Calculating the cost of kids

This post comes from J.D. Roth at partner blog Get Rich Slowly.

You folks send me tons of great questions, and I’d love to share more of them. This week, for example, Lisa wrote with the following.

“Having kids has made spending choices much more emotional and complex," she says. “You can’t always calculate a return on investment.” Here’s her predicament:

My husband and I are looking to purchase a home in our new city, but we’re having trouble deciding where our values, finances, and priorities intersect.

We have young children, one who will start public school this year. We’re considering buying a home in a modest neighborhood so we could have a house/car replacement fund available, rather than taking all of the down payment money and putting it in a “better” house. The schools in the neighborhood are solid, but not the best in the district. If we buy in this smaller, less fancy area, we can choose a 15-year mortgage, minimize our overall house expenses, and have more money for all of life’s priorities. But, it feels like we’re “cheaping out” on the kids.

To compound our “analysis paralysis,” we lost a fair amount of equity when we had to sell our house to transfer out of state, so we’re feeling less than enamored with the idea of putting money that is currently liquid into a building that isn’t guaranteed to hold its value, much less appreciate. (We have no car/consumer debt, and we have a comfortable emergency fund.)

I think our family might feel more comfortable in a more modest neighborhood with more coupon-clipping parents and kids who don’t have the latest and greatest, but I also want my children to have a great education. Have other parents faced this battle, doing what’s best for the overall budget vs. doing what’s expected for our kids? We’d love to hear how it worked out for you.

I love questions like this. They’re a clear demonstration that personal finance isn’t only about the numbers; it involves a complex calculus of math, emotions, and dreams.

Most of the time, I can offer suggestions when people ask these sorts of questions. But when it comes to kids, I’m at a loss. Kris and I have chosen to remain childfree, and as a result, I’ve never had to wrestle with these sorts of sticky issues.

• Bing: The most-expensive schools

From a non-parent perspective, I admit that the obsession over which school a kid will attend seems … well, I don’t know how to put it in words that won’t make people angry. But I’ve watched friends and family go through mental and financial gyrations to get their kids into the right preschools, which boggles my mind. I’m a firm believer that education is more about the child than it is about the school. If a kid has been taught to love and value learning, she or he can thrive almost anywhere.

• Price houses in your area

In other words, I’d urge Lisa to make her decision based on finances and not the school district. This may mean she needs to take a more active role in fostering her children’s intellectual curiosity, but that’s a good thing all the way around. But what do I know? As I say, I don’t have kids, and I don’t know what it’s like to actually face this decision. It’s one thing to say it and another to live it.

So, what do you parents say? How do you judge the trade-off between expenses and education? Is it worth paying more to live in a good school district? How does one make this sort of decision?

Related reading at Get Rich Slowly:

• How do you teach kids the value of money?
• What did your parents teach you about money?
• How to save while shopping for children’s clothes