Children and money: is there a problem being a parensioner?

Have you seen a movie called ‘When Sally met Harry’; if not, go see it! Apart from it being one of my all-time favourites I recently had an occasion to remember a conversation between Harry and Sally that went something like this:

Sally: One day soon I’ll be forty and my clock is ticking. I want to have children.

Harry: You’ll be forty in ten years!

Sally: I know! It is not the same for men, though. Charlie Chaplin had children when he was seventy!

Harry: But he was too old to pick them up!

As it often happens in life, the reason I remembered this conversation was because of a chat I was having with my hairdresser: a guy my age, who’s been cutting my hair for thirteen years and during that time we have become rather close. Last time I saw him, somehow we got into the following:

H: Maria, could you imagine having children in your 20s? Because I can’t!

M: No, I can’t either. Many would say that we had our son late but I think for me it was exactly right: I had him when I had stopped lusting after night clubs and had given up chasing men.

True; about the night clubs at least (chasing men was never my thing, btw). But this made me consider our situation: our youngest son is twelve, I am fifty and John is sixty. For all reasons and purposes we belong to the new and getting larger group of ‘parensioner’: a new word referring to people who look after young children when they are retired.

In fact, a recent study found that:

• Almost a million adults in the UK are parensioners;
• A third of men who are parensioners were between 50-70 years old when their children were born;
• A quarter of parensioners will have children who are 15 years old (or younger) when they reach retirement age;
• Retirement coincides with the most expensive period of raising a child – attending university.

This has clear implications for personal finance management. These will be probably easier to set out using The Money Principle financial profiles.

Remember, that to create a tool for considering personal finances throughout life rather than as a snap shot of today, I discussed different strategies during four seasons of life, namely Spring, Summer, Autumn and Winter?

This is the ideal profile I came up with at the time; this assumes that child rearing happens in people’s summer, or between the ages of 30 and 50.

 

 

Now, when one is a parensioner this profile needs to change. Delayed child rearing affect people’s life time personal finance profile in two major ways:

• Scenario 1: Cash flow is relatively low in Summer and savings and investments don’t increase. This is not because of raising children and paying off liabilities but because of…living. Cash flow can’t increase dramatically during Autumn because of child related expenses. As a consequence, retirement will be either severely delayed or really uncomfortable.
• Scenario 2: The rather bulging cash flow moves from Autumn to Summer; it is mostly invested and generates a nice, healthy passive income during Autumn when children are raised. This will make for a healthy personal finance profile where retirement – even early retirement – is possible and children can grow up with security and care.

Our experience

Of course there are financial implications of having children later in life but I find that having children is always a matter of ‘jumping into the unknown’. Having children earlier may not be such a bright idea either: I was certainly not ready in my twenties and many friends I’ve discussed the matter with were not either.

What are the advantages of having children later in life? Here are some in no particular order:

• You have got all the ‘wild’ stuff out of your system;
• You can focus on the needs of the child;
• You are established enough to be able to choose your child when necessary (when I was pregnant and couldn’t travel my collaborators from around the world came to see me);
• You have time to attend your child’s events (John regularly watches cricket matches, rugby games etc.);
• You can be there for you child and have more patience and understanding;
• You are more settled and divorce is less likely (John and I had been together for seven years when we had our son);
• You are generally wealthier (though this may vary depending on circumstance).
• You have learned how to preserve your energy; so there is plenty to go around in a controlled way.

There are negatives as well:

• You may get ill or die while your children are young (this is why we are very well insured);
• You may damage your retirement (who needs retirement when there is so much to do);
• You may not be able to support your child to the level expected (in which case expectations should be revised).

I realise that we are probably not a typical case, but our experience with being parensioners is very positive so far; we are doing well financially, career-wise, we are building businesses and I’ll be able to stop being employed in five years were this what I wish to do (be financially independent).

Our youngest son is bright, socially able and very well adjusted. He is doing exceptionally well at school, he loves learning and knowledge and he is good at sports. Even more importantly, he knows that he is the centre of the universe for his parents; which is exactly why we are teaching him that he is part of the universe albeit an important one.

He’ll be OK. When he is seventeen it will be his choice whether he joins me on my motorcycle trip around the US – for now he doesn’t want to be on a motorbike but with John in an air-conditioned, large and comfortable car. We’ll see!

Do you think there is ‘right’ time to have children and when is it?