After returning from your honeymoon, there is one question all newlyweds get used to.
“So, when are you having kids?”
Many of us plan this momentous decision around our maturity level. The choice becomes more about when we feel ready to settle down and less about whether or not we are financially ready.
Thinking about the cost of children can be overwhelming. Where do you even start?
I connected with my oldest friend, Adam Jacobs, to discuss his experience raising two boys and now planning for a newborn girl – all while running the highest quality jewelry store in Massachusetts, I might add.
How much should people budget for the baby costs we all know about? (For example, diapers, food, clothes, medical?)
Babies are definitely not cheap. The most important thing to hope for is a healthy child. With that being said, you have to plan for health insurance to increase. You are no longer just a couples plan, you are now registered as a family. Diapers on average will cost approximately $35 and you will need at least a box and a half per month.
Food is pretty standard for the first 6 months, it’s either natural, or formula. A lot of mothers are taking the more organic and natural route, while others still use formula. You might not have an option. Some mothers develop mastitis and have to use formula which can cost approximately $30-35 on each canister, depending on the brand. This cost will increase as the baby develops and grows, as they will consume more. Therefore 2-4 of those per month.
Clothing is fairly inexpensive and a lot of the time with your firstborn comes a baby shower with family and friends to spoil you.
As two working parents, how have you handled daycare? I’ve heard in some cases the cost is as much as a second mortgage. What has been your experience?
This was one of my larger concerns financially, because I had been told how costly daycare/preschool is. I toured both in-home and corporate daycares. I found that in-home daycares were significantly less expensive, offered a more comfortable atmosphere, and when operated properly offered a more beneficial fit for my children.
Also, having the grandparents around is a huge perk!
What are some of the costs those of us without kids might otherwise overlook that you recommend we budget for?
Time management, sick days, hospital visits, babysitters when wanting to go out. Dinner out now costs double. Are your vehicles large enough? Is your home large enough? You can’t raise a child in a one bedroom apartment.
(note: and some advisors wonder what type of financial planning “young people” need. Good luck getting a robo advisor to help with those daunting questions.)
Have you thought about public versus private school, and started planning for such? How about college?
I have considered both private and public, this decision was also considered when purchasing my home. I chose to purchase my home in a community with a great school system. This allows me to have both options of private and public.
As for my children’s’ college savings, I opened up a 529 plan (college savings) before each one was born. Each year, I place an equal amount into each of my child’s accounts. During specific times of the year such as holidays/birthdays, my parents will write the 529 plan a check opposed to spoiling the kids with toys. It’s beneficial for all parties.
(note: this is a fantastic strategy. You can start preparing for the cost of college even before you have kids)
Have there been any surprising benefits to your budget?
Its funny you ask this. I truly thought I would save. Though I go out half the amount, I am now spending double when going out because of the babysitter. Outside of this realm, you notice a lot more mileage on your vehicle, dropping your kids off on the way to work, picking up on your way home, bringing them to activities, like soccer and tee ball. I notice I spend a lot less on myself and a lot more on everyone else. I changed the brands I was wearing for clothing, etc. But still keeping my Nike game on Fleek!
Anything else you think we should know before we start changing diapers?
When changing a diaper, always wipe down.
Haha, thank you Adam!
There is no debating, a growing family is expensive. In their latest report, the US Department of Agriculture found raising a single child costs the average family roughly $230,000 from birth to the age of 17.
You can use their calculator to project your own estimates.
Additionally, LendEDU recently conducted a study finding the average first year cost to be $13,186 – with a great breakout of the spending found here.
Yet, there is also no debating that a growing family is one of life’s greatest blessings. Adam and I talked extensively about the joy he’s experienced watching his children grow, and his family expand. We hope our discussion helps you prepare for, and have financial conversations about growing your family to ensure you enjoy these amazing blessings.
If you’d like to share wisdom from your experience raising children, please email us, and don’t forget to forward this email to family and friends in this stage of life! We’d love to hear from you.