Can you afford to have a baby?
Bringing a child into the world is an exciting prospect, and for many, one of the main goals they have in their life. If you want to give your child the best possible start, it’s important to spend some time dealing with the financial implications of becoming a parent.
According to the U.S. Department of Agriculture, the average cost of bringing up a child for 18 years for a couple on a mid-level income is just shy of a quarter of a million dollars; that does not include the cost of sending them to college. Here are some tips to work out whether you can manage.
photo/ public domain pic from pixabay.com
Create a budget
If you have been living day today without a budget, now is a good time to create one. The cost of raising a single child can run anywhere between a few hundred and a few thousand dollars each month, depending on your childcare costs, your health plan, whether or not you use disposable diapers and whether you choose to breastfeed or use formula. It’s likely that many of your new expense will be offset by child tax credit, but make sure you actually claim it as many people forget to do so. Though it may seem morbid, it’s a good idea to factor in additional costs such as life and disability insurance if you don’t get them from your employer, so that you know your child will still be provided for in the worst-case scenario.
Work out how much your child is likely to cost you and make sure you can find the money you need. If you are unsure of some of the costs involved, ask a friend who has recently had a child to give you the benefit of your experience. So long as you are in a situation where you are able to pay all of your bills, keep a roof over your head and enjoy the occasional night out, it should be perfectly possible to make room in your budget for a child.
Most new parents stumble their way through the first few months making things up as they go along, but you’ll be far less stressed and far better able to deal with the many challenges that parenthood brings if you’ve made as many plans as possible in advance.
Live on one salary
If you are both working full time and one of you plans to stay home and care for the child while the other continues to work, it might be an idea to practice living on one income well in advance. Of course, nowadays there is the possibility of freelancing, which can offer a second, alternative income.
The one good thing about this situation is that babies take time to arrive, allowing you to do some financial planning. Most women find out the news fairly quickly, but even if they are not entirely aware and had not planned to get pregnant, many of the signs are in place. For example, your baby bump will be the size of a grapefruit at 10 weeks pregnant, and the baby itself will be no bigger than a strawberry!
If you can restrict yourselves to spending only one salary during your entire pregnancy and sending the rest of the money to the bank, you’ll not only know that you can manage, but you’ll have a nice little nest egg to fall back on should you run into any unexpected expenses.
The decision to stay at home should never be taken lightly and other factors, such as the loss of health insurance and whether you would actually be able to continue your career at a later date, should all be taken into consideration.
Put college to the back of your mind
Although you want your child to have the best possible education, the fact is that there is plenty of financial aid around to help students get to college. A bigger issue in the short term should be making sure you have enough money put aside to finance your retirement. After all, no one else is going to do it for you. Be sure to max out your 401(k) contribution at work and consider opening a Roth IRA as this can be used to fund both your retirement and college in the future.
Don’t sweat it
The truth is, if you wait until conditions are perfect and you have all the money you need before you begin even trying for a baby, the day may never come. In reality, most parents feel as though they can’t afford to have a child and yet somehow, they all manage to make it work in the end.
Having a child is an exciting but scary step, and it’s not something that you should dive into without considering all the financial consequences, but that should never scare you off going forward with your plans to become parents.
Author: Carol Trehearn
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