You may not be ready for a baby today, or even in the next five years. But, theoretically: Could your finances handle a little one?
Take a deep breath: According to the U.S. Department of Agriculture, a baby born today to a middle-class family will cost about $221,000 by the time she turns 18—not counting college! For more info, look at a detailed breakdown of child-rearing costs. Before you fall into a dead faint, remember that you won’t shell out that whole sum at once.
From birth to age 17, the average middle-income family spends about $221,000 raising a child. Here’s how that breaks down:
We can’t know whether you’re ready for a baby emotionally, but you’re probably ready financially if you can answer “yes” to at least 4 of the following 6 questions.
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Do You Have at Least $20,000 in Savings?
First, you’ll probably have to pay some out-of-pocket expenses for your pre-natal care and delivery, even if you have insurance. A normal pregnancy typically costs between $6,000 and $10,000—much more if you need special care or a procedure such as a C-section. Next, your baby’s first year will cost approximately $8,000 to $10,000 (more if you live in a high-cost-of-living urban area). Plan to have at least $20,000 in the bank at the outset.
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Do You Have Debt Under Control?
If not, aim to get your debt to manageable levels before embarking on parenthood.
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Are You Saving 10 Percent of Your Pay?
(Hint: You should be, whether you’re planning for a baby or not.) We’re big fans of automatic transfers from your paycheck to your savings account. You’re saving specifically for a baby, so this saving should be in addition to your 401(k) or other retirement savings.
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Will Your Loved Ones Help With Child Care?
One of the biggest expenses is child care once you return to work. Having a partner or close family and friends who can share in the care of the child will make the situation much easier.
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Will Your Friends Throw You a Shower?
Outfitting a nursery and buying things like car seats, strollers, and bouncers can easily add up to more than $1,000. A baby shower will probably offset a large portion of that, especially if you register at an online baby store.
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Are You a Disciplined Shopper? Do You Have Friends With Babies?
If buying clothes for yourself is hard to resist, it’s doubly so when shopping for an adorable baby. Develop that discipline now, since baby clothes—even lovely ones—will likely fit your newborn for three months or less. Nabbing used clothes and toys from friends’ and siblings’ children will save big money.
No matter how hard you try, you can never be fully prepared for the life change that is a baby. All the same, getting your finances in shape beforehand will give you one fewer source of anxiety as you start out on this massive adventure.