The cost of daycare is outrageous. It hurts my heart to think of the financial strain it puts on young families. I often hear from families with kids in daycare who worry that they won’t be able to invest with the outrageous cost. Well, here’s the thing about daycare: It eventually ends. Kids grow up and go to school. And when it does, it frees up that massive chunk in your budget. If you grant yourself some grace, and just simply get through those daycare years (hopefully debt free) then earmark that daycare money for investing afterwards, you can still happily retire multimillionaires.

The math on this assumes a 10% rate of return, which is about the historical average return of the stock market going back 100 years. It doesn’t account for inflation, but it also doesn’t account for increases to income which generally outpace inflation over the course of a career. Most people are earning more at 50 then they did at 25, even after accounting for inflation. So while the Garcia’s might start with the $2K/month daycare cost at 40, at 50 they’ll likely find themselves further in their career and able to invest $3,000 or more!

Prioritizing those investment contributions over lifestyle creep is how rich people get rich. It would be so easy to have that $2K free up and say, “whew, let’s get that new truck/remodel/vacation/whatever”. And I WANT you to have those things. But you can have EVEN MORE OF THOSE THINGS ALONG WITH LESS STRESS IN YOUR LIFE if you delay the gratification a bit and get your money working for you first.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy