Being on top of your personal finances often means planning for more than just yourself.
If you’re starting a family, you’re familiar with the importance of additional savings.
But knowing what to do and how to do it are not the same thing, especially when you’re planning for all the expenses of raising a child.
With the right research and preparation, you can create a budget that will allow you to raise a child in comfort. We’ve outlined the most important points to consider below:
How expensive is it to raise a child?
Everybody knows kids are expensive, but let’s provide some specific context so you have an idea of exactly how much you’ll need to save.
According to the Brookings Institution, the average cost of raising a child to age 18 is $310,605. This includes cost of food, housing, transportation, childcare, education, and medical care.
For the purposes of this exercise, we aren’t including the cost of college. Check out our article on making sure college doesn’t break the bank for our tips on that plan.
College aside, $310,000 is still a massive goal; the good news is there are ways to make sure that figure is always within your reach. Here’s our top 3:
1.) Plan ahead to boost savings
This is the big one; the earlier you start planning for the costs of raising a child, the better.
Planning ahead allows you to take advantage of the time value of money. Specifically, putting your money to work with a longer timeline can unlock exponential growth for your savings making that $310k much more achievable.
2.) Get help from family and friends
Don’t be afraid to ask for help, especially from close family and friends. They can help you with childcare, transportation, and any other tasks that will free up your time and money.
3.) Government assistance programs
It’s not as easy and warm as family and friends, but getting help from the government is a viable options for reducing childcare costs. Necessary expenses, especially ones associated with education like daily meal plans can be subsidized by government programs.
We recommend starting with your local public schools for the most accessible funding sources and moving onto local and state governments from there.