The Center for Nutrition/Policy and Promotion division of the U.S. Department of Agriculture reports that by the time a child born in 2004 reaches age 6, parents with an income exceeding $70,200 a year (the median family income for 2003 was $52,680) will have spent $95,840 on said child. The report also notes that parents with a $70,200-plus income will have shelled out about $353,000 by their child’s eighteenth birthday. It’s no wonder that people are intimidated by the supposed large price tag of raising a family.
If you don’t have insurance to cover the cost of delivering the baby, add on anywhere from $2,000 to $11,000 depending on where you deliver. (Midwife-attended homebirths are significantly cheaper than hospital births, and some uninsured families will choose homebirth for this reason.) Then tack on college expenses, which are estimated to run about $130,000 for four years at a public university in the year 2021.
Those who live in rural areas will pay about 7 percent less overall than the average urban-area couple because housing costs are lower. But rural families spend more on transportation and medical care, possibly because of greater distances to be traveled and lack of medical professional competition.
A second child certainly will not double your expenses, as you can take advantage of hand-me-down nursery furniture and clothing, and will typically cost about 20 percent less than the first. But what if there isn’t enough room for another family member? You might be able to have your children share a bedroom for some time, or make a second bedroom from a small office as we did. We moved the office into our larger bedroom.
About 25 percent of all families with children under six are being headed by single parents, according to the Census Bureau. Lower-income single parents will spend less for most of their child’s needs and, surprisingly, a lot less on child care, possibly because they are more likely to rely on relatives to baby-sit. Also, they may be more concerned where what money they have is being spent and more likely to spend less.
So what about all the other expenses, such as fancy teenage clothes, soccer, and piano lessons? Let’s not get ahead of ourselves. Luckily for us, parenting is a pay-as-you-go gig. Read about the major expenses you’ll face in your baby’s first few years and how you can manage them in Let’s Talk About Offsetting the Financial Squeeze of Parenting.
The key to succefully integrating a new family member is to prepare ahead of time. That means now, during your pregnancy, if not sooner. For a great example of how to get your finances in order before baby comes, see Let’s Talk About Pregnancy and Finances.