The Cost of Children

You're looking through the hospital's nursery window gazing at your newborn son. He's beautiful. What will become of him? Will he be a doctor, engineer or astronaut? Will he be healthy? What type of parent will you be? Will you be able to afford to give him a good college education?

These are all questions that go through a parents mind when having a new little one.

Hopefully during the last nine months, you and your partner have thought things through financially and created a budget as your were preparing for the blessed event. The decisions to make are enormous and they cannot only affect your life but the life of your newborn child.

Along with the cost of diapers, clothing and formula totaling up to approximately $5,000 per year, you now have to consider day care or having you or your partner be a stay-at-home parent. Can you afford that?

Choosing whether to have a stay-at-home parent is not an easy decision. Many parents are surprised at how little money is actually earned by the second breadwinner when expenses are deducted. For instance, someone earning $20,000 per year ($9.61 per hour) could find their take home pay reduced by as much as 75% when taxes and the additional expenses of working are factored in.

The 'stay-at-home' decision is one that needs to be discussed thoroughly. It involves much more than just money. Some parents are very happy staying home with children. Others are not. Career plans, the pace of family life, baby's health and more can all be affected by the choice you make.

Once you've made the decision, it's time to look at a proposed budget. If a family is used to spending all of the current income, some adjustments will be required. You can't take a budget that's tight now and shoehorn in the extra expenses of the baby.

Begin with your current budget and talk about how the baby will affect your life and your finances. You can expect to find changes on both the income and expense side. Even if both parents will continue to work, wages may be affected. A sick baby may need either Mom or Dad to say home from work. For many employees, that means that they won't get paid.  Some parents will choose to take advantage of the "family leave". That can mean up to three months of lost income.

There are many, many books available on how much it costs to prepare for a baby, but depending on the decisions you make about parenting - the costs may be less than you think.