Julius, from the TV show Everybody Hates Chris, has the ability to instantly calculate how much anything is costing him, from 11 cents of tape to how much electricity his three kids are wasting. So when the USDA determined that it would take middle-income parents $226,920 to raise a child who was born in 2010, I could imagine prospective parents like him fainting away. Can you afford to have a baby?
What I’ve noticed though, is that these totals all seem pretty variable. For example, around a decade ago, I noted that the costs of raising a kid was designated as almost half a million dollars, and that figure included tuition as well. It has been pointed out by the USDA that variability does exist on costs incurred by families — so for example, a family with income that runs under $57,600 is expected to dish out $163,440 (in 2010), while a family that earns almost $100,000 annually will spend more than twice that on ONE child (at $377,000+). It’s interesting that we all seem to adjust our expenses based on our income, right?
So what costs are we including here? Your immediate major expenses for having a child will tend to be housing, transportation, food, health care, and essentials like cribs and clothing. And as mentioned, later on, you’ll need to factor in the costs of items like child care and education. The USDA’s breakdown looks like this:
Cut Costs for Baby by Planning Ahead
How can you curtail some of these expenses? If adding to your family means finding a new home, then you can use resources like Zillow or Trulia to seek out real estate deals. It might even be worth it in the long run to relocate to a less costly region. For instance, homes in southern states like Georgia or South Carolina may cost less than homes in the Northeast, and especially, California. With the minimum budget that you need for a family of four in California running much higher than what you’ll need in other states, it makes sense that you can lower child costs simply by living in a low cost region. Of course, income is typically affected by geography as well (unless you have location independent work), so this is something to consider when deciding where you want to base your family.
As for child care, you can compare the costs of day care centers to babysitters or see if your employer provides a child care facility. Later, if you’re envisioning private school for your child, then check around to find out what kind of tuition different schools charge — and if they offer scholarships. Education takes a big bulk of expenses, as we’ve detailed in this analysis.
But let’s focus on that $226,920 figure. A glance at the Baby Registry Checklist at Babies “R” Us might convince you that it takes most of that amount to welcome baby. Rather than automatically buying the high end furniture and goods for baby, you might end up with getting better value by doing some serious comparison shopping. It’s never good to pay a lot for a diaper bag that will fall apart in two months, after all. Besides, you might end up deciding that your rugged hiking backpack is a better choice.
It takes a bit of effort, but price checks and going over reviews can get you a long way. In my case, as soon as I found out that I was expecting, I began to prepare a binder of material that held a checklist of things I needed for the baby. I scoured online stores for price info and options, and if there was something that caught my eye, it would go into the binder.
Compare Prices for Furniture & Diapers
For car seats, cribs, and clothes, I visited Amazon.com and BabiesRUs.com for a lot of the selections. These days, there are comparison sites on almost anything, which you can find through a quick web search. If the $950 crib doesn’t suit your family, one that’s hundreds less may be more appealing. Of course, it’s usually easy to find good quality clothes and toys on Craigslist, eBay, and even at thrift stores. If you can believe it, I was able to purchase a box of baby clothes off Craigslist for $20! Better yet, if you have family or friends with older kids, make sure to tap them for possible hand-me-downs. I’ve had great luck using this approach — I’ve got siblings who are fashion hounds who end up buying a lot of high end items which eventually find their way to us! At the very least, if you’re a new parent, find out if family and friends can pitch in with baby showers and gifts for that crucial first year.
For formula and diapers, see if you can pick up coupons from your favorite manufacturers and stores. Buying disposable diapers in bulk can certainly save money! Cloth diapers can cut your expenses, but may be less convenient to use. If this is the case, then see if a diaper service fits your budget.
Other tips? Compare prices of baby food from the store versus pureeing your own meals. Libraries and bookstores carry books on how to make your own baby food too, so it’s something you can think about. There’s also Amazon Mom, which is a service that offers amenities like 2-day shipping, discounts on diapers and wipes, and email offers.
The USDA report also notes that families with three or more children tend to spend less per child than families with two children. That’s because expenses can be reduced thanks to sharing rooms as well as buying in bulk for food and other necessities. The use of handed down items like clothes and toys can reduce the expenses of bigger families, too. More possible benefits for bigger families: discounts for child care, enrichment classes, and schooling. This Cost of Raising a Child Calculator from the USDA can help you estimate your own expenses. You can print your results or export them as an Excel file.
In addition to the expenses a new member of the family brings, you should consider the possible loss of income when one or both parents take time off from work. Along with the cost of education, this eventuality tends to impact a couple’s lifestyle the most. For short term breaks, parental leave may assist with the initial adjustments you’ll make when dealing with a new baby. But note that while parental leave covers a large number of workers in this country, it’s not offered by every employer. And if you run your own business, you may need to build up savings before you take time off. It’s also quite common for families to decide to focus on reducing to one income when children arrive.
The $226,920 cost to raise a child is an estimate, not an absolute figure. Also, Bloomberg Businessweek cites a Canadian study that found that parents prefer to emphasize the joy of parenting over the enormity of the costs. If you’re interested in adding to your family, there are a number of strategies you can pursue to lower your overall costs. By lowering expenses for categories like housing and supplies, it may be possible for you to afford to have a baby sooner than you think.
So if you’ve got kids, what kind of financial arrangements are you making?
Created September 14, 2007. Updated July 28, 2011. Copyright © 2011 The Digerati Life. All Rights Reserved.