Economy Project: Financial Planning For A New Baby
By Shomial Ahmad, KERA News
Dallas, TX – Having and raising a child could be the biggest investment a family will make. The U.S. Department of Agriculture estimates the cost to raise a child for 17 years is around $220,000. In today's economy segment, KERA's Shomial Ahmad looked into how you can financially prepare for a little one.
A new baby is expensive. There are the diapers, the formula, the crib and the car seat, and then child care and a college savings plan. The first year alone can cost around $10,000.
Kristin Powers thought she had a good idea how her budget would change when she was pregnant with her first child. But she was unprepared.
Kristin Powers: "I had no idea of what was exactly going to be involved. I knew there needed to be a college plan and things of that nature. But you really don't know until the baby is here."
Todd Mark coordinates educational programs for the Dallas office of Consumer Credit Counseling Service. He says one of the most personal and expensive decisions new parents will make is choosing the right child care provider.
The first step is to make sure both parents have the same expectations.
Todd Mark: "The key thing is for both parents to be on the same page together, whether it comes to family planning or the financial planning for having the baby, or after the baby arrives and you're making big picture decisions, like work or put the baby into day care or stay at home."
The next thing is to fully examine your resources.
Mark: "Get a clear confirmation from both sets of moms and dads on what kind of financial support they can provide, not just for money and goods but how much time the grandparents can spend with the kids."
Grandparents who live nearby can be a fill-in for day care, or can at least save you babysitting costs if you decide to go out.
And then, comparison shop.
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Mark: "See what the day cares cost in your community and surrounding neighborhood and make sure that there's accessibility, that you can get in immediately or if you've got to get on a waiting list."
Monthly costs for day care range from $800 for home day care providers to $1800 for larger providers. And prices can vary depending on how many days a week a child is in day care and what time the parents pick up and drop off the kids.
A family member took care of Powers' first child for the first several months, and then she went to a home day care provider. Powers is now pregnant with her second child. She plans to pay around $1500 a month to put both children in day care. That's more expensive than her mortgage.
But this second time around, both she and her husband have a better sense of their budget. Powers is also not as confused with all the baby information that's out there.
Powers: "When you're having your first kid everybody has this free advice, and you don't know what to do with it. You don't know that brand x is better than brand y. You just know that it looks cuter and it matches, and that's all that matters."
So that new baby might get some old stuff and some things that don't match exactly. But Powers says she'll save some money and still have what she needs.
This month the Consumer Credit Counseling Service is hosting financial planning webinars, including one on how to plan for a baby. You can find a complete list and register at KERA.org/economy
We've also posted links to help you budget for a new baby.
Consumer Credit Counseling Services: Money Saving Tips For a Baby
USDA's 'Expenditures on Children by Families Report' & Raising A Child Calculator