Preparing Financially For a Child
For a middle-income, two-parent family, the cost of raising a child from birth to age 18 averaged $233,610 in 2015, according to the U.S. Department of Agriculture. This figure doesn’t include college, but takes housing, food costs and other expenses into consideration.
Knowing this, the common phrase, “You’ll never be financially ready for a child” contains some truth, but there are ways you can prepare for the cost if you know what to expect financially while you’re expecting.
::Increased Costs::
- Food. The more mouths you feed, the higher your grocery bill. What happens if your baby needs formula? Depending on the brand and how much your baby drinks, plan to spend roughly $20 to $40 a week.
- Gear. Cribs, strollers, car seats, clothes, bottles, fancy trash cans, bouncer and bibs. That’s only a small portion of the items people buy when planning for a baby. Many of these are crucial—like a car seat—but some aren’t as necessary. Before buying baby gear, seek advice from moms you know and ask them what their must-have items are, and why. Some parents swear by a changing table—others simply use the couch or floor.
To save money on your must-have list, look for gently used items at consignment stores or on Craigslist. Avoid buying used car seats, and make sure your crib meets the highest safety standards. - Day care. If both parents plan to work outside the home, you’ll want to consider day care costs. Start working this expense into your budget before the baby is born. To help you rework your budget and build extra savings, pretend that you’re making payments to day care but put it in savings.
- Health care. Kids get sick. Then parents get sick, and sometimes the cycle repeats. In addition to doctor visits and prescriptions, you’ll need to plan for a monthly health care premium. Before enrolling in your employer’s benefit program, research to see if you can get comparable, yet cheaper, coverage elsewhere.
::Choosing to Stay Home::
If you’re interested in becoming a stay-at-home parent, test the water by banking your paycheck during pregnancy to see if you can pay your bills, meet your savings goals, and still have a little fun on one income. Don’t forget to budget for future baby expenses—health care, diapers, formula—to make sure you can stay at home, and still cover those additional costs. Parents magazine has a Stay at Home calculator that can help you determine if staying home makes financial sense for your family.
::Cutting Back on Expenses::
Remember that $233,610 figure mentioned earlier? You can reduce that amount by making more economical choices. Buying used, trading items with friends and using coupons can help you save money. Beyond those strategies, remind yourself what’s really important. As long as your child is happy and healthy, the extra toys and stuff is insignificant.
Ways to Save
- ThredUP allows you to buy and sell used clothing or trade a box of clothes for a new box from someone else.
- Just Between Friends is a consignment sale held several times per year, consisting of children’s clothing, furniture, books and toys.
- Browse the national thrift store directory by ZIP code to receive a list of stores near you.
- Craigslist.com and Freecycle.org allow you to either buy or receive free things, and offer plenty of children’s items, sporting goods and toys.
- Search for formula, diaper and food coupons on Coupons.com, SmartSource.com or RedPlum.com. In addition to manufacturer’s coupons, don’t forget about store coupons, like Target or Walgreens. At these stores you can often pair manufacturer and store coupons for extra savings.
