Andrew Hallam

Do Children Help To Improve Your Wealth?

You won’t see any black and white photos of Edwina and Edwin Moses in your parent’s living room. But you’re related to them. They grew barley about 4000 years ago. They had plenty of hurdles to leap, so they got busy having several kids.

Those kids helped grow and pick the crops. They helped cook and clean. They helped trade barley. They weaponised sticks, stones or slingshots to poke the eyes out of attacking neighbours.  

These days, unless you’re part of the mob or living in a war zone, you won’t likely need your kids to defend your home or your BMW. You love your children. But they don’t fortify your assets, like Edwin and Edwina’s kids.

Your kids are expensive.

You have to clothe them, feed them, entertain and educate them.  You live in a larger home because they’re too big to sleep in drawers. This all costs money.

At night when your baby cries, or during an urgent call from college when your son pleads, “Mom, can you send me more money?” you might envy your colleagues without kids. You figure they must save more. You figure they must have more.  Will they retire early, travel the world, and enjoy daily foot rubs while you slog it out at work?

That might be the case, depending on the people. But in most cases, people with children build more wealth.

If you told me this, years ago, I would have asked what mushrooms you ingest.

It’s true that Thomas Stanley, author of The Millionaire Next Door, said most millionaires have children. But most adults have kids. Consequently, most millionaires have children based on probability.

My friend Dr. Jeff Devens and I wanted to look into people’s banking and investment accounts. We launched a survey for international educators. Teachers were a good group to test. Some earn more than others, based on their schools and years of experience. But their income variations are in a tight range, compared to, say, corporate executives.

You probably aren’t a teacher. But what we learned about teachers and their money is likely true in your own workplace.

We surveyed about 1,200 international educators. When adjusting for equal age, marital status and years of experience, teachers with children reported saving more money.

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For example, consider married teachers aged 42 to 51 who have been working overseas between 16 and 25 years. Those with children in the home have an average of $450,000 in retirement savings. Teachers in the same age bracket who have grown children have an average of $550,000.

And what about teachers without children? You might think they have more. After all, they never bought diapers. They didn’t feed young hungry mouths. They didn’t take kids to Disneyland or pay for little Lucy’s college education.

But teachers without children have less in retirement savings.

Based on our survey, such teachers aged 42-51 with 16-25 years experience overseas, have an average of $400,000.  In other words, their equal-aged, equally experienced colleagues with children in the home have almost 13 percent more wealth. And their equal-aged, equally experienced colleagues whose children are now out of the home, have almost 38 percent more in retirement savings.

I used to work with a woman named Stephanie. She was a single parent raising one son. You might expect that Stephanie saved less than her single, equal-earning colleagues without kids. But from my anecdotal observations (I’m a nosy chap who asks a lot of questions) Stephanie’s saving rate crushed those of her single colleagues without children.

Our survey now proves that she wasn’t a unicorn.  

I checked the results of single teachers who don’t have children. Within every age and experience bracket, those without children saved less money. For example, those within the ages of 42 and 51 with 16-25 years of teaching experience overseas reported saving an average of $17,500 per year. They have an average of $250,000 in retirement savings.

In contrast, those like Stephanie, who are raising at least one child on their own, save an average of $27,500 per year.  That’s 57 percent more than their single counterparts who don’t have children.

The single parents also have 40 percent more in retirement savings: $350,000 versus $250,000.

The same wealth and savings discrepancies likely exist where you work. You might work with a childless couple. They earn the same as you and your spouse. You figure their expenses are lower than yours, based on the fact they don’t have kids.  Their Ferrari and speedboat also smacks of more wealth.

But looks can be deceiving.   

Children cost money…a lot of money. But there’s a paradox. Perhaps the added responsibility of having children makes us more like Edwin and Edwina. To thrive, they couldn’t take anything for granted. Seasons weren’t predictable. They preserved food for lean times. They maintained their nests, the way we (should) with our nest eggs.

Do children make us more financially responsible? Do they make us think and plan better for the future?

Based on our survey, I would bet that’s the case.



Andrew Hallam is a Digital Nomad. He’s the bestselling author Balance: How to Invest and Spend for Happiness, Health and Wealth. He also wrote Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas

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