Start 2025 Right: A Guide to Setting Financial Goals for the Coming Year

For many parents, the end of daycare feels like a long-awaited financial milestone. No more sky-high monthly bills for childcare! But before you start redirecting those funds to other dreams or investments, let’s talk about an often-overlooked reality: the costs of raising kids don’t go away after daycare—they just shift. Extracurricular activities, summer camps, and other kid-related expenses can quickly replace them. Let’s break it down, debunk some myths, and explore strategies to keep your family budget (and your sanity) on track. The Daycare Cost Myth: When the Spending Doesn’t Stop Daycare costs can be jaw-dropping. For many families, these expenses rival a second mortgage or a high car payment. Naturally, there’s hope that when those daycare years end, your budget will breathe a sigh of relief. But here’s the thing: costs don’t magically disappear. They transform . As your children grow, new expenses fill the void. Think music lessons, travel sports, coding camps, tutoring, or after-school care. While these activities often feel less mandatory than daycare, they are still essential investments in your child’s development and they can add up quickly. According to a recent LendingTree survey , approximately 86% of high-income earners have their children involved in afterschool activities. These activities can be costly. Consider these costs: A competitive soccer program can run $2,000 to $5,000 annually Music lessons might set you back $1,500 to $3,000 per year Advanced academic tutoring or specialized training programs can easily reach $4,000 to $6,000 annually. When you multiply this by three, four, or even five activities (or more), those “savings” from daycare start to look a lot less impressive. For high-net-worth families, these costs might seem manageable at first glance. But the real kicker? The more opportunities your children have, the easier it is to overspend without realizing it. Tracking Your Family Budget: Awareness is Everything If you haven’t already, now is the time to get a clear picture of your family’s spending. You might find that extracurriculars creep into your budget in ways daycare didn’t—often sporadically and unexpectedly. Here are some tips to regain control: Identify Hidden Costs : Extracurricular activities come with sneaky expenses. Registration fees, uniforms, travel, equipment, and fundraising efforts can quickly double what you initially planned. Budget Seasonally : Unlike daycare, which is often a flat monthly rate, extracurriculars can fluctuate. Dance recital season or summer swim meets may require you to spend more during certain times of the year. Build these peaks into your budget. Set Limits : It’s easy to fall into the “yes trap,” especially if your child shows passion or talent in an activity. Be intentional about how many activities they participate in and prioritize those that align with your values. Plan for the Unexpected : Last-minute competition fees or special lessons often come out of nowhere. Having a family buffer fund can keep you from scrambling. Why It’s Easy to Overspend High-income families face unique pressures when it comes to kids’ activities. Beyond the financial ability to say “yes” more often, there’s a cultural expectation to do so. Here are some common traps we see with clients: Overcommitment : Money often opens doors to a dizzying array of extracurricular options. Saying yes to everything can lead to burnout for both parents and kids. Keeping Up with the Joneses : It's easy to fall into comparison traps, especially when other families travel for elite hockey tournaments or enroll in private music academies. Future-Planning Pressure : Activities often feel like stepping stones to college admissions or future success, making it hard to decline even costly opportunities. Recognizing these dynamics is the first step to breaking free from them. Remember, you don’t have to say yes to everything for your kids to succeed. Tax Benefits for Parents: Don’t Overlook Potential Savings One silver lining of managing child-related expenses is that some may come with tax perks. Here are a few to keep on your radar: Dependent Care Flexible Spending Accounts (FSAs) : This FSA allows you to set aside pre-tax dollars for eligible care expenses, such as after-school care or summer day camps. Child and Dependent Care Tax Credit : If you’re paying for care for a child under age 13, you might qualify for a credit on your tax return. Educational Savings Accounts : Extracurriculars that are educational in nature (like certain tutoring programs) might qualify for tax-advantaged savings if structured properly. Charitable Donations : Some extracurricular programs run by non-profit organizations may qualify as charitable donations. Keep detailed records of your contributions to these programs, as they could be tax deductible. Know Your State Tax Laws : Every state has different tax laws. For example, in Arizona, you can donate up to $400 (for a married couple) to a public school. The donation can then be used to pay for after-school activities such as sports programs for your children. You then receive an equal tax credit (not a deduction) off your state taxes. These benefits are often underutilized, especially among families who don’t feel they “need” the savings. But when layered with other smart financial strategies, they can free up funds for additional opportunities or long-term goals. Working with a financial advisor who understands the nuanced tax landscape and can help you maximize potential benefits is critical. The Value Behind the Dollar As fiduciaries, we understand that financial planning extends beyond simple cost calculations. These activities represent more than expenses — they're investments in: Skill development Character building Potential scholarship opportunities Social and emotional intelligence Creating lasting memories for your children It’s important to remember the intangible benefits of extracurricular activities. The key is finding the right balance between enrichment and financial stability. Preparing for What’s Next Even though daycare ends, the financial journey of parenthood doesn’t. The sooner you take control of shifting costs, the better positioned you’ll be for life’s next stages — whether it’s saving for college, supporting aging parents, or building a legacy for future generations. At Five Pine Wealth Management , we specialize in helping families like yours make thoughtful, informed financial decisions that align with your values. Our role is to help you navigate these investments strategically, ensuring that your financial decisions align with your family's broader goals and values.  Are you ready to create a financial plan that works for your family — daycare, dance lessons, and beyond? Schedule a meeting with Five Pine Wealth Management today. We’re only a phone call (877.333.1015) or email away. Let’s work together to create a family budget that reflects your priorities and sets you up for lasting financial success.