#46 | Cost of Raising a Child and Stock Loss Harvesting feat. Mike Davidson & Jackson Carr

Practical Tax with Steve Moskowitz

How much does it cost to raise a child and should anyone with a stock portfolio regularly review for stock loss harvesting potentials. Episode Transcript Intro: Welcome to the Practical Tax podcast, with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz, LLP, a tax law firm. Disclaimer: The information contained in this podcast is based upon information available as of date of recording and will not be updated for changes in law regulation. Any information is not to be considered tax advice or legal advice and does not form an attorney/client relationship. Further, this podcast may be construed as attorney advertising. You should see professional consultation for your individual tax and legal situation. Chip Franklin: Hello and welcome to the Practical Tax Broadcast with tax attorney Steve Moskowitz. I'm Chip Franklin. Excited about this week, Steve. There's a lot to talk about. Obviously there's a lot happening in the economy and part of that, I think, is about planning for that. And that brings us to our first guest today. Again, this is a guest that I always like to talk to. Michael Davidson is a financial strategist. And we're going to talk quickly about this new Brookings study that shows it's going to cost over $300,000 a year to raise a kid. That's a lot. And Michael Davidson and from the Wisdom Index is with us here. Good to have you here, Michael. Thank you. Mike Davidson: Thank you for having me, Chip. Chip Franklin: Steve, obviously, when you hear something like that, does that number shock you? That it costs $300,000 to raise a kid? Steve Moskowitz: No, in those numbers it depends on the parents and the kid. Some parents are going to spend way more, some are going to spend way less. We're not even getting into, well, what's the value of having a child emotionally and all the other benefits, or detriments. And we're just talking about the finances and pretty much it depends on somebody's lifestyle. To me that $300,000 number is just about useless. It depends on the individual family. Chip Franklin: What's your experience, Michael, with when people come to you and either they just had a kid or they're thinking about having children and they're trying to figure out the road ahead? Mike Davidson: Well, Steve, I agree with you a hundred percent. I think that number is a pretty fascinating number. I spent some time looking at the USDA methodology for how they developed the math on what families are spending on their children specifically. And in America right now, families don't do a great job of tracking their expenses in general. And so, specifically what they spend on their kids is a whole nother level of difficulty. But the $300,000 number, well, whether it's 30,000 or a hundred thousand or 3 million or 30 million, having kids requires more than having the dollars. It requires all of your heart and your soul and your time and energy. And I have three children and they are invaluable, but it's tough- Steve Moskowitz: And it's such a highly personal decision. Chip Franklin: It is. And I want to get into some of the other aspects of this, but upfront, do you think it's a fair question, as a planner, to ask somebody, can you afford to start a family? Mike Davidson: I think that every spending plan requires putting things in the right order. And Steve was correct. If you look at the research that the USDA did, the level of income that households had was the single greatest driver on what they spent on their children. And so, you don't have to spend $300,000 to raise a kid. But what's interesting is the order in which Americans spend money. And what I have found is that conventional wisdom is to use a credit card for that spending because we have to get our points. And then what's left over, well, we want to have some money to pay our taxes and our debts. And then there's nothing really left to give or to save.