When most people talk about family planning, they are talking about birth control. Mr. Money comes at it from a different perspective: economic planning. Children are wonderful. Mr. Money knows firsthand because of his two beautiful children. But he also knows raising children is another major expense in your life and like all of those major expenses (buying a house, retiring, etc.) you need to start planning and saving.
Do Your Homework
If you are thinking about having a baby in the future, now is the time to start working towards that goal. You want to begin saving money so you can afford to make this major life change. But first you need to know how much it will cost you and that takes some research.
First, you’ve got to find out what it costs. If you have friends or family members who recently welcomed a new baby into their homes, give them a call and ask how much the hospital bills cost. Ask about the doctor visits and the special pregnancy vitamins. You need to know approximately how much you need to save for these expenses. If you have health insurance, figure out how much of those costs would be covered and how much co-insurance you would need to pay.
But don’t just stop with the medical costs. Those are major expenses but you’re also going to need furniture for the nursery, a car seat for your vehicles, strollers, high chairs, diapers, clothes, formula, bottles, and toys.
If you plan on staying at home with the baby, you need to save enough money to replace what you will be losing in terms of income. If you are going back to work after six weeks, you’ll need to have money put back for nannies and babysitters.
Don’t just plan for that first year either. You’ve got to think long-term. If you want to send your child to private school, know the cost and start saving for the tuition.
Just as with any major expense, you need to open up a separate savings account where you can stash a certain percentage of your income each week or every two weeks. The savings comes off the top of your incoming money – don’t plan on just putting back whatever is left over. Otherwise, you’ll never build up enough savings to afford expanding your family.
If your income is too tight to save money, you need to look at your cash flow and make some adjustments. Remember if you can’t afford to save money out of your check for a future baby, you aren’t in a good place financially at the moment to have a baby. Try reducing what you spend on flexible areas, such as food or entertainment.
You can follow this same idea regardless of what your baby plans are. For example, if you think you might have twins: save double the money. If you plan on adopting, you’ll experience a lot of the same costs but you may also have travel expenses or birth mother payments to add into the mix. Thinking ahead and saving money for the future will help you be better prepared for this exciting but expensive life change.
Now Mr. Money knows a lot of you are also parents so I’d love to hear some feedback on just how expensive it is to raise a child today. What is the biggest expense? What was the most surprising cost? Share your stories in the comments.