baby is a bundle of joy, but get ready if you are
starting a family: Raising that little person also will
cost you a bundle.
you have a baby, expect to spend $233,610 over the next
18 years as you pay for everything from diapers to the
extra room in your house or apartment, according to a
report released this month by the U.S. Department of
Agriculture. Thatís the estimate for a middle income
family using 2015 figures. And if you find that number a
bit disconcerting, brace yourself: It doesnít include
in what youíll pay for four years of college by the
time your child is 18, and you are looking at another
$157,284 for a public university or $355,210 for a
private college, says Kalman Chany, author of
"Paying for College Without Going Broke." His
estimate covers expenses ranging from college tuition to
room and board and assumes college costs keep rising 3.5
percent a year.
becoming nauseated, however, consider that on the day
your baby is born you donít have to have $233,610
sitting around to pay for baby food in a few months or a
pair Adidas sneakers and a computer later. If you
consider your lifetime earnings, your income will total
a big number too. A parent with a college bachelorís
degree is likely to make $800,000 to $2 million during
their working years, according to an estimate by the
Hamilton Project, a research group within the Brookings
Institution. A person with only a high school degree
will make about $580,000.
you break down the spending for raising a child on an
annual basis, itís not quite as terrifying. Itís
about $12,350 to $13,900 a year for the middle income
couple earning $59,200 to $107,400 a year, according to
the Agriculture Department. People at incomes under
$59,200 spend a little less ó $9,330 to $9,980. And
people with incomes over $107,400 spend more ó ranging
from $19,380 to $23,380 annually. The costs are from
2015 and rose about 3 percent compared with the previous
year. For people considering children in the future,
keep in mind: Prices tend to rise each year. The cost of
raising a child has increased about 4.3 percent a year
since the department began tracking it in 1960.
biggest cost is housing, which consumes about 26 to 33
percent of total child-related expenses for a married
couple with two children. Food was the second largest
expense for low and middle-income families ó
accounting for 18 to 20 percent of total expenditures.
In the highest income group, child care and education
were in second place, consuming 23 percent of total
transportation, clothing and health care costs get
higher the older a child becomes. The good news is that
you may be more able to handle the higher costs for
older children because mothers who stay home for babies
tend to go back to work when children go to school.
at home comes with a steeper cost than most families
appreciate, and itís not part of the $233,600 estimate
the Agriculture Department just reported. Parents ó
usually mothers ó who leave jobs and stay home with
babies and young children lose potential Social Security
and donít stash away essential retirement savings. The
cost for a 26-year-old woman who left a $30,253 job in
2014 to stay home for five years would be $467,000,
according a Center for American Progress estimate. Try
this calculator: www. tinyurl.com/hy7m7xl
of these costs ó either immediate or in the future ó
make it wise for people to plan for children before
getting pregnant if they can. In the years before having
children, families should maximize retirement saving in
401(k)s at work or IRAs outside of work so they can cut
back some saving if necessary in the financially lean
years around a babyís birth.
two parents are working, "practice living on one
income for months before having a child," adds
Kimberly Palmer, author of "Smart Mom, Rich Mom:
How to Build Wealth While Raising a Family."
Putting aside $1,000 a month in a fund for child care
costs later will relieve some of the sting of day care
costs. And getting into the habit of living frugally
before itís forced on a couple relieves one form of
wonít feel your lost income later," said Palmer.
As a new mother, "I was stressed out taking care of
babies. But I avoided money stress and enjoyed being a
also tells parents to put off moving into larger, more
expensive homes: "A baby living in a one-bedroom
apartment for a while isnít going to notice or care as
much as you think," she said.
buying clothes or baby items, Palmer adds, choose
gender-neutral colors so they can be used for sisters or
brothers. Better yet, get hand-me-down cribs, swings,
clothes and car seats from friends or relatives, but
check to make sure there are no safety warnings.
importantly, she said, the working partner should
maximize benefits in the workplace that cut major
expenses. The parent may be able to cut transportation
costs, save for health costs on a pretax basis and put
aside as much as $5,000 to cover child care on a pretax
gripe: Too much attention for mothers is on couponing
and other tiny savings when the giant savings that come
from workplace plans and the tax system are ignored.