New Born Baby

Oh, baby! That little one will cost you a bundle.

Share

A baby is a bundle of joy, however if you’re getting ready to start a family, that little one will cost you. According to a report from the U.S. Department of Agriculture, it will cost an estimated $233,610 over the next 18 years. And that doesn’t include saving for college.

Before becoming nauseated, consider the fact that you don’t need $233,610 on the day your baby is born. Take the time to create a financial plan that can lessen the burden of rearing children. A good place to start is with a spending plan.

Housing and food represent the largest expenditures when it comes to raising kids, with housing accounting for 26-33% of the total cost. The USDA comes up with those numbers by calculating the average cost of an additional bedroom. Other expenditures include transportation, health care, clothes and other incidentals. Creating a spending plan to know where your money is going can help. You’ll see more clearly where you can reduce costs and increase savings. The chart below is an example of how a typical household might spend its money.

The Cost of Raising a baby from birth to 18 years old.

The report from the USDA also states that child care and education are becoming much larger expenditures making up about 16% of the total cost. Data reported in a February 2016 survey conducted by Child Care Aware® reveals that the average annual cost of full-time infant care is on the rise. It’s most expensive in Massachusetts at $17,062 and least expensive in Mississippi at $4,822. Visit http://usa.childcareaware.org/costofcare and click on your state to determine average costs where you live.

It may seem too early to start thinking about college, however, according to the College Board College Cost Calculator, in 18 years a public in-state college will cost $153,000. Careful research and planning can position you to be prepared when your “baby” starts college.

Creating a long-term financial plan can be the cornerstone for financial success, whether you’re having baby no. 1 or baby no. 3. Talk to an advisor to develop a financial plan for your family.

Sources:
Child Care Aware of America, Parents and the High Cost of Child Care 2016 Report, usa.childcareaware.org/costofcare
U.S. Department of Agriculture, Expenditures on Children by Families, 2015, https://www.cnpp.usda.gov/ExpendituresonChildrenbyFamilies

Need more insight? Let us be your guide.

Our national network of experienced financial advisors can help you create a personalized plan to help you identify financial goals and get you where you want to go in life.

Find an Advisor

This information is provided for informational and educational purposes only. Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. This information is not meant to be a complete summary or statement of all available data necessary for making financial or investment decisions and does not constitute a recommendation.

Please note that the information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Waddell & Reed, Inc., nor its Financial Advisors give tax, legal, or accounting advice.

This information is not meant as financial or investment advice pertaining to your personal situation. The selection of appropriate investment, insurance or planning options and/or strategies should be made on an individual basis after consultation with appropriate legal, tax and financial advisors. Nothing contained herein is intended as a solicitation or an offer to buy or sell any product or service mentioned and they may not be suitable for all investors.

Securities offered through Waddell & Reed, Inc., Member FINRA/SIPC, are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. Insurance products are offered through insurance companies with which Waddell & Reed has sales arrangements. Guarantees provided by insurance products are subject to the claims-paying-ability of the issuing insurance company.

Associated Tags: Budgeting

Market Data powered by Wikinvest. Data is provided as-is, delayed, and subject to Terms