A Baby Costs How Much in Those First Few Years?

smiling baby looking at camera under a white blanket/towel
Iurii Sokolov
Babies bring a ton of joy and wonder into our lives -- and a ton of extra expenses.

The average cost to raise a child, over the course of 18 years, is around $241,000 for a middle-income couple, according to the U.S. Department of Agriculture. (This doesn't include the cost of college, which is another article in itself). Let's break down basic baby costs in two categories: what you need at the beginning and what you'll be spending in the months that follow:

Upfront Costs
  • Childbirth. Thecosts of pregnancy, delivery and postnatal care are huge. Even if your insurance pays for part of it, you'll end up on the hook for your deductible (which may range from $500 to $3,000), plus your co-insurance (with can be 20 percent to 30 percent of the total), plus office visit co-pays (with can cost $30 to $75 per office visit.) Review your health insurance policy to see what is covered and what you must pay out-of-pocket, but expect the following price ranges for overall cost, according to Parenting.com: vaginal delivery ($7,000-$10,000), C-section delivery ($10,000-$12,500); delivery with complications (up to $250,000-$300,000)
  • Mementos. You might want a few keepsakes from your baby's birth, but remember that posting pictures from your phone on Facebook (FB) is free. Consider these price estimates: birth announcements ($50), baby book or scrapbook ($25) and photo printing ($130)
  • Insurance. You'll have two major insurance needs: health care for the baby, plus term life insurance for yourself. Adding a baby to a family health insurance plan will cost in the neighborhood of $200 to $450 a month. The cost of taking out life insurance for yourself will depends on your age, health and the amount of coverage you desire. But as an example, a healthy non-smoking male can get $500,000 in coverage for around $350 to $450 a year.
  • Supplies. Are you ready for an incredible list of everything you'll need when the baby arrives? Assuming you purchase everything new, here are the price estimates: furniture ($1,000-$3,000 for crib, changing table, rocking chair and accessories); bedding, blankets and mattress ($150-$200); bassinet ($100); stroller ($100); baby carrier ($20-$50); car seat ($100-$200); diaper bags ($50); feeding supplies ($90 for bottles and nipples, bibs, burp cloths and bottle brush); highchair ($100); baby monitor ($50); cleaning and toiletries ($50 for bathtub, towels and washcloths and accessories); play yard ($80); bouncer ($40); play mat ($50); mobile ($30); childproofing supplies ($45); and safety gate ($120). According to Parenting, new parents typically shell out $6,000 in total for supplies, though you could pull it off for $2,000 or less if you're a careful shopper.
Monthly Costs

Baby is here! Now here's what you can expect to pay going forward, according to a combination of estimates from BabyCenter.com and WhattoExpect.com:
  • Diapers. Many parents report that diapers are one of the biggest sticker shocks when their first baby arrives. Here are the costs: disposable diapers ($30 to $85 a month), diaper pail ($25), cloth diapers ($20 a month), diaper service ($75 a month) and cleaning wipes ($20 a month).
  • Food. You may or may not need baby formula, depending on your health and choices, but your child will start eating solid food after roughly six to eight months. Expect these costs: formula ($60-$100 a month); nursing bras ($50-$75 each); breast pump ($50-$250); nursing pillow ($30); milk storage bags, breast pads, ice packs and accessories ($75); baby food once your baby starts solid food ($50-$100 a month); and plates, bowls, sippy cups, utensils once on solid food ($45 one-time cost).
  • Day care. Day care when your child is a newborn will cost more than it will in later years since babies require extra care and attention. Depending on where you live, annual day-care costs can be $5,000 to $20,000 a year.
  • Clothes, toys, books, etc. These items are actually among of the cheapest, in part because they're mostly discretionary. Plan on spending $30 to $80 a month, for a reasonable quantity of clothes and other items.
Helpful Hints

By any measure, these are worrying numbers. And if you and your spouse decide that one of you should look after the child full-time, thus becoming a one-income family, the numbers become even more daunting.

One of the best ways to defray the costs of having a baby is by tapping into your network of family and friends. Can your brother, sister or your friends give you items -- like a crib, stroller, toys, books or some clothing that their own children have outgrown? Would grandma or grandpa be willing to watch the kids, even just one or two days per week, while you're at work?

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 32 countries, owns seven rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who want to ditch the cubicle, shatter limits and live life on your own terms -- while also building wealth, security and freedom.

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A Baby Costs How Much in Those First Few Years?
"We're living in the 'now' generation, with kids wanting everything now and a lot of parents giving in," says Dan White, a certified financial planner with Dan White and Associates in Glenn Mills, Pennsylvania. But there's a difference between simply wanting the shiny new thing because it's out there and desperately needing the shiny new thing because not having it has larger consequences in your teen's mind.

"Sometimes teens feel that if they don't have the latest and greatest gadget, they won't be popular or fit in," says Kimberly Foss, a certified financial planner and president of Empyrion Wealth Management in Roseville, California. "This is reflective of a deeper issue of self-worth and self-esteem."

