According to a recent study by the US Department of Agriculture, it costs more than $12,600 per year to raise a child from birth to the age of 18. That’s nearly a quarter of a million dollars — per child — and doesn’t include the cost of college, uneven teeth, or unscheduled visits to the emergency room.
Without some consideration to the financial impact of raising a child, your hopes and dreams for your financial future may face inevitable ruin. Here are some considerations for when you are expecting a new baby.
Maternity leave. With more women now working outside the home, a loss of income during a medical leave of absence can be devastating. Some women prefer to return to work as soon as medically cleared. However, many new mothers take an extended leave of absence. If you suspect you may want to stay home longer, plan accordingly to cut back expenses, save up funds, or supplement your income from your home to offset the temporary lost wages.
Increased cost of health insurance. An unexpected expense for new many parents is the added cost of covering your new bundle of joy medically. Additionally, you may want to start a life insurance policy for your infant early in life, which will equal another invoice.
Baby supplies. You’ll probably receive a ton of baby supplies through gifts from friends and family, but you’ll still need an avalanche of diapers, bottles, clothing, and equipment. Avoid the temptation to overspend and buy every gadget advertised. You’ll want a crib, a baby swing, a playpen, and a changing table as basic staples for your nursery, but if you find yourself in a real pinch, you can always purchase these items later or look for second-hand items in good repair. Avoid designer baby supplies, as your little one will quickly outgrow most items, making them a poor investment. Save the designer labels for when your child is in high school and can wear the items well into adulthood.
Transportation. Many couples decide to purchase a safer, family friendly vehicle when expecting. This added expense can really put a couple’s budget into a tailspin if not planned for in advance. Look for a vehicle with good gas mileage, high crash test ratings, and car seat anchors. If you’re thinking about purchasing a particular vehicle, take your car seat along and practice getting it in and out of the back seat to see if the vehicle is a good fit.
Housing. While the addition of a single child may not initially affect your housing situation, you may eventually consider purchasing a home with additional bedrooms, room to play outdoors, kid-friendly neighbors, and access to a good school system. While housing can become one of the largest expenses of raising a child, see if you can get by initially with your current living conditions as long as your child will be safe in your current home.
Entertainment. You probably won’t be going anywhere for entertainment when your little one is small. But eventually you’ll need a date night and some time away with adults. If this wasn’t something you factored into your budget, it may come as a shock how much of a dent regular outings can make in a family budget, especially when you factor in a babysitter.