On average, it costs $250,000 per child from birth to 18, and just in the first year, it costs $10,000. That’s not even including childcare costs such as diapers, wipes, and medical costs. So, what can you do to plan for a baby?
Create a Budget
A baby will change your existing budget, so make sure to make the necessary adjustments to your monthly budget. Include an increase in your grocery bill for diapers and food. You’ll also want to create a separate savings fund for the pregnancy and delivery costs as well as for the nursery and supplies.
The decision to continue working or change your schedule to accommodate for baby is a very personal one. First, determine if you want to continue working or not and then start crunching the numbers. Don’t forget to add up the costs associated with working including transportation, gas, clothing, and dry cleaning. Consider job sharing or part-time work if you can afford to stay home but need the break.
The cost of daycare is very surprising for new parents. It can run up to $1,200 per child for a daycare center. If you are working just to send your child(ren) to daycare, you may want to rethink your situation. There are other options including in-home daycare or nannies (if you can afford it). Ask friends, read reviews online, and visit several centers to help you with your decision.
College costs go up about 5 to 8 percent each year, meaning that the cost of a college education could easily grow to more than $250,000 by the time your child is ready. Fortunately, there are some smart ways to save for your child’s education that let you begin very early. Many of them even include tax advantages! Look into Coverdell Education Savings Accounts, 529 Plans, Roth IRAs, and Custodial Accounts.
Yes, you do want to save for your child’s education, but don’t forget to focus on your retirement. There are many options to pay for college when your child is ready, but there are no options for your retirement when it’s time to retire.
You may say let’s wait until we have this or that, but if you wait until your financially secure to have a baby, you probably will never have a baby. You’ll never be totally prepared for a baby, you can only try your best to provide for your family.
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Categories: Budgeting, Finances, Saving