The prevention: Foss recommends asking in a calm, non-emotional environment about the reasons they made the purchases and listening to the response and watching the body language. Counseling may be in order if you feel your teen is compensating for a bigger emotional issue, Foss says.

If it's just a case of your teen wanting the next newest thing, White recommends establishing an allowance and saying no to your kids when they ask for more.
According to a recent Gallup Poll, 68 percent of American adults do not have a detailed monthly household budget. Kids who don't see their parents paying attention to the family's inflows and outflows are going to have to cram in later life to learn those important lessons -- in real time, with their own real money.

The prevention: Kids should learn the concept of budgeting for life's expenses before they go to college, advises Ric Runestad, owner of Runestad Financial in Fort Wayne, Indiana. Establish your own budget and share it with your kids. Have your children make their own budget for things like vacations and summer camp.
"The odds of winning the lottery is somewhere around 1 in 259 million," says Gregg Murset, a certified financial planner and CEO of MyJobChart.com in Scottsdale, Arizona. "If your child thinks this is a good way to plan for the future, just start planning now to have them living with you during your retirement."

The prevention: Make sure you're quickly correcting your kids whenever they mention a lottery ticket or windfall. (Search "odds of winning the lottery" for even more colorful examples.) Explain the importance of saving and working hard to fulfill their future dreams.
It's one thing if your child asks to borrow a few dollars to buy something and pays it back immediately when you get home. "However, if a child starts to treat their parents as a payday loan service, then the parents should act as a payday loan service by charging expensive rates of interest," Runestad says.

The prevention: Reinforce the "If you want it now, you have to pay for it now" behavior by instituting a realistic interest rate on borrowed money. Take a cue from the credit card industry and set it around 15 percent. Run the math with your child and show how much more an item costs in the long run when it is paid for with borrowed dollars.
Does your child assume (unrealistically) that he or she will replicate your lifestyle when it's time to be on their own? Here, again, there may be a communication breakdown. "It's important for parents to assess their own behavior and guide the child in the right financial direction," says Eric Johnson, principal of Signature, a wealth management advisor in Charlottesville, Virginia. "If they're spending lavishly and telling their children to save, there will be a large disconnect in the child being able to form solid monetary values on their own."

The prevention: Talk early and often about your money values and reinforce the idea that your wealth may not be a signal of your child's future lifestyle.
"Children can be every bit as gullible as adults when it comes to trying to help someone out who really is just taking advantage of them," says Runestad. "Everyone wants to be liked, and we all have times we need someone to lend us some money. However, any time money is lent it should be under very stringent requirements."

The prevention: You can't always know about your child's private financial dealings. But you can instill in them standard expectations when it comes to money issues by consistently following certain money rules when they come up at home. So, when you lend money to your child, remind them that you are not in the debt forgiveness business and you expect full repayment of the loan by a certain date. Consider drawing up a standard fill-in-the-blank lending document for all parties to sign.
"While piggy banks can be a cute way for a youngster to learn about nickels and dimes, what purpose do they serve after that?" asks Murset. "If your kids are old enough to earn money, they're old enough for their own bank account."

The prevention: Open a bank account with your child, walk them through the process of making deposits, teach them about online banking and earning interest. There's no better education about the adult world of finances than actual hands-on experience with the products they'll be using for the rest of their lives.
"Some kids think that credit cards represent free money that banks give away for people to buy things," says Murset. "Until your children have a clear understanding of how cash advances work and what interest rates, penalties and fees mean, they shouldn't have one."

The prevention: Teach your kids the difference between a debit card and a credit card as you use them. When they are old enough, get them a pre-paid credit card. Fund it with their allowance or savings, and give them room to make their own mistakes (such as running out of money because they weren't keeping track of the balance). Better that they learn the lessons of proper plastic usage under your watch.
If your kids spend more time watching TV or playing video games than helping around the house, they're not developing a sense of responsibility, says Murset.

"Get your children off the couch and out of their rooms to do their share around the house," he says. "Besides building a daily routine, they'll develop a good work ethic."

The prevention: Not all chores should be equated with payment. Helping around the house is simply part of what family members do. However, certain chores and work above and beyond the basics can be linked to extra payments. As your kids develop a work ethic, they'll start to learn that doing a good job and taking on more work can be satifying both financially and emotionally.
"Young adults are made to believe that once they graduate college they'll be able to pay off their student loans quickly," says White. "That couldn't be further from the truth. An average student takes a minimum of 10 years to pay off an undergraduate degree."

The prevention: Together, as a family, go over all of the costs of higher education -- everything from tuition to room and board, meals, gas money, and airplane tickets home for the holidays. Together, discuss ways to cut costs. And make sure your kids are exploring every opportunity and avenue for covering college expenses before they commit to a large loan, says White.
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