Let’sbe real here. Raising a kid from infancy to adulthood is freaking expensive.There’s no way around it. The average cost of raising achild for amiddle-class family is $233,610, which is nearly a quarter of a million dollarsover 18 years.
Nowthat you’ve picked your jaw up off the floor after seeing that number, I’ve gotsome tips for you to make baby financial planning a little bit easier. Theseare tips that I wish I’d read before I had my first child five years ago — butbetter late than never, right? You don’t need to have a quarter-million dollarsin the bank before you have your little one. Here’s why.
Look at Your Health Insurance
Whilehaving a kid isn’t as expensive as raising one, it will still take a decentchunk out of your wallet if you don’t have good health insurance. A healthynatural birth with no complications can set you back upwards of $8,200, and that number goes upwith the number of painkillers and other medical interventions requiredthroughout the birthing process.
Takea close look at your health insurance plan and see just how much is covered byyour policy. Will you be responsible for prenatal care out-of-pocket? How muchof the actual birth and hospital stay does your policy cover?
Invest in a 529 Plan
Ifraising a child is expensive, sending them to college is downright terrifying.
Onthe low end, you’re looking at spending at least $25,000 for afour-year state college, and more than $50,000 for a private school. If they’re heading to anout-of-state college, the price gets even higher, since colleges charge moreper credit hour for students from different states. If they get into an IvyLeague school, you’d better hope they get a scholarship to go with it.
Thesolution may be a 529 plan, which is to college what 401(k) plans are toretirement. It’s an investment account that allows you to save money for your child’sfuture college education, and you can set one up as soon as they’re born. Look into the typesof 529 plans that are available in your state and then start saving.
Write a Damn Budget — Or Update Your Current One
If you don’t already have a budget — why? Budgets are easily one of the most useful tools in your financial arsenal, so take the time to set up a budget to account for new baby expenses. And if you do already have a budget in place, make sure you take the time to update it to account for all the expected and unexpected expenses that come with adding a member to your family.
Don’t Forget the Registry
Babysupplies are expensive and everyone will be asking what they can get for you —especially if this is your first child. As soon as you announce your pregnancy,set up a baby registry and send it to friends and family. This will keep youfrom ending up with duplicate items and stave off the endless repetition of”What should I get you for your baby shower?”
Trustme on this one — constant annoyance plus pregnancy hormones could potentiallyequal homicide, so try to minimize it wherever possible.
Have Some Savings
Financialexperts recommend having at least six months’ worthof incomesaved up before you start attempting to conceive a child. This tip soundsgreat, but if you’re living paycheck-to-paycheck, it’s not always possible.
Thisis where that budget from tip number three comes in. Figure out where you cancut corners and save some money so you’ve got a nest-egg to fall back on ifyou’re out of work for a while or have some unexpected expenses.
Don’t Forget About Retirement
It’stempting to put all of your other plans on the back burner when you’repreparing for a baby, but you don’t want to neglect yourself or your future.That is, unless you want to be one of those elderly parents living in theirkid’s basement as a live-in babysitter.
Savingfor your kids is a noble endeavor, but it shouldn’t be the only savings accountyou have. Don’t forget to take care of yourself and your spouse, too.
Update Your Beneficiaries
Chancesare good you already have a will or a life insurance plan. If you do, once yourlittle one is born, it’s time to update your beneficiaries. No one wants tothink that something will happen to them before they’ve had a chance to raisetheir child. But if something does, it’s always better to be prepared.
Contacta lawyer or an accountant and update your paperwork as soon as you’ve got aSocial Security number for your new little bundle of joy.
Plan for Maternity Leave
Havinga baby is rough on your body. If the doctors don’t even want you to have sexfor six weeks, you probably shouldn’t be going back to work during that periodeither. Make sure you’ve got enough vacation time — or FMLA time — to heal,recover and spend time with your little one after they’re born.
Be Ready for ALL the Expenses
Thereare so many expenses that come with having a new baby that you might find yourhead spinning. Diapers, clothes, furniture, toys, medicine, doctors’appointments — the list goes on and on. The average infant uses 2,700diapers intheir first year alone — and diapers usually come in boxes of 48 and cost $15to 20. Add that up. That’s $843.75 just on diapers, and that’s if you buy thecheap ones.
One Closing Thought: You’re Never Ready
Youcan spend all the time in the world preparing for your first, second orfifteenth child, but when it comes down to it, you’ll never really be 100 percentready. The best thing you can do is prepare as best you can and keep up withthings like your budget and your savings. Adding a baby to your family is alife-changing experience, but it doesn’t have to leave you broke.