Posted on 05/16/2006 5:58:35 PM PDT by Flavius
According to a recent study by the U.S. Department of Agriculture, it costs a middle-income family $250,000 to raise a child from birth to age 17. And that doesn't include the cost of a college education.
In the first year alone, the costs of a baby can reach between $9,000 and $11,000, and most new and expectant parents don't realize the size of the financial burden they are taking on.
"Most people are more focused on the schedule disruptions and the exhaustion they will be facing," says Brette McWhorter Sember, a retired lawyer and author of "Your Practical Pregnancy Planner: Everything You Need to Know About the Financial and Legal Aspects of Preparing for Your New Baby" (McGraw-Hill, 2005).
So where does the money go? Here are the top nine financial shocks that parents face when they add a child to their family.
1. Medical expenses: Medical care for mother and child is a potentially significant expense facing new parents. The cost of delivering a new baby can range from $5,000 to $8,000 for a vaginal delivery to more than $12,000 for a cesarean delivery. If there are complications, those costs can increase dramatically. Even if your child is in perfect health, new babies require numerous well-visit checkups and immunizations.
"If you don't have insurance or have a rather pricey co-pay, you'll be shocked at how much it costs every time you take your baby to the doctor for shots, well-care and sick visits," says Jeannette Moninger, the mother of twin boys in Greenwood, Ind.
Be sure to check the terms of your health insurance coverage carefully so that there are no surprises when it comes to who is responsible for paying for what portions of your and your baby's medical care. Because many health plans penalize you for using doctors that aren't on the health plan's approved list, confirm that your obstetrician (including the hospital at which you plan to deliver) and pediatrician are "in network." An often overlooked expense is the additional cost to add a child to your health insurance.
After reviewing your health insurance coverage, check to see if your employer offers a health care flexible spending account. These accounts can significantly reduce the burden of out-of-pocket medical expenses by allowing you to pay for qualifying expenses with pretax dollars.
2. Maternity leave: Although most short-term disability insurance policies cover the time Mom is out of work due to recovery from child birth (or complications during pregnancy), the average policy only pays a portion of your gross income for a set number of weeks (usually four to eight) after birth. If your maternity leave extends beyond the stipulated time, or if Dad decides to take advantage of the Family and Medical Leave Act (FMLA), it will be at no pay unless you use vacation or sick leave.
To cover the cost of that lost income, Deborah A. Wilburn, author of "For Richer, Not Poorer: The Newlyweds' Financial Survival Guide" (Perigee, 2005), suggests some advance planning. "Couples should try saving one of their salaries for several months leading up to the delivery date," says Wilburn.
3. Child care: If both parents work outside of the home, they need to be prepared for probably the biggest financial shock facing new parents -- the cost of child care. Depending upon where you live, child care expenses can range from $5,000 per year for family day care to more than $20,000 per year for a live-out nanny.
Check out day care options during the pregnancy and choose one that you are comfortable with and that you can afford. Check with your employer to see if they offer a dependent care spending account. Similar to health care flexible spending accounts, these accounts enable you to pay for qualifying child care expenses with pretax dollars. You may also be able to claim a child care credit on your federal income tax return, although, if available, a dependent-care spending account is often more advantageous financially.
4. Diapers and wipes: The average baby goes through 10 diapers a day. If you use disposable diapers, that'll cost you about $2,000 by the time your little one is potty-trained! The cost of cleaning their little bottom with a wet wipe or two at each diaper change will add about $100 to your monthly grocery bill. Even cloth diapers can be expensive if you use a diaper service.
To save money in this area, you can use cloth diapers and launder them yourself. Jennifer Herrin of Tulsa, Okla., found it easy to use cloth diapers with her children.
"These days you can buy them with Velcro or snaps and elasticized leg openings so they fit just as snugly as the expensive disposable diapers," Herrin says. She washed them at home and saved a bundle.
5. Formula and/or breast-feeding expenses: The cost of formula shocks just about every new parent. The general rule of thumb is that a baby needs about 2.5 ounces of formula per pound of body weight per day.
Breast-feeding can certainly minimize that expense, but there are some hidden costs associated with breastfed babies. For example, you may need to purchase or rent a breast pump, an essential for moms who work outside the home. Nursing bras, breast pads, nursing tops, lanolin ointment and a breast-feeding pillow are also common expenditures.
6. Baby gear: Many new parents don't realize just how much "baby gear" is required to care for and entertain an infant. Crib? Changing table? Rocker or glider? Car seat? Stroller? Baby swing? Monitor? Bouncer seat? Doorway jumper?
Most of these items, with the exception of a car seat, can be purchased used. "Baby furniture, such as a changing table, gets very little wear and tear and can be purchased second-hand," advises Wilburn.
7. Clothing and shoes: Lisa Collier Cool of Pelham, N.Y., was surprised by how much she spent just dressing her children.
"Babies outgrow clothing at an amazing rate, so they need a new wardrobe every few months," Collier Cool says. "Plus, they never get to wear some of the gifts you get because by the time they get to be the right size, it's the wrong season for the clothes!"
