Hundreds of years ago, when farmers needed an extra pair of hands to work the fields,
having a child might have been a purely financial decision.
But today, unless you’re planning on raising the next Justin Bieber, kids are a big, unpredictable
cost--one that can make even a cool and collected financial advisor nervous.
That’s right, Julia and I will soon be embarking on what will probably be the most rewarding--but
expensive--adventure of our lives.
There are so many factors and variables to having a child, it’s really difficult to
make even a ballpark guess of what the total cost will be… especially since, these days,
some parents will never be totally off the hook from this financial commitment.
But just because you can’t plan everything doesn’t mean you shouldn’t plan what you
can, so here’s our beginner’s guide to the general costs you can expect to incur
in the first year of your new family member’s life.
Medical bills are notoriously hard to pin down.
A 2016 study showed that within New York City alone, the cost for a non-cesarean delivery varied
between $4022 and $17,646!
And cesarean sections in Los Angeles ran between $6,000 to $42,000!
The best thing you can do is contact your insurance provider and get as much info from
them as you can: which care providers are in your network, what procedures are (and
are not) covered, and how much you’ll have to pay out of pocket.
You want to avoid nasty surprises like finding out that certain tests aren’t covered or
that you can’t use the facility you want.
Make a special appointment with someone in the billing department, and don’t be afraid
to sound stupid.
Grill them for every detail you can get!
You should also assume that you’re going to pay your full yearly deductible during
pregnancy and the first year of pediatric care.
Don’t forget it usually resets at the beginning of every calendar year!
Philip and I have calculated that with pre-natal care, ultrasounds, clinic costs, birthing
coach, childbirth classes, and--sue me, I’m worth it--pre-natal yoga classes and massages,
we’re going to pay about $5,300 out of pocket, just to get us to the birth.
There’s not a lot you can do about medical costs, but you can have a bit more control
over stuff like cribs, car seats, onesies and strollers.
This is where family, friends and craigslist can come in real handy.
Remember, this thing is only going to stay the same size for about .5 seconds, so don’t
splurge on items that will have a short shelf-life.
There are lots of parents out there who need to offload the things their kids have outgrown.
So far, we’ve only had to spend around $100 on maternity clothing thanks to friends and
some serious thrift.
We’re also anticipating around $300 for a used crib, $200 for a bassinet, $300 for
a fancy but used stroller set, $500 for the first year of baby clothes, and another $800
for car seats, room decor and whatever else we might not get from our registry.
Unless you live in a country with generous maternity leave (aka not the U.S.), a working
woman will need to factor in a certain amount of time off to get her baby through the first
few months.
Your choice is to either set aside part of your budget in the months leading up to the
birth to build a maternity cushion, or live on a tighter budget after the baby’s born.
Neither choice is super-appealing, but either is preferable to piling up debt.
The average baby will consume about 30 oz. of breastmilk or formula a day.
Breastmilk is essentially free, while formula costs on average about 11¢/oz, so you’re
looking at somewhere between zero and $100 a month to feed the little tyke.
Diapers are a bit more expensive.
A baby will need, on average, about 225 diaper changes a month which means that, depending
on the brand, disposables will cost you between $90-$300 a month.
Cloth diapers can save you about half that… if you wash them yourself.
If you use a laundry service, expect to pay about the same as disposables.
And while cloth diapers do cut down on waste, according to one study, the electricity and
water required to wash them mostly cancels out any benefit to the environment.
No way around it, you will be adding two adorable little carbon footprints to the world.
This is the big one.
Child care is the #1 expense for most families and it can take a million different forms.
There’s daycare, nanny-share, free grandparents, private nannies or a spouse that stays home.
According to The National Association of Child Care Resource, the average cost of center-based
daycare in the United States is $972 a month.
And the average nanny can cost anywhere from $2,000 to $3,000 a month for full-time care.
Nearly one in three families report spending 20 percent or more of their household income
on child care alone!
The best way to start nailing down a number is to ask your friends and family who live
in the same city what their method of child care costs.
The US Department of Agriculture also has this handy online calculator that gives you
an estimate of child-raising costs based on your region and preferences.
I never really thought of babies as agriculture, but I guess they do produce a lot of fertilizer.
It’ll be a long time before Julia and I really know what the cost of raising this
particular human will be, but one thing we’re already glad we did is build up a 3-month
emergency fund.
Knowing that we can deal with unexpected costs without accruing debt helps us sleep at night.
If only we could save up an emergency fund of sleep.
So if you think you might have a child in the near future, start feathering your nest
with cash now.
Remember, just because you’re going to be a new parent doesn’t mean you need a new
house or a new car--baby won’t judge!
It’s way more important that you’re not financially stressed during those first magical
years.
And that’s our… three cents!