By Dana Donovan
I will never forget the first trip to Babies R Us after my daughters were
born and the $300 dollars we spent for one week worth of supplies. It wasn’t
until that moment that I realized just how expensive our little bundles
of joy were going to be. From diapers to baby furniture and daycare, the
expenses for new parents mount quickly. For some, the reality of these expenses
is daunting. For others, they are completely unaware of how the joy of a
new child will impact their financial situation.
So, just how much does a baby cost? The answer depends on many factors.
Does one parent stay at home or does the family hire a child care provider?
Will the child attend public or private school? Is there a need for a larger
home or car for the growing clan? According to the U.S. Department of Agriculture,
raising a child costs an average of nearly $11,000 the first year and more
than $220,000 for the first 18 years. Then on top of that add the
cost of college and the numbers can cause potential parents to think twice
about getting pregnant.
So where do expecting and new parents start? Thrivent Financial for Lutherans,
a not-for-profit, Fortune 500 financial services organization offers these
five “baby steps” to help them prepare.
- Start early. During your pregnancy, take the time to determine
your family’s immediate financial needs as well as your long-term goals.
- Create a realistic budget. Determine the true cost
of what you will need and weigh it against the new realities of your
household income situation. This is particularly important if you plan
on leaving the workforce for an extended period of time. Consult another
new parent for a list of monthly baby expenses to get a clear picture of
those costs.
- Start and/or increase an emergency fund. The chances
of unexpected expenses will become much greater when the little one
comes on the scene.
- Protection through proper insurance. It’s time
to face your own mortality and vulnerability. Protection is critical.
Consult with a financial professional to insure your health, property,
income and life through appropriate insurance. In addition, consider a
juvenile life insurance policy when your child is born. Also, be sure to
update the beneficiary designation on your own policies once the baby is
born.
- Save for college. Before you know it they will leave
the nest, so start saving for junior’s college experience now. A
financial professional can assist with the various investment tools available
today for college savings. Furthermore, opening a savings account in the
child’s
name is a great starting point for depositing monetary gifts given to the
child.
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