If you’re pregnant, congratulations! If you’re in the beginning stages of planning for a new addition to the family, congratulations. Possibly one of the largest financial mistakes that future parents make is to underestimate the cost of a baby. It’s hard to say no to the sometimes called biological clock and the pull it has on us and that can sometimes make us forget that a baby costs money, and a lot of it.
Rather than taking a more business-like approach and using a budget spreadsheet to see if we can really afford a baby, we sometimes says yes to a child without figuring out if we really can afford it. Make your financial situation just as large of a part of the decision to have a child as other decisions you’ll make. With that in mind, let’s look at how a baby will impact your finances.
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Total Cost
Ready for this? According to babycenter.com, the total cost of raising a child from birth to age 18 is about $200,000 and that doesn’t include the cost of a college education.Although the monthly costs will change as the child grows up, that is an average of $925 each month.
In the current economy, starting a college savings account is a necessity if your child is to avoid the crippling effects of student loans. Parents can expect to pay $78,000 for a four year college education starting in 18 years. Not counting any investment income that comes with a tax advantaged education savings account, that’s $361 per month making the total more than $1,200.
Any amount of money saved for college is a great start and $361 may end up overfunding the account but remember that the overfunding could be used for a second child or even yourself.
Furniture
Furniture is an upfront cost that comes with welcoming a son or daughter in to the world and compared to your bedroom suite, the cost is relatively small. Designer cribs could cost $1,000 or more but other models may cost as little as $100. Sites like Craigslist may have great deals on higher end cribs for very reasonable prices.
Along with the crib comes the changing table and maybe a rocking chair for the baby’s room. All of these together might cost $450 or less depending on how skillful you are as a thrifty shopper.
Disposable or Cloth?
Now we reach the great debate among moms. Should you use disposable or cloth diapers? According to Diapering, the cost of disposable diapers is $2,700 over three years while cloth diapering is only a fraction of that since cloth diapers are washable. A set of cloth diapers comes with a $300 price tag but saves money over time. If it were that easy, there would be no debate so this may be an issue that will require a lot of reading during those nine months.
Baby Formula
A year’s worth of formula will cost between $1,000 and $3,000 depending on what you buy. If you’re looking to cut down on those costs, a breast pump costs about $300.
We’ve all heard how the price of food is skyrocketing and baby food has seen the same inflation. There are so many variables that estimating a cost is nearly impossible as a general number but some people learn to make their own baby food to save on the cost of grocery store food.
Final Thoughts
Although looking at the costs of a child may take all of the joy out of your plans, just as you would with any other financial decision, collect all of the facts and design your budget around the added cost. Being prepared now instead of surprised later is the best way to avoid financial disaster.
Roger Wohlner says
Good post. As the father of three (ages 18-23) let me say this. Take your budget add 50% to it (and more as they get older) and you might be close. I generally counsel clients to assume that college costs will rise an average 7.5% per year. I have one who will be a soph at a state school here in IL and one who will be a senior at a private school. Our oldest graduated from a private school in ’10. This is premature for parents of younger kids and certainly for expectant parents, but private schools can be a much better deal for kids who rank high in their class and test well.
Marc says
Good points. We had twins … and then twins again. I wrote a post about how to prepare for twins (https://www.facebook.com/note.php?note_id=92880133620) This only takes into account preparing for the first year or so.
With our first set, we used a Cloth Diaper Service. Same price as disposable, but they have industrial washers to make sure all the diapers are clean (and the excrement is properly disposed of).
When you first find out you are having a baby (or babies) you can start buying diapers size 1, 2 and 3. I have the number of diapers (as well as formula) that we went through with both sets.
As far as formula, if this is your first child (or children) buy some formula to be prepared. With all the stress, my wife was unable to produce milk. Having formula on hand helps for times of low milk production. Also make sure to ask your pediatrician for samples every time you go (and you will be visiting them a lot the first year).
Bob says
Marc, 2 sets of twins! Wow – you got quite a special thing going!
Marc says
One thing to note (at least so far, and not including college) the cost of raising more than one child does not rise proportional to the number of children. Many costs can be shared, and you can also do more things in bulk.
Sun says
Formula costs a lot of money along with all the accessories and supplies you have to buy. Formula, bottles, freezer bags… Breast feeding is cheaper and more convenient. Mother can just take the baby to her breast. You don’t need to make formula, heat it, and all that mess. Just because breast feeding is a “natural” process doesn’t mean that the mother nor baby now how to do it properly. Many women give up because the baby doesn’t latch on right and it is painful to the woman.