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282 MG Family Financials: What to Expect When You're Expecting

7 things to consider before a new family member arrives.

Broadcast on:
05 Sep 2012
Audio Format:
other

7 things to consider before a new family member arrives.

[MUSIC PLAYING] Hi, friends. I'm Laura Adams, and you're listening to the Money Girl podcast. Having a baby can be an exciting time for a couple, but it can also leave you worried and stressed out about your finances. Since I'm not a parent, I asked a special guest to share her sage advice in today's episode. It's Cheryl Butler, the host of the Mighty Mommy Podcast. She'll give you seven financial tips to plan for a new family member, so you'll be as prepared as possible. Thanks, Laura. Starting a family is one of the most exciting and important decisions a couple will ever make. There is so much to consider. What will the sex be? Can you decide on a name you both like? How will you decorate the nursery? Who will stay home with the baby? And perhaps the most overwhelming question, how are you going to pay for all that comes with this bundle of joy? Take a breath and relax. I've been down this path eight times. Don't worry. You don't have to be extreme like I was. And believe it or not, once you take the time to figure out what expenses go hand in hand with a new baby, you'll be able to plan your life and your budget much more efficiently. According to the Department of Agriculture's latest estimates, raising a child to age 17 in the United States costs about $235,000. This figure includes just the basics, like food, housing, transportation, and childcare, add collagen to the mix, and the cost of a child can run much higher. Here are some key expenses to keep in mind before and after the stork arrives. Number one, maternity leave. You will need to consider how you'll manage on one income during maternity leave, and a possibly reduced income during the pregnancy. This will, of course, depend on your employer's maternity benefits options. Number two, work versus staying at home. Who will care for your new baby is a very personal decision between you and your partner? If you are contemplating one parent staying at home and possible future children, you need to determine what your expenses are ahead of time so you can see if your growing family can manage on just one income. Number three, health and life insurance. The most immediate issue when you're thinking of adding a new member to your family is how much of the associated cost will be covered by your health insurance. Be sure to consider co-pays for both well and sick visits, as well as deductibles, and certainly what any out-of-pocket expenses will be for the prenatal care and delivery. In addition, don't forget about life insurance. If something happens to you or your significant other, life insurance can help your surviving family cover the bills, including child rearing expenses and college costs. Number four, nursery items and paraphernalia. Babies do not come with instruction manuals, and they also don't come equipped with all the items you'll need to take care for them. A typical nursery consists of a crib, changing table, cradle, dresser and bureau, rocking chair, and even a bookcase and a toy chest. Then there are big ticket items such as car seats, high chairs, and strollers. Keep in mind that most expectant moms have baby showers thrown in their honor, which can help defray the costs of these necessities. But if you don't receive all your items as gifts, you can either shop the sales or check out great finds at consignment stores, yard sales, and even on eBay and Craigslist. I love learning and anything that makes learning easier. If you're a parent and your child needs some homework help, then IXL is a right for your family. IXL is an online learning program for kids covering math, language arts, science, and social studies. IXL has interactive practice problems for topics from pre-K to 12th grade, and everything is organized by grade and subject. As kids practice, they get positive feedback, awards, and explanations for wrong answers. IXL figures out what your kids need more help with, and recommends more topics to practice. Their videos, lessons, sample problems, and learning games too. One subscription to IXL gets you all subjects and all grade levels. Membership started just $9.95 a month. It's no wonder IXL is used in 95 of the top 100 school districts. I think the positive feedback that IXL gives is really crucial when it comes to learning. So make an impact on your child's learning. Get IXL now, and money girl listeners can get an exclusive 20% off IXL membership when they sign up today at ixl.com/moneygirl. Visit ixl.com/moneygirl to get the most effective learning program out there at the best price. AI might be the most important new computer technology ever. It's storming every industry, and literally billions of dollars are being invested. So buckle up. The problem is that AI needs lots of speed and processing power. So how do you compete without costs spiraling out of control? It's time to upgrade to the next generation of the cloud, Oracle Cloud Infrastructure, or OCI. OCI is a single platform for your infrastructure, database, application development, and AI needs. OCI has four to eight times the bandwidth of other clouds, offers one consistent price instead of variable regional pricing. And of course, nobody does data better than Oracle. So now you can train your AI models at twice the speed and less than half the cost of other clouds. If you want to do more and spend less, like Uber, 8x8, and Databricks Mosaic, take a free test drive of OCI at oracle.com/advanced. That's oracle.com/advanced, oracle.com/advanced. Number five, miscellaneous items. The popular website, babycenter.com, estimates that disposable diapers for a newborn will cost $72 every month. The same website estimates that using a diaper service would cost $76, and washing your own cloth diapers would cost $19. Food for a newborn varies depending on whether you breastfeed or formula feed. If you breastfeed exclusively, the cost is virtually nothing. The breastfeeding center of Ann Arbor website advises that formula feeding a newborn for the first month will cost between $49.50 and $99, depending on how much the baby eats and the formula you choose. And that does not include the cost of bottles. Medicine will cost approximately $23 per month, toiletries will approximately cost you $21, and many parents spend as much as $35 per month on toys and books. So if you're having a new baby, you should expect to spend anywhere from $148 to $255 per month at the outset. And of course, more is your baby grows and his needs change. Number six, daycare. If you plan to place your child into daycare, you need to calculate the cost of that service into your budget. According to WebMD, average daycare costs are approximately $1,200 per month. Perhaps hiring a nanny is more your style. And more companies are now offering in-house daycare centers so parents can visit their kids at lunch and break times. Be sure and check with your pediatrician and other mom friends to get recommendations so that you can compare settings and cost. And number seven, college. Most parents dream of sending their children to college, and in my case, that's eight tuitions. But it's a priority for our family, so we have made sacrifices to make this happen. Paying for college has dictated the size of the home we live in, the vacations we take, and even the food we eat. You wouldn't believe the things I can do with macaroni and cheese. It's never too early to start thinking about a savings plan for college. Having a child is one of the happiest, most exciting, and most stressful time of a couple's life. The list I just reviewed is a guideline of what new parents can expect financially. But the overwhelming love and joy you're going to feel when you hold your baby for the first time, that is absolutely priceless. Cheryl, thanks for sharing those great financial tips for starting a family. For more practical parenting tips, be sure to subscribe to the Mighty Mommy Podcast at quickandertitips.com or iTunes. For more money tips, don't miss the free Money Girl newsletter, the Money Girl Facebook page, or following me on Twitter, where my username is @LaraAdams. It's L-A-U-R-A-A-D-A-M-S with No Space. To read a transcript of this show, which is episode number 282, called Family Financials, What to Expect When You're Expecting, just go to the Money Girl section at quickandertitips.com. We always post the full show notes there and give you additional resources. I'm glad you're listening. To change. That's all for now. Courtesy of Money Girl, your guide to a richer life. [BLANK_AUDIO]