Becoming a parent for the first time is exciting. You’re thinking about how you’ll decorate the nursery and all of the cute clothes your bundle of joy will wear. However, it’s also important to think about how that brand new baby will impact your budget. The average cost to raise a child born in 2013 is roughly $245,000 according to a 2014 report released by the United States Department of Agriculture. This is a 1.8% increase from the year before. Not surprisingly, housing and child care costs were cited as the top expenses.
“For middle-income families, housing costs are the single largest expenditure on a child, averaging 30% of the total cost. Child care and education was the second largest expense at 18%, followed by food, which accounted for 16% of the total cost,” notes the U.S. Department of Agriculture report.
Children are expensive, so you’ll want to do everything you can to keep as much cash in your pocket as you can. Here are some financial mistakes you should avoid.
1. Skimping on the baby registry
Now is not the time to be shy when it comes to your baby registry. Make sure to include everything you think you’ll need for your child. Don’t get caught up with adding too many novelty items, like monogramed pillows and stuffed bears. Include items that you’ll get a lot of use out of, like diapers and baby wipes. Think of what you will need to use daily. It’s the smaller items that tend to chip away at your budget.
2. Buying everything new
Your first instinct might be to purchase shiny new items for your baby, but this will surely break the bank. Although it may be tempting to try to keep up with your friends who have also just had babies, it’s not worth the cost. In a few months, no one will remember that designer baby bag or stroller. Instead, ask family and friends to give you their gently used baby items. Also look online for additional pieces. Clothing items can be especially costly since children grow out of their outfits so quickly. Online consignment shops like Swap.com and ThredUp are good places to start.
3. Not saving
Start saving up for your child’s future expenses as soon as you find out you’re expecting. Prepare now for long-term costs such educational expenses as well as short-term costs such as childcare, baby formula, and medical emergencies. One great way to begin saving for future college costs is to open a 529 College Savings Plan. Funds for more immediate expenses can be raised by asking friends and family to give money instead of toys for birthdays and holidays. If you’re hesitant to ask for money directly, request a gift card.
“Gift cards are essentially money, but because they’re dedicated to a specific store, it feels more like asking for a gift. Now if you can wrap yourself around asking for a MasterCard gift card, you’re halfway there. Many 529 college savings plans offer gift certificates. If you’ve mastered asking for a gift card, this should be no problem,” said Dorothy Frank.