WANT A BABY?
Much Does It Really Cost to Have a Baby?
A lot more
than you think, according to results from our
Everybody knows that having a child puts a dent in your
family finances, but not everybody plans for it. What's
worse, even those who do plan have lots of misperceptions
about just how big an impact a little baby can have,
according to a survey of 1,000 new and expectant parents
commissioned by Redbook and VISA. And in this case, what
you don't know can hurt you: Financial strain only
compounds the emotional challenges a newborn brings to a
household. "The smartest thing you can do is sit down
before you have your baby and map out a financial plan,"
says Rosetta Jones, a vice president at VISA USA, which
provides a baby budgeting calculator at practicalmoneyskills.com
Unfortunately, fewer than half of expectant parents
surveyed even bothered to create a new budget that
includes expenses for their baby. Or babies.
As of 2013, twins accounted for
about 3 in 100 births in the United States. And 1 in 837
births were triplets or higher order multiples. Between
1980 and 2009, the birth rate for twins rose by about 76
percent and has remained about the same since
Read on to learn
about other money mistakes new parents make the most
and what you can do to avoid them.
All the Money Go?
expectant parents say they feel financially prepared for
having a baby but 41% of new parents admit that,
in hindsight, they were not as financially prepared as
Why the huge
discrepancy? It turns out there's a major financial
roadblock that expectant parents often fail to account
for: hospital bills. One in four new parents ended up
spending more than $2,000 on out-of-pocket costs for
services associated with a normal delivery costs
that they thought would be covered by insurance. On
average, expectant parents are allotting just $776 to
cover out-of-pocket delivery costs.
Call your insurance
company to find out exactly what will be covered for your
delivery. And make sure you have the right idea about
postdelivery costs too: Log on to the Internet to see
what you could be paying for day care, a crib, a car
seat, a stroller even baby wipes, formula and
diapers (at eight a day for newborns, they add up fast!).
Then tally up what your costs will likely be, factoring
in your family's lost income due to maternity and
paternity leave. But don't forget you'll have new
savings, too, since you'll be going out a lot less once
the baby arrives! "New parents don't spend on personal
indulgences the way they used to," says Brette McWhorter
Sember, author of Your Practical Pregnancy Planner.
"These savings bring some balance to the enormous new
of new parents say they spent more money than necessary
on a car seat; 36% overspent on strollers; about 25% went
overboard on baby photos, a crib and clothing.
All new parents say
they won't lavish their child with toys and clothes. But
many respondents to our survey did just that. And you
can't really blame them. "There's been a huge surge in
luxury items for babies," says Tamara Draut, author of
Strapped: Why America's 20- and 30-Somethings Can't Get
Ahead. "No matter what a couple's financial status is,
they feel pressure to buy these things the bar has
been raised for everybody."
How can you fight
the urge to splurge? Let someone else do it for you. If
you've really got to have that $300 stroller, put it on
your gift registry. Expectant parents in our survey were
counting on their friends and family to buy 46 percent of
their baby's first year of clothes, 40 percent of toys
and 39 percent of baby-care items as gifts. Another
alternative: Hit thrift stores or eBay to find what you
want, albeit used. Miriam Nunberg, a 41-year-old mother
of two from Brooklyn, scours yard sales for toys and
tricycles. "People get rid of this stuff when their
babies grow out of them and you can buy them for almost
nothing," she says. Another tactic: Borrow. Ask your
friends and family for hand-me-down clothes, used toys
the Small Stuff
expectant parents think that managing everyday expenses
will be their biggest financial worry, but only a third
of new parents feel the same way.
expectant parents tend to underestimate the overall
financial impact of having a baby, they also overestimate
the cost of daily expenses. Expectant parents figure on
spending an average of $120 a month on diapers; new
parents actually spend half that. What gives? New parents
are savvier shoppers: Three-fourths of them shop for baby
items at discount retailers, compared with only half of
expectant parents. It makes sense: A Consumer Reports
comparison recently found that some store-brand diapers
work just as well as brand-name ones and cost a lot less
assuming you change six diapers a day, you'd save
about $220 a year.
The best news about
basic baby costs: "Daily baby expenses, such as for food,
diapers and wipes, actually haven't gone up dramatically
over the years," says Alan Fields, coauthor of the
shopping guide Baby Bargains.
Baby Makes Stress
expectant parents anticipate that tension in their
relationship will increase after their baby's birth.
