By Derek Pesta
Diapers, formula, tiny clothing, medicine, constant doctor visits – most of us are quite surprised that such a small body can cost so much! Bringing a baby home is one of the greatest joys in life, and also one of the biggest price tags.
According to a 2015 report by USDA, the average price of raising a child from infancy to age 17 is:
- $175,000 for low-income families
- $233,600 for middle-income families
- $372,000 for higher-income families
For many of us, the cost of raising one child is about the same as purchasing a house! Preparing ahead of time and establishing a budget prior to the big day can have a positive impact on your future goals.
Today, let’s look at a few practical tips on how to keep that bundle of joy from breaking the bank.
5 Tips for the Baby Budget
When it comes to the cost of having a baby, it’s those little things that add up. I never would have thought that during the first year of having a baby, that diapers could cost $240 per year or that baby formula could cost $1,800 per year. You’ll need help anywhere you can get it, so here are a few small things that can add up to big savings over time.
- Remember – nursing is free – Formula can get expensive quickly, and breastfeeding is a natural, free alternative. Find out if buying a breast pump is covered by your health insurance plan and use regular clothing instead of buying nursing clothes.
- Find housing you can afford – Housing is a huge piece of your budget. Think about how that expense fits into life with a family, especially if you plan on having more children.
- Consider all childcare options – Ask family to help you care for your baby, consider being a stay-at-home parent or working remotely.
- DIY and save – Small projects can help you save and help fill up the time if you’re staying at home with your child. Making your own soap, learning to sew and learning to make wholesome baby-centered meals are some simple places to start.
- Don’t Spend Big on Entertainment – Free activities like library story times and “free days” at the zoo or children’s museum can help keep the kids entertained without depleting their college fund decades in advance.
Creating and maintaining a budget for these new expenses is a great way to keep on track for your retirement goals. In the moment, confident budgeting can help you lower financial stress and reduce tensions that may come up between you and your spouse. With a little financial planning, you’ll be even more free to embrace one of the greatest joys in life: starting a family.
Planning for Today and Tomorrow
Contact us today to learn more about how to create a monthly budget, how to plan for college savings, or how to balance saving for retirement while paying down student loan debt or paying down your mortgage.
We help many families in the San Jose and Silicon Valley Bay Area prepare for child raising expenses, saving for retirement, creating college savings plans and managing diversified investment portfolios tailored to your unique needs.