According to the Wall Street Journal, a baby born in 2009 will cost its parents $222,360 to raise until the ripe age of 18. Clearly, becoming a parent is far less stressful (and far more enjoyable) when you have the financial means to comfortably support your family.
Whether you plan on being a frugal momma or fully intend on spoiling your child rotten, here are a few points to consider before taking the leap into the wonderful, yet costly, world of parenthood.
1. Childcare. Can you afford to set aside an extra $1,000 to $1,200 per month for childcare? If not, do you have willing family members and friends that are able to care for the baby while you work a fulltime job?
It may come as a relief to know that you can receive a tax credit up to $3,000 per child by spending an equivalent amount in childcare expenses throughout the year. Be sure to use a licensed childcare provider, as it is the only admissible method of childcare that can result in a tax credit.
2. Can you afford maternity leave? Employers are required to allow you a maternity leave. However, whether or not the leave is paid is at the discretion of your employer.
If you qualify for short-term disability insurance, you can receive a percentage of your monthly income throughout your leave. However, there will still be a gap in your income until you return to work.
If you’re not eligible for compensation throughout your maternity leave, be prepared to trim your expenses and build up a savings equal to two to three months of your income before having a baby in order to ensure that your new family will be able to stay afloat.
3. Skip the fluff. Plain and simple, most of the baby products geared towards expectant moms are fluff. You can do without an $800 stroller, a fancy crib, or a changing table with all types of secret compartments.
If you’re able to score an item that is safe and fulfills the necessary function for a fraction of the cost of a pricey-but-cute alternative, always choose safe and inexpensive over safe, expensive, and cute.
Consider shopping for clothing at thrift stores. Your baby won’t be able to tell whether his jumper came from Gymboree, Wal-Mart, or the Salvation Army.
Ask for hand-me-downs from friends and family members with children. You can save hundreds or even thousands by simply asking for contributions. Refrain from feeling like a bother – most moms will feel thrilled to free up valuable storage space.
4. Living quarters. When your family expands to three (or more), will you need to upgrade the size of your living quarters? If so, can you afford to do so before baby arrives?
If you’re planning on purchasing a home before your child arrives, ensure that your credit score allows you to qualify for a fair interest rate, you have enough money to place a down payment, and that you’re able to handle all of the increased expenses of home ownership.
If you’re strapped for cash, it’s possible to make a small space work for your family. After all, babies need very little space throughout their infancy. But once your baby begins to crawl and walk, you may need to think about expanding your living quarters.
When you’re responsible for providing food and shelter for your baby, there’s no mountain you won’t move. Like most families, you’ll always find a way to make ends meet.
But, the true question is: Do you want to be in a comfortable financial situation, or will you be content with scraping by? Becoming a parent is a lifelong commitment – take your time and consider your options before deciding whether it’s the best decision for you right now.
Filed under: Money Management