From Diapers to Daycare: Financial Planning for Growing Families

It's no secret that having kids is an expensive undertaking. Beyond the immediate costs of having a baby, here's what you should be planning for in the long term.

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We've all heard the saying, “If you wait to have kids until you can afford them, you'll never have them.” That is true. But it does not mean you should never have kids if you want them. The important thing is that you are prepared—not necessarily to be able to afford the whole lump sum of raising a child, but to make the choices and tradeoffs that accompany parenthood.

Here are a few of the costs associated with having children you should consider:

The Basics

Any parent will tell you that the costs of children start racking up even before they're born. If you want to be (relatively) prepared for the arrival of your baby, you'll probably start shopping as soon as the stick turns blue. There's furniture for the nursery, clothing, strollers, diaper bags, and the list goes on. And on. And on.

Having a baby shower with a registry is a great way a lot of moms‐to‐be stock up on the essentials early. You can also save money by asking for hand‐me‐downs from friends who already have babies.

Daycare Versus Stay‐at‐Home Parenting

There is no cheap option. The cost of daycare can range anywhere from a low $420 to more than $1,400 monthly depending on where you live and what options are available. If a couple decides that one spouse will stay home to parent full time, you're not paying for daycare, but you are losing your second source of income. Fortunately, you may be able to find a work‐from‐home option to complement your spouse's main source of income.

Put a lot of thought into the options and what will work best for your situation.

Rejoining the Workforce

If you did decide to step away from working to raise your children, you may eventually want to go back to work. Unfortunately, job prospects for returning to work after a five‐ to 10‐year hiatus may not be as robust as you might expect.

With the rapid advancements of technology, it can be incredibly challenging to find a position that still matches your skill set. You may have to consider enrolling in certificate courses or training programs to catch up on lost time.

The Cost of Education

Even if you choose public schools over private, you're still paying for your kids' education. Living in a neighborhood with a high‐performing school district means paying more for a home or higher rent. There is also the added cost of school supplies, clothes, and technology.

One of the biggest expenses you'll face (if you choose to foot the bill) is a college education. If you want to send your child to a four‐year public college with in‐state tuition, you should put away $500 per month from the time your baby is born until they're 18. For a four‐year private college, that amount raises to a recommended $1,100 per month.

The Lesson

Having kids will likely be the best gift you ever give yourself—and also the most expensive. Be sure to consider the costs that will continue to add up as your kids grow into teenagers and adults. Have a financial plan for paying for their college, look for work‐from‐home options, and see if you can convince grandma to watch her grandchildren during the week. As they say, it takes a village.

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