Watch out: Nearly half of new parents found that to be
Of course, not
getting any sleep and dealing with a crying baby don't
help matters, but the added financial responsibilities
also put a lot of added strain on relationships: Most new
parents say baby expenses have increased their stress
level, and the majority of expectant parents predict that
they'll be in the same boat. In addition to the simple
strain of all the new costs, there's uncertainty and
disagreement as to what's really necessary a sure
formula for conflict. And once the baby arrives, couples
tend to work together less on their finances. In our
survey, the percentage of couples who split their
family's financial management equally dropped from 44
percent before the baby was born to 32 percent after the
baby's arrival. Who's taking on the added responsibility?
Mom! Half of new mothers report that they handle the
family money, up from 37 percent prior to the baby's
"The combination of
having a kid and all the financial pressures that
involves, especially when one parent stays home for a
while, naturally leads to relationship stress," says
David Bach, author of Smart Couples Finish Rich. What can
you do to cut down on the stress? Richard Ryan, a
psychology professor at the University of Rochester,
advises couples to keep one concept in mind: teamwork.
Whether it's a big-impact issue like a budget or a small
one like buying a toy, keep each other in the loop and
discuss concerns openly. "The goal is to focus on
agreement," says Ryan. That's not easy to do, but
according to our survey, couples believe they can make it
work: The majority of new and expectant parents say they
are prepared to tackle any challenge. And that mutual
optimism is money in the bank.
Budgeting, Then and Now
the prices on many baby items have gone down in
the last decade. (1994 prices have been adjusted for
100 count Step 1 diapers
Pampers Baby Fresh Wipes
of name-brand formula at grocery
cost of first year's layette
31, a stay-at-home mom, and T.J. Aures, 29, a corrections
officer, Boulder Junction, WI - Parents of Cayden, 18
Kam and T.J. were
both raised by stay-at-home moms and wanted the same
experience for Cayden. So they saved for months before
Kam even got pregnant. Once she did, she combed library
sales for books and garage sales for clothing. "I've
found Ralph Lauren outfits for a dollar," she says. Kam
nursed Cayden for about nine months, then got three
months of free formula by using coupons. The Aureses have
kept their daily expenses low, so they can afford to
splurge now and then. "Sometimes there's a really cute
outfit that you just can't pass up," says Kam.
34, a Web designer, and Shawn Hazen, 32, an art director,
Finn, 4 months
The Hazens knew a
baby meant all kinds of new expenses, but they were still
surprised: "Living in the San Francisco Bay area, I've
been shocked by how expensive everything is for a baby,"
Lisa says. "Child care is going to cost $1,000 a month,
even with me going back to work only three days a week."
The Hazens have curtailed dinners out and other expenses,
but they're still just scraping by. "We're trying to cut
wherever we can," says Lisa.
with the Second
Morris, 35, a communications manager, and Andrew Morris,
38, a management consultant, Atlanta Parents of Lindsay,
3, and Claire, 7 months
The Morrises spent
hundreds of dollars on high chairs, bouncy seats and
other gear for Lindsay. "When you're a first-time mom,
you just don't know what will work when you have a
screaming baby," says Caroline. But once she realized
that every toy looked battered within a few days,
Caroline decided to shop at consignment stores. With
Claire, the Morrises were money-conscious from the
get-go, shopping at Costco for store-brand diapers. Says
Caroline, "The child doesn't know the difference and it's
usually just as good."
a Scary Surprise
30, a stay-at-home mom and student, and Charlie Burt, 34,
a construction manager, Houston, TX - Parents of Byson,
Devona and Charlie
Burt thought they were financially prepared for their
baby they even had $4,000 saved for baby-related
expenses. But Byson was delivered prematurely, and the
Burts were hit with, among other bills, $200 in monthly
insurance co-payments and $45 a week for hospital
parking. "Our savings were completely wiped out," says
Devona. Byson's health is improving, she says, a blessing
that offsets any financial setback.
Cost of Raising Children
what you can expect your annual kid expenses to
your child's 10th birthday, depending on your
Age Household Income
U.S. Department of Agriculture *-Single-parent
family; **-Dual-parent family
much does it cost to raise a child?
