Children do increase expenses, but they do not preclude ERE. When popular articles calculate the cost of having a child, they often include lost income. For someone who has already stopped working for income, this is not an issue. However, starting on the ERE path after having children, parents must cope with either lost income or other child care expenses. This makes ERE very difficult unless one's salary is above average.
The highest necessary cost associated with children is housing. Children typically require an additional room. It is possible to live in a one bedroom apartment with children, with children sleeping in the bedroom and parents converting the living room into a bedroom at night. Many families travel for extended periods in an RV or sailboat, so it is possible even to live in a studio apartment or one-room house. It helps to consider what non-western cultures do and what families several generations ago did before the rise of the middle class.
Children do not eat much at first, though they will later. Clothing can be hand-me-downs or bought used and then sold or donated, and the same is true of cloth diapers, toys, strollers, bicycle trailers, bicycles, etc. As for transportation, the cost of driving does not significantly increase with two or even three children.
Family health insurance typically costs three times the cost of insuring a single person (for families with two or more children). Health plans are usually offered up to "employee + 3 or more" so if you have more than two children and a spouse you are not paying any more for the additional children.
Equipment: Babies do require some equipment but don’t have to be budget busters. Inexpensive cribs can be had through resale or Craigslist or freecycle sites. Make sure it meets current standards and hasn’t been repainted (paint might not be safe for children). Mattresses don’t have to be purchased new--just inspect thoroughly. A carseat is also necessary. (even if you don’t have a car you might need to transport the child in a carseat occasionally) This can also be purchased used or found through freecycle sites. All other equipment is optional. Changing tables are convenient but babies can be changed on beds. Swings are nice if you have a colicky baby but not necessary. If you plan on having several children some purchases might be worth the expense. If you only plan on one child you might try and borrow the equipment since most things are only useful for 6-12 months.
Food: Breastfeeding is healthier, less expensive, and more convenient. It is also sometimes not possible or practical. If you have to supplement with formula, get on mailing lists for formula companies. They will send coupons regularly. Warehouse stores also have competitive prices on formula. Breast pumps can also be rented or borrowed if only needed occasionally. Mom’s caloric intake will increase while breastfeeding so that will add to the food budget. And if Mom’s diet is mostly plant-based (with little or no meat), the diet might have to be adjusted to include more meat if the baby develops colic (triggers are usually plant-based foods). That would also add to the food budget for Mom.
Purchasing baby food in jars is an unnecessary expense. There are many websites that explain how to make safe baby food. For most things, just peel, boil, mash and serve cool. You can make food in batches by placing scoops onto a cookie sheet covered with wax or parchment paper, freezing them, and then placing the lumps into a container in the freezer. Take out the next day’s food every evening to defrost in the refrigerator. Making it yourself also gives you greater control over what is in the food, and lets you combine ingredients to encourage babies to eat a varied diet. If you don’t have a food processor, a pastry knife or potato masher (or even a fork) will get the job done.
Diapering: Cloth diapers are cheaper in the long run and better for the environment. Disposables can be more convenient when outside the home or if you don’t have laundry facilities in your home. It doesn’t have to be an either/or situation. Try using cloth diapers at home, and save disposables for when you’re out or the child is with someone else. It’s the same with pre-made baby wipes. Cloth wipes are much better for baby’s skin and much cheaper. Buy white washcloths or buy fabric and make your own. When you are away from home just pre-moisten a few and use a little baby wash. With some practice cloth diapers and wipes will be easy to use all of the time.
Health: Babies require frequent doctor visits (mostly for required vaccinations) but most health plans cover those visits in full now. In the US, if you don’t have health insurance you can usually insure your child through your state for free (or a modest fee). When you visit the doctor ask if they have any samples of medicines or formula--most will give you samples every visit.
