We all know raising kids demand a lot of money. They also mark the beginning of a new phase in your life. But can kids help us financially? Let us find out in this article.
We are not going to tell you that raising a kid is cheap. As per the latest figures from the US Department of Agriculture, the cost of raising a child from the age of 0 to 18 is around US $233,610. The same ranges around $15,000 to $40,000 in developing countries. The figures are not easy to cope, and most families start planning years before having a child.
As they say that every cloud has a silver lining, it is not all thorns and no roses here too. You may have many economic benefits of not having/adopting a kid, but here are seven financial ways in which kids help us financially –
1. Having a kid gives you a purpose to save
Many people fail to find a purpose in life to save. Even after turning 18, getting married and facing so many difficulties, they don’t perceive enough reasons to preserve money in their lives. For such people, having a kid is the ultimate opportunity to sort themselves out and find a purpose to save. There are hardly things that are more important than your child’s future.
2. You are forced to build an Emergency Fund
We may plan to have an Emergency Fund since the inception of our job life. But we keep procrastinating adopting it due to some vague reasons till we can postpone it no more. Yes, having a kid instills a sense of requirement, and you will finally set up your emergency fund. No one would like to see their child suffer due to the lack of planning or a financial crunch.
3. Kids ensure that you finally become financially mature
If people around you had been asking you to become economically mature and you may have been ignoring the rant all along. Having a kid will ensure that it changes. A kid will make you sit down and take notice of what you are doing wrong and how to improve. You know that you can no longer be callous and must take constructive steps to save money.
4. Kids help us financially by making us invest in future
If you are someone like me, I would love to spend my old days on my own money. I don’t want my kids to consider me a financial responsibility. To give this idea a concrete shape, it is necessary that we must plan properly. Having a kid reiterates that idea in our head and gives us a significant push to achieve our vision. I have nothing against my kids; I don’t want to be considered a financial liability at any point in time.
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5. Taxation Benefits
Kids help us financially by allowing us taxation benefits. In various parts of the world, the government provides benefits in terms of tax deduction/credits for promoting child education.
In India, Government of India provides deduction under Section 80C of Chapter VIA of The Income Tax Act, 1961, with regards to tuition fee paid. Parents are also eligible to Children Education Allowance and Hostel Expenditure Allowance up to a maximum of two children.
If you have availed an education loan for the higher studies of your kids, you can claim deduction under Section 80E of the same act. The interest part of the loan up to 8 years from the time the repayment starts is allowed as deduction.
In the USA, you can avail education credits in various forms for the education expenses of your child. If you are looking for a job or working, you can avail Child and Dependent Care Credit to the extent of $3000 for a kid or $6000 for a maximum of two kids.
US government also provides Child Tax Credit for parents of a child under the age of 17.
6. Reducing expenses on Unhygienic Food
How many of you love to see your kid falling sick due to contaminated or unhygienic food? I can bet that there is no one. Having a kid gives us an added responsibility to take care of not just her/him, but also ourselves. We curtail the intake of fast food or food that is not nutritious enough. The reduction of expenses on unhygienic food ensures a safer course for our future endeavors and a better financial life.
7. Getting the tag of ‘Dad’ gives you a scope to generate more money
If you are a male, having a kid is probably excellent news for you, not just in your personal life but financially as well.
“For most men, the fact of fatherhood results in a wage bonus,” mentions Elaine C Kamarck and Third Way’s President, Jonathan Cowan in their piece “The Fatherhood Bonus & The Motherhood Penalty.”
For women, this works in an exactly opposite manner. Their income generally sees a fall after attaining motherhood. With the gender pay gap closing in, we expect this fact to change with time sooner or later.
The Sum Up – Do Kids helps us Financially?
Kids act as an inspiration, be it to live a better life or to be more financially secure. We do incur a lot of money on them, but the money doesn’t go down the drain. It helps us in securing our families future and is bright.
Care should be taken to understand that having a kid is far more than a financial decision. The wide-accepted thought process is kids only call for expenses, but there is more to it. They can also have a positive impact on us financially, and the points mentioned above should clear your skepticism about it. Kids help us financially, and you will be hard-pressed to accept the fact.