Department of Agriculture (USDA) recently came out with
its latest figures on the cost of raising a child. The
title should have read How to scare the heck out of
any parents-to-be. Want to know the sticker price
of that cutie pie? $286,050. That would be for the middle
income families. If you are a high income
family (read: earn more than $98000 before tax) the cost
of raising a kid born in 2009 would be $475,680!!! Half a
million for one kid? That is not even including college
costs. If I include college and have 2 kids, it could be
more than a million dollars! Is it just me or does this
amount sound really high? Lets see what is included in
this amount and what is not.
is included in the cost of raising a child
survey had 7 categories
consisting of shelter, utilities, house furnishings and
2. Food expenses
consisting of food and nonalcoholic beverages purchased
at the grocery, convenience, and specialty stores, dining
at restaurants and household expenditures on school
expenses consist of the monthly payments on vehicle
loans, down payments, gasoline and motor oil, maintenance
and repairs, insurance, and public
transportation(including airline fares).
expenses consist of childrens apparel such as
diapers, shirts, pants, dresses, and suits; footwear; and
clothing services such as dry cleaning, alterations, and
5. Health care
expenses consist of medical and dental services not
covered by insurance, prescription drugs and medical
supplies not covered by insurance, and health insurance
premiums not paid by an employer or other organization.
Medical services include those related to physical and
6. Child care and
education expenses consist of day care tuition and
supplies; baby-sitting; and elementary and high school
tuition, books, fees, and supplies. Books, fees, and
supplies may be for private or public schools.
expenses consist of personal care items, entertainment
and reading materials.
Since 1960, the
U.S. Department of Agriculture has provided estimates of
expenditures on children from birth through age 17. Here
is a chart comparing the expenses in 1960 and
The major change
comes from Child care and education (increasing from 2%
is not included?
doesnt include a few things which doesnt seem
right to me.
- Cost of college
: Or at least the money many parents start setting
aside for education when their little ones are still
in diapers. I am looking into 529s now, I dont
even have a kid.
- Lost income or
career opportunities : Lot of parents decide to have
one stay at home parent to raise the kid.
- Life insurance
: I dont have life insurance yet but I plan to
get a term life as soon I have a kid, so I feel this
should be included. If I am alone I wont be
buying life insurance for myself.
- Tax benefits :
Dont parents get some kind of tax
- Cost of living
: According to the survey child care (day care) costs
around $5000 per year. But I know for a fact that it
costs around $1000 a month where I live.
much does raising a child cost ME?
provides a handy calculator to figure out how much it
will cost you to raise your child. Living in CA, it will
cost me an extra $2000 to raise a kid every year than the
national average. Just for fun I decided to enter a
couple of more kids. If I have 3 kids, I will spend
$832,728 over the next 17 years! That is without college
costs. If I include that I am easily looking at $1+
million. Oh my!
I understand this
is a very personal issue. For example I dont think
it will cost the amount of money they quote in the
following categories :
- Housing : The
survey says you will have to move to a bigger home for
each child. I plan to live in a modest home and that
wont change whether I have a kid or not. When I
buy a home, I will make sure that it is in a decent
school district even though I dont have a kid
- Food : I do
plan our meals and grocery shopping, so I might save a
chunk on food expenses.
: I am not a parent yet, but at least until I have to
start driving a lot for sporting events and such, I
dont see why I will spend $3380 for
transportation. What am I missing here?
- Health Care : I
have good health care from my employer (fingers
crossed) and that will continue for the kids. So
except the co-pays for which I will use FSA or HSA,
this wont be a big part of our
But we will pay
through the nose for the following:
- Child care : As
I mentioned my coworker pays $1050 for a shared day
- Education : I
plan to help my kids with college expenses, so I will
set aside a good amount of money for their future
- Sports and
other extra curricular activities : If my kids are
interested in sports or music or anything, I will
encourage them as much as possible and pay for
whether to have a kid or not is not purely a financial
decision. There is no denying that they are going to cost
money. A lot of money. There are other non financial
concerns and my husband and I are committed to giving
them the best possible life that we can afford. But these
kinds of surveys and big numbers do scare me. I will have
to create my own spreadsheet and run some numbers for my
family and should probably try the stay-at-home
calculator as well.
I am asking
parents, what is the cost of raising a child? Are their
numbers accurate? Or are they too low? Too high? Are you
surprised by how much it costs to raise a child? What are
your biggest expenses? What other categories that are not
included here should I be aware of?
Step Program for those thinking of having
still wanting to have kids before 25 or 30, complete this
1. Go to the
2. Arrange to have your salary paid directly to their
3. Go home.
4. Pick up the paper.
5. Read it for the last time.
Before you finally
go ahead and have children, find a couple who already are
parents and berate them about their...
