Becoming a Parent: The Financial Considerations
Once you have a child, financial planning for the future becomes even more essential. How will you finance child care, medical bills, food, education, clothing, toys, and education savings? What will you need to spend money on and how much will each item cost? Here is some of the information you will need.
This Financial Guide provides you with guidelines on handling the expenses a child brings. Obviously, we cannot offer precise costs because the costs hinge on variables such as family size, family income, and geographic location. However, we can suggest some rough (often very rough) estimates for the average sized family of two adults and two children and to at least provide a starting point for your planning. Obviously, the costs for later years will go up as inflation takes its toll.
Knowing what to expect will allow you to plan for the future, thereby increasing your chances that you will not fall short of your financial goals. Indeed, this is the time to review and update, if necessary, your financial plan.
Related Guide: Please see the Financial Guide: YOUR FINANCIAL PLAN: Getting Started On A Secure Future.
Here is a breakdown of the items you'll need and an estimate of their cost. The costs are categorized chronologically, according to the child's age.
Note: These estimates are for a first child. Bear in mind that second or third children will cost less than the first, since you will already have purchased many of the items you need. If you have three or more children, you will spend about 22% less on each child. Also, note that, in the case of a multiple birth, expenses will be higher than (although not double) those of a single birth.
Government estimates say that a middle income family in 2013, defined as having an annual income between $61,530 and $106,540, will spend a total of $245,340 to raise a child to age 17. This figure represents a 1.7 percent increase from 2012 and does not include expenses incurred beyond the age of 18. If you include the cost of college, whether public or private, that cost goes up significantly. And, families that earn more generally can expect to spend more on their children.
Planning Aid: For an estimate of the amount of money you would have at the time your child enters college if you begin saving now, see the Financial Calculator: The College Savings Plan Calculator.
Related Guide: If you are ready to start planning now for your child's future college education-and indeed the time to start is now-please see the Financial Guide: YOUR CHILD'S COLLEGE EDUCATION - How To Finance It.
Here are the costs you can expect up to birth and during the first year:
Note: For a second or third child, you will spend much less on furniture, clothing, and toys, but health care, child care, and food will remain the same.
According to the Transforming Maternity Care Partnership, in 2011, an uneventful hospital delivery, on average, in the United States cost between $10,657 (vaginal birth, no complications) and $23,923 (cesarean section birth with complications). The actual costs you pay, of course, vary depending on your health care coverage.
Baby Supplies and Equipment
Before you bring the baby home, you'll buy a crib, a changing table and a swing or bouncy seat. The moderately priced versions of these three things will cost you about $1,200. You'll also need at least one stroller that you can expect to pay about $400 for. A full-size infant car seat will cost you about $150-$200, and a full-size high chair will cost $150. Finally, you will spend several hundred dollars on washcloths, sheets, blankets, towels, undershirts, onesies, and other baby clothes. Also think about whether you plan to use a diaper service, cloth diapers, or use disposable ones.
Feeding and Diapers
The American Academy of Pediatrics recommends exclusively breastfeeding your baby for at least 6 months. Many women of course choose to breastfeed longer than that. Nursing mothers will have to invest in several good nursing bras and nursing pads (about $50) as well as a nursing pi