What is the true cost of raising a child?
Learn how you can take action to plan for a secure future for your family.
Raising a child is one of the most rewarding and worthwhile things a family can do. There is no greater feeling than taking pride in your child, watching them grow and helping them develop into a well-rounded human being. Your children are a direct representation of you and your partner and you naturally want to give them the best possible upbringing you can.
Although raising children is a blessing, it also requires great dedication, hard work, and determination. As a parent, you must be vigilant and strive to provide for your child at all times both mentally and financially. Raising a child should be a natural process; however, some forethought should be given to the associated cost. You must fully understand what finances you will have to and how this will affect your overall budget and income. Start by using Personal Capital to track your expenses, income, savings and investments.
What costs considerations are associated with raising a child?
There are many different associated costs to consider when raising a child, some of which you may not have considered. As an aspiring parent, you should make a list of these costs and figure out how you can afford them. Listed below are some of the main cost considerations:
This is one of the largest chunks of money you will spend. But, do you have a home big enough to comfortably accommodate a whole family? If not, do you need to change location? How much will this cost? How much will your rent of mortgage increase by a month? Do you need a deposit if you are buying a new house?
Obviously, your ravenous child will need feeding! At first, you will need to buy baby food, and then as your child develops, move on to solids etc. This is all additional food on top of your usual weekly shop. How much extra will be required for your child’s food? Will you need to make extra shopping trips? This is extremely important, especially in the early stages as your child’s nutritional intake is vital to their well-being and growth etc.
In this modern world, it is becoming more common for both parents to stay in full-time work. If this is the case, will you need to arrange child care? If you are lucky enough, you may have parents or grandparents who are willing to share to load, but not everyone can rely on this. How much will your child care cost? What about schooling and nursery? Child care can be tax deductible, use Turbo Tax to get all of your tax rebate.
As much as you may like too, you cannot let your child run around unclothed! When your child is born, for the first year or so it will seem like you are continually buying new clothes (Children grow!). How much can you set aside for clothes? Do you have enough cash to cover that initial growth spurt?
How can you manage these costs?
Once you have a firm understanding of the associated costs, you must then be able to manage them. A sure-fire way to keep track of these costs is to create a budget and make regular notes on a calendar. A budget is a fantastic way to keep track of your expenses. This budget doesn’t have to be complex, but if you include the associated costs of raising a child, you should be able to keep tight control of your finances. A budget should include categories for individual costs i.e. child care, clothing together with an average monthly cost. Many people encounter problems if they freely spend their money and do not allocate sufficient funds for their monthly outgoings.
Should you invest in your child’s future now?
To cope with the costs of raising a child, it is a prudent idea to start investing now. If you are considering having a child, a savings account could be the perfect opportunity to put some money away that you can use when the happy moment arrives. Alternatively, you could open a child’s savings account and pay a regular amount into it that your child can access at a certain age for a college fund etc. The more you can save, the easier it will be to give your child the upbringing they deserve!