How having kids can make clients richer

investmentnews.com:

The cost of raising a kid is more than a quarter of a million dollars — not including college — so it would seem to follow that parents are worse off financially than those who are child-free.

Not so, according to some data and evidence from researchers and financial advisors.

Having children forces people to confront their financial lives in ways they hadn’t before, and that usually translates into increases in saving and decreases in discretionary spending.

“Choosing to have a child is a really optimistic thing. What we hear from parents is that it really crystalizes that feeling of being responsible for someone else,” said Laura Varas, CEO of consumer research firm Hearts & Wallets.

Among people with children, the percentage of those saving 6% to 9% of their income is more than double that of those without kids, according to data the firm collected last year. The rates of those saving 10% are comparable across the two groups, as were the portions saving 1% to 5% of income. But people with children were much less likely to say they were spending more than they were saving or that they didn’t know if they were saving. Controlling for income level, the differences in savings behavior between parents and the child-free are consistent, according to Hearts & Wallets. Further, the bump in saving that parents experience doesn’t go away after the kids grow up and leave the nest — it appears to persist for the rest of their lives.

“It’s a counterintuitive finding, because of course [children] are really expensive,” Varas said.

Of course, children aren’t little ATMs — quite the opposite. Although parents benefit from tax breaks that childless households don’t, having kids simply costs more money. The reason why parents might end