You’d better budget for that baby

When I was having my first child, my friends and family were very concerned.

Knowing my penny-pincher nature, they weren’t sure I would buy much of anything for my newborn. So they threw me a shower. I received some wonderful and thoughtful gifts.

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.” View Archive

But you know what?

Most of the clothes and items were barely used. My baby girl — born 19 years ago this month — grew so quickly that I couldn’t get her into the outfits fast enough. Some she wore once or twice. Expensive educational toys were ignored in favor of jingling car keys or the cardboard boxes the items came in. Gadgets and products that promised to make it easier to care for my baby often just got in the way.

I’m saying all this because if you’re expecting, focus your finances on the big-ticket items, such as day care. Consider this sobering news from the U.S. Agriculture Department, which releases an annual report on the cost of raising a child. A middle-income family with a child born in 2012 and earning between $60,640 and $105,000 can expect to spend about $241,080 until the child is 17 for food, shelter and other necessities. For a family earning less than $60,640, expect to spend $173,490. A family earning more than $105,000 can expect to spend $399,780.

After the cost of putting a roof over the head of your child, the next biggest expenses you will face are for care and education, including babysitting, day care, books, fees and supplies. If you send your child to private school, add the cost of elementary and high school tuition to that list.

The average annual cost of care for an infant in a day-care center can range from $4,863 in Mississippi to $16,430 in Massachusetts, according to a report last year by Child Care Aware of America. Depending on your state, the average cost of full-time care for an infant in a day-care center ranges from 7 percent to about 19 percent of the state median income for a married couple with children, the report adds. In 2012, in 31 states and the District of Columbia, the average annual cost for an infant in center-based care was higher than a year’s tuition and fees at a four-year public college, according to the organization.

You can go to usda.gov and search for “cost of raising a child.” The calculator can be tailored to give you an estimate of your costs based on where you live, your household size and income. You can compare what you spend with the national average.

Here are some steps you can take to budget for your little bundle:

Baby step 1: Start collecting information. Before you can calculate costs, you need to know price. Don’t wait to find out after the baby arrives. Check out the major expenses, from diapers to day care.

Baby step 2: Baby-proof your budget. How are you going to pay for the expenses of raising a child? Either you’re going to make more money or you’ll have to cut current expenses, or both. If it’s only the latter, something’s got to give. There are a number of free sites that calculate budgets online. One of the most popular is Mint.com, which also includes articles to help you save. In particular, search for the posting on baby gear money traps, which lists diaper wipe warmers and baby kneepads among other unnecessary items.

Baby step 3: Dump the debt. Do as much as you can to get rid of it so that you can have more money for baby expenses. I favor a debt-buster method in which you list all your obligations, starting with the one with the lowest balance. Throw any extra money at that debt while making the minimum payment on the rest. When you’ve paid off one, move on down the list.

Baby step 4: Build a savings safety net. Just like you have to baby-proof your house, you need protection in case of emergencies. Start or build up an emergency fund aiming for three to six months of living expenses.

Baby step 5: Start saving for college soon after the baby is born. In fact, when people ask what you need or would like, tell them you would love a contribution to your child’s tax advantaged 529 college savings plan (but only if they ask and insist on getting the baby something). One of the best sites for information on 529 plans is Savingforcollege.com.

Right about now you might be thinking, “A pet would’ve been cheaper.”

Just kidding. As the mother of three, I know you’ll receive priceless joy from having children. Just plan and be prepared for the stuff that costs money.

Readers may write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or singletarym@washpost.
com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise specified.To read previous Color of Money columns, go to postbusiness.com.

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