While children bring lots of joy into our lives, there’s no doubt that having a child and raising that child is costly. Families in the U.S. with average incomes spend an estimated $284,570 for a child’s upbringing through the age of 18 with housing the biggest expense followed by food.
After you have a child, you’ll need to rework your budget to ensure all of your expenses are covered. If you can practice being more frugal, living on a smaller budget before your child is born can help you prepare for the inevitable while allowing you to save more for upcoming expenses.
Factoring in Children’s Expenses
The expense of childcare, formula, and diapers won’t last forever. As your child grows, eventually they’ll fall off your budget and expenses like auto insurance and football camp or dance lessons will eventually take their place.
There are many things to consider throughout your children’s lives, starting with one-time expenses, like a crib, stroller, and car seat. You might receive many starter items at a baby shower which can be a big help when it comes to savings. Be sure to register so that your guests can buy what you really need, that way you won’t end up with a bunch of photo albums, baby rattles or other duplicates.
Of course, the cost of actually having a baby can vary greatly depending on your health insurance and location. You might need to budget for a large deductible and/or co-pays so you’ll want to consider that in your budget too. Nerd Wallet offers a helpful calculator that can help you estimate the amount you’ll spend during the first year. After all of the initial expenses, you’ll want to factor in childcare, diapers, food and clothing.
Stay-at-Home Parent
If either you or your spouse will be staying home to take care of your child you’ll have to take into consideration the reduced family income. In some cases the high cost of child care can outweigh the loss of income, but it can still be a hardship with not only the loss of earnings but benefits and potentially retirement investments. That’s compounded further by diminished earning potential when the non-working partner decides to resume their career. If this is your goal, however, it’s a good idea to try living on a one-income budget prior to the child’s birth. The money from the second income can be used to build an emergency fund.
Finding Ways to Save
As it can be difficult to make a budget work when trying to include all the expenses that come with having and raising a child, your best bet is to look for ways to save everywhere you can. While increasing income and cutting expenses are basic strategies for balancing a budget, it can be easier said than done. Some of the options might include buying gently used clothing at a kids clothing store. After all, babies and toddlers grow quickly, so why pay full price for something they’re only going to wear a few times? You can also save those items and as long as they’re in good condition, trade or sell them back to a consignment store.
Other ways to save include eliminating unnecessary subscriptions and memberships, getting rid of cable and streaming instead, downgrading or selling a car, and cutting lots of coupons.