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.

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 assist in the understanding the issues discussed. Neither Waddell & Reed, Inc., nor its financial advisors associated with Waddell & Reed give tax, legal, or accounting advice. You may want to consult with your accountant or tax advisor to discuss your personal situation.

Past performance is not a guarantee of future results. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance.

Associated Tags: Budgeting

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