7 Costs that can affect your financial life after having a child
Many would-be parents are facing financial stress due to the rising costs in bringing up a child in our nation as the cost of raising a child increases every year. According to the latest estimates made by the Department of Agriculture (USA), a child born in 2018 now costs $233,610 to raise to the age of 18.
The survey has also stated that the expenses for child care, education, and health care has increased in such a way as never before. For an average income family, the estimated range is from $11,650 to $13,530 each year.
Fortunately, the United States Department of Agriculture provides us with a Cost of Raising a Child Calculator using which a parent can figure an approximate annual expense to bring up a child. Once you put the required data within the cells, the calculator graphically represents the overall estimated annual costs of various things like food, housing, clothing, health-care, transportation, education, and others. Moreover, keep in mind that you have to enter information like your region, income, and number of children in the calculator.
Having children is undoubtedly one of the priceless gifts. However, while planning for children, you should be aware of certain hidden costs that come along with parenthood. The knowledge will help you manage your personal finances such that you can enjoy parenthood without having to fall into debt problems. Remember, the overall monthly expenses will rise after having a baby. So, if you can’t manage multiple bills consolidate your bills to make it simple. By doing so, you can stay out of a debt mess in your life.
Read on to know how much does having a child affect your financial life.
1. Cost of buying health insurance
You may have to spend more on health-related issues after you have a child. So, it is advisable that you buy suitable insurance policies beforehand. Even if you need to pay a comparatively higher premium on health insurance, yet it is relatively cheaper than expensive medical bills.
2. Buying food for children
Shopping for food and grocery items comprise a major portion of your budget. The cost of food is likely to increase as your child grows up. Research reveals that the food budget per child almost doubles when a child is in their teenage years. Moreover, the cost may become even higher with the increasing price of food items. If you take your child shopping with you, then you may end up buying more as your child may get attracted to a product and want it.
3. Celebrating kids’ birthdays
You will also have to budget for celebrating your kid’s birthdays. It has been found that a couple spends about $200-300 on a kid’s birthday party. You need to arrange for a cake, food, entertainment along with goodie bags for your kid’s friends. Moreover, your child will also attend others birthday parties and you’ll have to buy suitable gifts on such occasions. So, you should take this cost into consideration while planning an annual family budget.
4. Paying for your child’s education
The cost of education is increasing day by day. The education cost will increase if you get your child admitted to a private school instead of a public school. However, you can get some relief as you may qualify for childcare tax credit if you and your spouse, both are working.
5. Money spent on children’s activities
The parents need to spend a substantial amount on their children’s extracurricular activities as well. It’ll be quite expensive if your child gets admitted to a number of such activities. Moreover, you may have to purchase costly sports items, musical instruments, etc. However, you may get the required equipment at an affordable cost if you buy second-hand items.
6. Buying clothes for children
Buying clothes for children may be quite expensive if you want to buy branded garments. You may forget about budgeting when it comes to buying clothes for your little ones. However, the cost can be reduced to some extent if you look for your child’s clothes at a discount store instead of a branded shop. Young kids rarely care what they wear but that often changes as they get older and want the latest fashions to fit in with their peers.
7. Cost of buying a new house
When you have a child, you may feel the need to buy a new house. If you’re staying at a comparatively smaller house, then you may have to set a financial goal to buy a new house in the near future. This is because your children will want separate rooms as they grow up. However, until you’re financially savvy to afford a new house, you can make your children share rooms. For example, if you have 2 daughters, they can easily share a room for the time being. You may also consider renting a larger house if you can’t afford a down payment on another house.
Lastly, some of the parents are of the view that they tend to spend more due to the time crunch. Your time crunch can result in spending relatively more on restaurant meals and you may also pay more for household help. Moreover, you may also end up paying more when you don’t have time to shop around and compare prices before buying the necessary items.
Thus, when you’ve just received the good news that you’re a would-be parent, buck up and get your finances in order so that the newborn can have everything that he needs without any fuss. Don’t overspend and splurge as you may fall in debt, which is a big “no-no.”