1. Methods of
2. Lack of patience.
3. Appallingly low tolerance levels.
4. Allowing their children to run wild.
5. Suggest ways in which they might improve their child's
breastfeeding, sleep habits, toilet training, table
manners, and overall behavior.
Enjoy it because it
will be the last time in your life you will have all the
A really good way
to discover how the nights might feel...
1. Get home from
work and immediately begin walking around the living room
from 5PM to 10PM carrying a wet bag of potatoes weighing
approximately 8-12 pounds, with a radio turned to static
(or some other obnoxious sound) playing loudly. (Eat cold
food with one hand for dinner)
2. At 10PM, put the bag gently down, set the alarm for
midnight, and go to sleep.
3. Get up at 12 and walk around the living room again,
with the bag, until 1AM.
4. Set the alarm for 3AM.
5. As you can't get back to sleep, get up at 2AM and make
a drink and watch an infomercial.
6. Go to bed at 2:45AM.
7. Get up at 3AM when the alarm goes off.
8. Sing songs quietly in the dark until 4AM.
9. Get up. Make breakfast. Get ready for work and go to
work (work hard and be productive)
Repeat steps 1-9
each night. Keep this up for 3-5 years. Look cheerful and
Can you stand the
mess children make? T o find out...
1. Smear peanut
butter onto the sofa and jam onto the curtains.
2. Hide a piece of raw chicken behind the stereo and
leave it there all summer.
3. Stick your fingers in the flower bed.
4. Then rub them on the clean walls.
5. Take your favorite book, photo album, etc. Wreck
6. Spill milk on your new pillows. Cover the stains with
crayons. How does that look?
children is not as easy as it seems.
1. Buy an octopus
and a small bag made out of loose mesh.
2. Attempt to put the octopus into the bag so that none
of the arms hang out.
Time allowed for
this - all morning.
Forget the BMW and
buy a mini-van. And don't think that you can leave it out
in the driveway spotless and shining. Family cars don't
look like that.
1. Buy a chocolate
ice cream cone and put it in the glove compartment. Leave
2. Get a dime. Stick it in the CD player.
3. Take a family size package of chocolate cookies. Mash
them into the back seat. Sprinkle cheerios all over the
floor, then smash them with your foot.
4. Run a garden rake along both sides of the car.
Go to the local
grocery store. Take with you the closest thing you can
find to a pre-school child. (A full-grown goat is an
excellent choice). If you intend to have more than one
child, then definitely take more than one goat. Buy your
week's groceries without letting the goats out of your
sight. Pay for everything the goat eats or destroys.
Until you can easily accomplish this, do not even
contemplate having children.
1. Hollow out a
2. Make a small hole in the side.
3. Suspend it from the ceiling and swing it from side to
4. Now get a bowl of soggy Cheerios and attempt to spoon
them into the swaying melon by pretending to be an
5. Continue until half the Cheerios are gone.
6. Tip half into your lap. The other half, just throw up
in the air.
You are now ready
to feed a nine- month-old baby.
Learn the names of
every character from Sesame Street , Barney, Disney,
Spounge Bob Square Pants, the Teletubbies, and Pokemon.
Watch nothing else on TV but PBS, the Disney channel or
Noggin for at least five years. (I know, you're thinking
What's 'Noggin'?) Exactly the point.
Make a recording of
Fran Drescher saying 'mommy' repeatedly. (Important: no
more than a four second delay between each 'mommy';
occasional crescendo to the level of a supersonic jet is
required). Play this tape in your car everywhere you go
for the next four years. You are now ready to take a long
trip with a toddler.
Start talking to an
adult of your choice. Have someone else continually tug
on your skirt hem, shirt- sleeve, or elbow while playing
the 'mommy' tape made from Lesson 10 above. You are now
ready to have a conversation with an adult while there is
a child in the room.
This is all very
tongue in cheek; anyone who is parent will say 'it's all
worth it!' Share it with your friends, both those who do
and don't have kids. I guarantee they'll get a chuckle
out of it. Remember, a sense of humor is one of the most
important things you'll need when you become a parent!
But, do us a favor. Wait until you can afford to take
care of a child for at least 18 years.
Department of Agriculture report on cost of raising a
2. Calculator for cost of raising a child
3. Stay-at-home calculator
4. Most recent Child care cost by state
- Time to think
about taxes once again!
- Health Savings
Accounts (HSA) Vs Flexible Spending accounts
- Freshman Finances
: Set up a Budget or a Spending plan