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Raising Baby on a Budget: Tips for Saving Money
You spend almost 10 months preparing for the arrival of your newborn. You buy toys, bassinets, clothes, and books -- not to mention diapers, formula, and countless onesies. But before you spend another dime on baby expenses, maybe you should think about saving a penny -- or two.
"Bringing up a child from birth to 18 years old now costs around $200,000," says Michael Farr, author of A Million Is Not Enough. "And that doesn't include school or college. For new parents, the trick is to buy smart and save wisely."
WebMD has gathered cash-saving tips and budget-planning advice from family financial experts and frugal moms who live the baby-money balancing act every day. Read on to find out how you can raise your little one while keeping your wallet intact.
Baby Dollars and Sense
"The first thing you need to do when you know you are starting a family is get your financial bearings," says Farr, who is the president of money management firm Farr, Miller & Washington in Washington, D.C.
Before baby is born, Farr recommends that a couple analyze their budget and get a good sense of what they spend their money on, how much they spend every month, and importantly, what's a necessity versus a nice-to-have.
With a little one on the way, the nice-to-haves need to be prioritized. The goal is to cut a good number of the frivolities off the list, Farr tells WebMD. By trimming the fat from your monthly spending, you can begin to prepare your bank account for the arrival of your newborn. But when you stop buying things you don't need, don't start buying things your baby could live without.
"Parents often fall victim to the hidden pressure of having to have everything for their baby, even things a newborn doesn't need," says Ellie Kay. Kay is author of Living Rich for Less. "Worse yet," she says, "they buy name-brand items that are overpriced and impractical."
Kay, a family financial expert, explains that sometimes, overzealous new parents equate love for their new child with "stuff." Then they end up with a home filled with unnecessary baby accessories.
Unfortunately, the unnecessary starts to add up. Then the next thing a mom and dad know, the nice-to-haves get in the way of what baby really requires -- daycare if a parent works, food, health care, diapers, and safety essentials.
Baby Budget
When you look at the math, the numbers can cause sticker shock. With the cost of raising a child to 18 in the hundreds of thousands of dollars, where does all the money go, and how can such a little person cost so darn much? Here's a breakdown of the financial picture:
- Daycare costs run about $1,200 a month, depending on where you live. So sometimes it makes sense for one parent not to work, because when you compare that number versus the after-tax salary of one parent, two kids in daycare equal about $30,000 in annual salary.
- With insurance co-pays of $25, the annual cost of visits to the pediatrician's office is about $250.
- Not only is parenting an expensive endeavor, it can be a dirty job, too. By the time a child is potty-trained, he or she can go through thousands of diapers. The cost of diapers amounts to $1,500 to $2,000 in total by the time your baby is out of them.
- Food costs are the most expensive, topping out at more than $100/week.
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