How Much Will It Cost?
Let’s face it, A LOT! The average cost of raising a child until they are 18 for a middle income family is reported to be $235,000 or more. That is not including private school, after school care, extra-curricular or religious activities or college. So for most people there is never a time where you are truly “ready” or “financially prepared” for children. However, with a sense of awareness, consideration of the expense, a bit of financial planning and a whole lot of patience you may be in the position to give your child what they need and deserve. The team at Numerico PC can advise you and guide you through the planning process. Together you can take a look at your income and output and devise a plan to be prepared financially for one of the biggest life changing events – having a child.
Some considerations for having a child:
Health Insurance – Do you have it and does it cover prenatal care, child birth, maternity and new born care?
A Savings Plan for Emergencies – It is one thing to live paycheck to paycheck and fly by the seat of your pants when it is just you or two adults involved. Now that you have a child it is time to decide just how much in living expenses you need to have set aside. Many financial advisers recommend having 3-6 months living expenses in the bank in an accessible account.
Life insurance – It will be more important now than ever before that your family be financially set if something were to happen to one of the parents or both.
College Savings Plan – When you are preparing for a child it may be hard to imagine them as a college student, but it will happen. Saving NOW lessens the burden later. Not every parent can cover or even contribute to their child’s college. However, we all hope to give our children the brightest future and saving now, will help you accomplish that.
Tips on Budgeting for a Child
According to a government survey, the first year of your child’s life in a middle class family will cost about $11,000. That makes the months prior to your child’s arrival that much more significant. In advance, figure out what expendable income you have per month and how much you can save. A good goal would be to save at least $800 per month so you would be close to the $11,000 prior to the child’s life. Also be prepared for extra expenses like co-pays from the delivery of a baby and multiple pediatrician visits.
– Remember to be practical when it comes to spending on your baby, their equipment and supplies. Sometimes family and friends will offer gently used equipment so you can reduce the initial cost of having a baby. There are big box stores, media, Twitter and people in your life that may convince you that your baby needs hundreds of dollars in new equipment – keep in mind, your baby doesn’t know the difference.
– Look for ways to increase your income and savings. For some people, a new baby can be an incentive to look for a new job, ask for a raise or seek a promotion.
-Pay down debt in anticipation of your child’s arrival. We all want to give them our children the best, but the best we can give them will be even more when we come from a place of financial preparedness.
The joys of parenthood are immeasurable, but also a big responsibility. Let Gary and his team at Numerico PC plan for one of your most memorable and life changing events!