Shopping at consignment stores and yard sales or swapping baby clothes with friends can save a lot of money. Buying clothes on sale at the end of the season (in a larger size so your child can wear the clothes next year) also helps cut expenses.
8. Baby food: Once babies reach 4 to 6 months of age, they start eating baby food in addition to drinking breast milk or formula.
Although it can be time consuming, puréeing your own food rather than buying baby food in jars can be a money-saver.
9. Life insurance premiums and attorney fees: Wilburn advises couples to review their life insurance policies and increase them so that each spouse has adequate funds to raise each child to age 21, should something happen to one of them.
"In addition, they should have wills written, naming a guardian for the baby," Wilburn says. "If there is no will and the two of you perish together, do you want a judge to decide who will raise your child without the benefit of your opinion?"
There's no way to get around the attorney's fees for setting up a will and taking care of your insurance and estate planning, but doing some comparison shopping may help. Ask friends and family members who they used and find legal and financial representation that is reasonably priced.
There's no doubt about it, having a baby is expensive. McWhorter Sember advises parents to put together a family budget that includes these expenses.
"A lot of families don't start thinking seriously about money until after they are parents, so you are not alone if you haven't considered these types of expenditures," she says.
It's hard to find a woman who can or even wants to cook nowadays! I think they've priced themselves out of the market. Those guys who get foreign brides are doing it right.
Not me. I had my family's financial future laid out well in advance of having children. It included a rich wife and no children.
Some cook huh?
Well there's the problem. I planned on a rich husband, 1 child and a maid.
;-)
I laugh when I add up the cost of my last three children born at home, breastfed, and cloth diapered.
Birth tub (Extravagant, but great. 150 gallon rubbermaid stocktank) plus plumbing: $150 Room for two, priceless!
Sterile scissors, cord clamps, assorted "accessories" : $20 per child.
Three children born at home total: $210
Cloth diapers : $324 for ALL sizes, plus inserts. Still using them after 4 years. Total savings on diapers alone (using their numbers)$7,000+ and counting.
What a pantload. Obviously this is written from the perspective of an east coast elitist with an au pair and all the rest of the trimmings. Rug rats can be had, housed and fed for a mere fraction of what this nitwit claims.
I LOVE to cook. The problem is that I am not very good at it!
Obviously none of your children lives up to your screen name. Had it not been for a competent hospital maternity ward (they call it "The Birth Place" or something now) my wife and son would have both died during his birth. His big head got firmly stuck in the birth canal and he had to be delivered by C-section.
I always get a kick out these articles. We shopped yard sales, consignment shops and were blessed by the fact my mom sews. That saved us a bundle on clothing. We also made our own baby food- blenders are wonderful things.
We used cloth diapers at home. We did have to provide throwaway diapers for the church based daycare they went to but we brought store brand and saved money that way too. We did not use wipes instead I filled a spray bottle with a mix of baby shampoo and water squirted their squirmy little bottoms and wiped with soft cotton cloth.
I also was not shy about asking their pediatrician for cans of formula once I added a bottle to supplement breastfeeding. The doctors get these free from the formula company reps. You can also ask for samples of any prescription meds the doctor puts your child on.
I never really added up the cost. I figure that should be calculated in gray hairs and sleepless nights rather than dollars anyway. But then again I never calculated the benefits either. And as long as the benefits outweight the costs I have no complaints.
"Well there's the problem. I planned on a rich husband,"
Such poor planning. Next time aim for an elderly rich husband who has a heart condition, loves doing extreme sports and does not trust lawyers who suggest prenups. If you can find one who is also an only child who was orphaned and reared in a State home that is even better.
I love to cook and do everyday...my husband brags about my cooking.
If you have a husband then you aren't single!
What an idiot.
First of all I see to it that my wife does not have to work. So there goes #2 and #3.
$100 per month for wipes? What are you doing? Wiping the entire house down with them everytime the baby poops?
Stop feeding him beans and you wont have to do that.
My twins cost us a $100. Of course, my wife and I were active duty at the time. She got out right after the birth. I figured my taxes that year paid for it.
I wrote off the article as ridiculous when it included the "cost" of hospital stay. What percentage of parents actually pays, out of pocket, those costs?
It isn't costing me and the Mrs. anything close to what this article states. We buy the wipes in bulk at about $15/month instead of the $100 quoted in the article. Of course we also had the benefit of the Navy paying for the delivery and continuing to pay my wife her regular pay during 42 days of maternity leave. We use my adult daughter for daycare at $100/week (plus free rent).
You present Hong Kong at the end of this listing!! But do you know how much pieces of disposable diapers are thrown out everyday? More than 500,000 pieces! We all should help the parents to think about the impact of this behavior! Nowadays, there are many WAHM that make huge effort to make available cloth diapers that are very healthy for the baby's skin and for our environment. WAHM like www.doubibou.com and many others are working to satisfy a natural parenting lifestyle!!!
Thank you
Newbie. Everytime I hear/see a sentence that starts with "We all should help..." I get nervous. I'll worry about my own behavior, thank you, you keep your nose out of it. Next thing, you'll be telling me not to eat meat.
(Denny Crane: "Every one should carry a gun strapped to their waist. We need more - not less guns.")
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