Clothing: Consignment shops are full of baby clothes. You can purchase new undergarments (like onesies) but use consignment shops for dressier clothes and coats. Used clothing is usually in great shape because babies outgrow their clothes so quickly. Shoes are not necessary until they are walking, and then only when outside. Baby and toddler clothing is frequently sold in lots on eBay for cheap prices if you don’t live near a consignment store.
Clothing: Used clothing is easy to find up through age 12. Consignment shops and eBay are full of clothes for this age group. Items needed only occasionally (formal wear) should be bought used or borrowed.
Food: Food costs increase only slightly. Children should be expected to eat whatever is served (within reason). Avoid prepackaged food (which becomes a temptation once children socialize outside of the home). Learn to cook and bake and prepare snack foods at home. There are many websites with instructions on how to make food look appealing to children.
Activities: Organized activities are heavily promoted once kids reach school age. Look at activities with a cost-per-visit that is low. A sports activity like soccer that costs $100 and only meets once per week is less of a bargain than a track team that costs $100 but practices 4 days per week and has local meets on weekends. Factor equipment and gas/travel expenses in as part of the cost. Many gyms (like the YMCA) have unlimited activities if you are a member. Kids can then sample many things to see what they like. A swim club or beach pass for the entire family can be an inexpensive way to spend the summer. If you belong to a health club, they might have classes for kids that are included with your membership, or have kids' hours at the pool.
Stuff: Trading with other families is an easy way to acquire things like school supplies, sporting equipment, formal attire, outdoor gear, books and games of all kinds. Arrange a swap day at the start of every season for families in your child’s school to make it easier. Email lists are also useful for swaps. In this age group, there is a definite correlation between the effort you make and the money you save. If your child likes chess, start a chess club at their school. If your child wears a uniform to school, start and maintain a uniform closet/exchange. Don’t wait for a carpool offer, develop a schedule for the entire team and assign rides. Contact older kids’ teams and offer to supply game-day snacks in exchange for them passing down their equipment at the end of the season to the younger kids. Start a tradition at school where each class passes down the books they had to read that year to the younger class. Social capital and creativity are the best ways to keep costs down but still provide the experiences you want for your child.
Teenagers are young adults. After years of your example, they should have a pretty good idea of how to spend less but accomplish more. This is the time to let them start their own swaps with friends, find free or low-cost entertainment, establish carpools for their own activities, and manage a small budget every month. It’s easier for them to make mistakes now (under your roof) then to try and teach them everything they need to know during the two weeks before they leave for college. Give them a clothing budget and encourage them to purchase quality items. Host swaps for them. Let them take over the kitchen for make-at-home pizza night with friends. Be willing to take them and their friends camping. Take them to the park or beach with food and a Frisbee and teach them how to have fun on the cheap. Constantly challenge them to have fun but spend next to nothing. Give them a seasonal budget and force them to decide if they want to do 3 activities or only do 1 but have a cell phone. Let them be a part of the process. Your willingness to indulge their attempts at reducing their costs is key here. They will cooperate more if they make their own choices.
Of the non-necessities, college education is perhaps the biggest hurdle in the minds of many would-be ERE parents. Many children will want to go to college, and college costs have increased dramatically in recent years. A bachelor's degree has become a requirement for many jobs, even if those jobs do not require a college education in practice. Additionally, an ERE family's high net worth can result in low financial aid.
There are several approaches to paying for college. Pursuing scholarships definitely helps, but it is unwise to depend on them, and scholarships often only offset other financial aid. Parents can delay early retirement or work part-time after retirement to save for college. Children can attend community college at lower cost and then transfer credits to a state university to complete their degree. Many state universities have agreements with community colleges to accept credits, but care should be exercised if this is not the case. High school students can earn college credit through Advanced Placement tests, eliminating up to a year's worth of college classes.
High costs are starting to cause a backlash against traditional college education. Non-traditional means will become more available, such as apprenticeships or guided self-study. Self-employment is another way to avoid the college degree hiring hurdle. Many contract workers get jobs by referrals and by past performance, and beneficial community college classes can be taken without needing to finish an entire degree.