Deciding to have a baby or adopt a child changes your financial picture. The cost of having a child immediately increases your annual expenses. The U. S. Department of Agriculture estimates that a family living in the United States will spend an average of $11,000 to $23,000 per year for the first 17 years of a child’s life (based on 2007 costs). Great parents lovingly accept financial responsibility for their children and “make ends meet” despite the amount of money in the household. Quality childcare is grounded in love. Financial stability makes the process of childrearing less stressful. When deciding to start a family, consider the following so you can plan accordingly:
- Determine What it Costs to Have a Baby
Taking the time to determine how much it will cost to have a baby will help you make an educated decision about whether or not it is the right time to add to your family. Make a list of the expenses you know you will have. Include things like the pre-natal visits to the clinic or the hospital charges to deliver your baby in a hospital. For other ideas about what costs to consider try the free Baby Cost Calculator. This calculator lists all of the basic expenses and the average costs of these expenses. You can enter your best cost estimates about your baby’s expenses, or you can select the expenses that match your personal situation. Then, the Baby Cost Calculator automatically gives you a clear idea of the projected cost of raising a child in your area. This makes expense calculation easy for you based upon their research and an exclusive BabyCenter survey of more than 1,000 new moms.
Once you know what the estimated cost of having a baby will be, think about your possible options. For example, moving to a less expensive or different area may help reduce your rent or mortgage costs allowing you to save some money for your baby’s expenses. Be creative and innovative in this process!
- Start a Child Savings Fund
If you just discovered your pregnancy, you have nine months to start setting aside funds towards your child’s future. Start small and gradually increase your savings contribution. Small, gradual, increases in your savings contribution builds up your child’s nest egg and your own confidence for the safety and security of your child in the future. These funds can help pay for emergency expenses or for college costs as your child grows. Just remember not to touch these funds for other uses unless it is absolutely necessary.
- Get Rid of Excess Debt
Bringing a new child into the world is a blessing. It gives you the opportunity to reset the button on your financial life path. Take advantage of this blessing by getting rid of that nagging credit card debt, high furniture payments, caffeine addiction, or other unnecessary shopping or spending habits. Reducing your debt makes you feel better and gives you control over your financial situation. It also allows you to replace the unnecessary expenses with your very necessary baby expenses. Changing your habits requires a commitment that becomes easier to maintain when you think about the investment you are making toward the life of your child.
Take action to get your “financial act” together now. Remember, a series of little financial sacrifices (e.g. one Starbucks coffee drink eliminated per week, no chocolate or rented movies for a week, no designer or new clothing for a few months, etc.) add up. But, if you want to create a little nest egg for your child, you must put your “small sacrifice” money into a special place like a limited access bank savings account if it is to grow and contribute to the welfare of your child.
- Develop a Will
For parents, a will is the single most important thing you can do to make sure your child is cared for by the people you want to care for him or her if anything happens to you. Through your will, you can specify a person (guardian) to take care of your child should you no longer be able to or if you die before your child becomes an adult. You can appoint one person to act as both personal and property guardian, or choose two people to carry out the separate roles. There are inexpensive ways to get a will prepared. Try LegalZoom or prepaidlegal.com to get started today. You may also consider consulting an estate planning attorney for specific advice on preparing a will and related topics.
- Develop a Family Budget
Budgeting is a pledge to keep your family income and expenses in line with reality. When you live within your budget, you achieve greater balance in life. Yes, this sometimes means cutting expenses and eliminating unhealthy spending habits. Think about your new baby’s needs. Then, ask yourself: “Do I really need those designer clothes or new shoes or the latest cell phone?"
Start developing your budget by listing all of your family’s sources of income: payroll checks, social security income, disability checks, etc). Then, subtract all of your expenses: rent or mortgage payments, utilities, gasoline, food, etc. If you have something left, that’s terrific! Stick to your plan. If not, adjust your plan by finding additional sources of income, for example, a second job or sales of a hobby product. Another option to consider is reducing or eliminating unnecessary expenses. You can do it! Focus on the exciting life ahead of you with your new baby!
Consider taking our Building Your Wealth online course to learn more about making and adjusting a personal budget.
The material provided herein is general and for basic educational purposes only and does not purport to be comprehensive. We are not attorneys, tax accountants, or brokers. Nothing contained herein should be construed as legal, accounting, tax or other professional advice. You should consult with a licensed attorney, accounting or tax professional for any specific questions you may have regarding your situation and should not rely on any information contained herein as being a substitute for professional legal, tax or accounting advice.
Any references contained herein to third party companies or websites are provided for your convenience only. We have no control over the content on any third party website or the services offered by any third party. Any resources we have listed as being offered by such third parties may not continue to be offered by the third party or may be modified without notice. We make efforts to keep our content up to date; however, we do not make any representation that the information contained herein contains the most current information available. If you notice that any of our content requires updating, we would be pleased to have your input. Please contact our Customer Service Department at
if you have any questions, comments or suggestions regarding our website content.
Any financial figures or other numerical or statistical information, including interest rates, prices, and similar information are for exemplary purposes only and may not reflect the most up to date information available. We do not in any way guaranty or promise that any interest rates, prices or other similar information will continue to be available.
 U. S. Department of Agriculture, Cost of Raising a Child Calculator (2007)