Hundreds of years ago, when farmers needed
an extra pair of hands to work the fields, having a child might have been a purely financial
decision. But today, unless you’re planning on raising
the next Justin Bieber, kids are a big, unpredictable cost--one that can make even a cool and collected financial advisor nervous. That’s right, Julia and I will soon be embarking
on what will probably be the most rewarding--but expensive--adventure of our lives. There are so many factors and variables to
having a child, it’s really difficult to make even a ballpark guess of what the total
cost will be… especially since, these days, some parents will never be totally off the
hook from this financial commitment. But just because you can’t plan everything
doesn’t mean you shouldn’t plan what you can, so here’s our beginner’s guide to
the general costs you can expect to incur in the first year of your new family member’s
life. Medical bills are notoriously hard to pin
down. A 2016 study showed that within New York City
alone, the cost for a non-cesarean delivery varied between $4022 and $17,646! And cesarean sections in Los Angeles ran between
$6,000 to $42,000! The best thing you can do is contact your
insurance provider and get as much info from them as you can: which care providers are
in your network, what procedures are (and are not) covered, and how much you’ll have
to pay out of pocket. You want to avoid nasty surprises like finding
out that certain tests aren’t covered or that you can’t use the facility you want. Make a special appointment with someone in
the billing department, and don’t be afraid to sound stupid. Grill them for every detail you can get! You should also assume that you’re going
to pay your full yearly deductible during pregnancy and the first year of pediatric
care. Don’t forget it usually resets at the beginning
of every calendar year! Philip and I have calculated that with pre-natal
care, ultrasounds, clinic costs, birthing coach, childbirth classes, and--sue me, I’m
worth it--pre-natal yoga classes and massages, we’re going to pay about $5,300 out of pocket,
just to get us to the birth. There’s not a lot you can do about medical
costs, but you can have a bit more control over stuff like cribs, car seats, onesies
and strollers. This is where family, friends and craigslist
can come in real handy. Remember, this thing is only going to stay
the same size for about .5 seconds, so don’t splurge on items that will have a short shelf-life. There are lots of parents out there who need
to offload the things their kids have outgrown. So far, we’ve only had to spend around $100
on maternity clothing thanks to friends and some serious thrift. We’re also anticipating around $300 for
a used crib, $200 for a bassinet, $300 for a fancy but used stroller set, $500 for the
first year of baby clothes, and another $800 for car seats, room decor and whatever else
we might not get from our registry. Unless you live in a country with generous
maternity leave (aka not the U.S.), a working woman will need to factor in a certain amount
of time off to get her baby through the first few months. Your choice is to either set aside part of
your budget in the months leading up to the birth to build a maternity cushion, or live
on a tighter budget after the baby’s born. Neither choice is super-appealing, but either
is preferable to piling up debt. The average baby will consume about 30 oz.
of breastmilk or formula a day. Breastmilk is essentially free, while formula
costs on average about 11¢/oz, so you’re looking at somewhere between zero and $100
a month to feed the little tyke. Diapers are a bit more expensive. A baby will need, on average, about 225 diaper
changes a month which means that, depending on the brand, disposables will cost you between
$90-$300 a month. Cloth diapers can save you about half that…
if you wash them yourself. If you use a laundry service, expect to pay
about the same as disposables. And while cloth diapers do cut down on waste,
according to one study, the electricity and water required to wash them mostly cancels
out any benefit to the environment. No way around it, you will be adding two adorable
little carbon footprints to the world. This is the big one. Child care is the #1 expense for most families
and it can take a million different forms. There’s daycare, nanny-share, free grandparents,
private nannies or a spouse that stays home. According to The National Association of Child
Care Resource, the average cost of center-based daycare in the United States is $972 a month. And the average nanny can cost anywhere from
$2,000 to $3,000 a month for full-time care. Nearly one in three families report spending
20 percent or more of their household income on child care alone! The best way to start nailing down a number
is to ask your friends and family who live in the same city what their method of child
care costs. The US Department of Agriculture also has
this handy online calculator that gives you an estimate of child-raising costs based on
your region and preferences. I never really thought of babies as agriculture,
but I guess they do produce a lot of fertilizer. It’ll be a long time before Julia and I
really know what the cost of raising this particular human will be, but one thing we’re
already glad we did is build up a 3-month emergency fund. Knowing that we can deal with unexpected costs
without accruing debt helps us sleep at night. If only we could save up an emergency
fund of sleep. So if you think you might have a child in
the near future, start feathering your nest with cash now. Remember, just because you’re going to be
a new parent doesn’t mean you need a new house or a new car--baby won’t judge! It’s way more important that you’re not
financially stressed during those first magical years. And that’s our… three cents!
