (and how they compare).
Let’s imagine you were making $40,000 a year before the baby, and if you wait to have a second child you delay your return by three years. The obvious cost is the three years of lost income—that’s about $120,000. The perhaps less obvious cost is lost income growth. Your income grows every year and—this is the key issue—that growth compounds. Lost time now affects you forever.
If your income goes up by 3% every year and you plan to retire 30 years from now, then by delaying your return for three years you lose about $150,000 over the course of your career just because of compounding. This is on top of the baseline loss during the years you are not working.
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