What's the real cost of having a baby?

00:06:33
https://www.youtube.com/watch?v=72mPrnnsQ3s

Summary

TLDRThis guide outlines the financial considerations of having a child, particularly in the first year. It highlights the unpredictability of costs, including medical expenses, baby gear, feeding, diapers, and childcare. The author emphasizes the importance of planning and budgeting, suggesting that prospective parents build an emergency fund to manage unexpected expenses. The guide provides specific cost estimates for various aspects of raising a child, encouraging parents to seek used items and consult local resources for childcare costs.

Takeaways

  • 💰 Expect high medical costs for childbirth.
  • 🍼 Feeding can range from $0 to $100 a month.
  • 👶 Diapers can cost $90-$300 monthly.
  • 🏠 Avoid unnecessary big purchases like new cars or houses.
  • 📊 Use online calculators for estimating child-raising costs.
  • 👗 Buy used baby items to save money.
  • 🛏️ Build an emergency fund for unexpected expenses.
  • 👩‍👧‍👦 Childcare is often the largest expense.
  • 📅 Plan for maternity leave in your budget.
  • 🤝 Consult friends for local childcare cost insights.

Timeline

  • 00:00:00 - 00:06:33

    The speaker discusses the financial implications of having a child, highlighting how the cost of raising children today is unpredictable. They emphasize the importance of planning for expenses that can be anticipated, especially in the first year of a child's life. Medical bills, including prenatal care and delivery costs, vary widely and can total around $5,300 out of pocket prior to childbirth. They stress the value of consulting with insurance providers to avoid unexpected expenses and recommend budgeting for essential items like cribs and strollers using second-hand resources to offset costs. Furthermore, they suggest setting aside funds for maternity leave and outline food and diaper expenses. Childcare is identified as the largest expense, with various options ranging from daycare to private nannies. Families often spend a significant portion of their income on childcare, making it essential to research costs specific to their region. The speaker concludes by advising prospective parents to build an emergency fund to manage unexpected expenses and maintain financial stability during the transition into parenthood.

Mind Map

Video Q&A

  • What are the average medical costs for childbirth?

    Medical costs for childbirth can vary significantly, with non-cesarean deliveries in NYC ranging from $4,022 to $17,646, and cesarean sections in LA costing between $6,000 to $42,000.

  • How much should I budget for baby gear?

    Expect to spend around $2,200 on baby gear, including cribs, strollers, and clothes.

  • What are the average monthly costs for feeding a baby?

    Feeding a baby can cost between $0 to $100 a month, depending on whether you use breastmilk or formula.

  • How much do diapers cost?

    Diapers can cost between $90 to $300 a month, depending on whether you use disposables or cloth.

  • What is the average cost of childcare?

    The average cost of center-based daycare in the U.S. is $972 a month, while a full-time nanny can cost between $2,000 to $3,000 a month.

  • How can I prepare financially for a baby?

    Start building an emergency fund and budget for maternity leave and baby-related expenses.

  • Is it better to buy new or used baby items?

    Buying used baby items can save money, as babies quickly outgrow many products.

  • What should I do about maternity leave?

    Factor in time off work and budget accordingly to avoid financial strain after the baby is born.

  • How can I estimate the total cost of raising a child?

    Use online calculators from the USDA or consult with friends and family for local cost estimates.

  • What is the importance of an emergency fund?

    An emergency fund helps manage unexpected costs without accruing debt.

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  • 00:00:03
    Hundreds of years ago, when farmers needed an extra pair of hands to work the fields,
  • 00:00:07
    having a child might have been a purely financial decision.
  • 00:00:11
    But today, unless you’re planning on raising the next Justin Bieber, kids are a big, unpredictable
  • 00:00:16
    cost--one that can make even a cool and collected financial advisor nervous.
  • 00:00:24
    That’s right, Julia and I will soon be embarking on what will probably be the most rewarding--but
  • 00:00:33
    expensive--adventure of our lives.
  • 00:00:37
    There are so many factors and variables to having a child, it’s really difficult to
  • 00:00:43
    make even a ballpark guess of what the total cost will be… especially since, these days,
  • 00:00:48
    some parents will never be totally off the hook from this financial commitment.
  • 00:00:51
    But just because you can’t plan everything doesn’t mean you shouldn’t plan what you
  • 00:00:55
    can, so here’s our beginner’s guide to the general costs you can expect to incur
  • 00:00:59
    in the first year of your new family member’s life.
  • 00:01:12
    Medical bills are notoriously hard to pin down.
  • 00:01:16
    A 2016 study showed that within New York City alone, the cost for a non-cesarean delivery varied
  • 00:01:21
    between $4022 and $17,646!
  • 00:01:24
    And cesarean sections in Los Angeles ran between $6,000 to $42,000!
  • 00:01:30
    The best thing you can do is contact your insurance provider and get as much info from
  • 00:01:35
    them as you can: which care providers are in your network, what procedures are (and
  • 00:01:39
    are not) covered, and how much you’ll have to pay out of pocket.
  • 00:01:43
    You want to avoid nasty surprises like finding out that certain tests aren’t covered or
  • 00:01:47
    that you can’t use the facility you want.
  • 00:01:49
    Make a special appointment with someone in the billing department, and don’t be afraid
  • 00:01:52
    to sound stupid.
  • 00:01:54
    Grill them for every detail you can get!
  • 00:01:56
    You should also assume that you’re going to pay your full yearly deductible during
  • 00:02:00
    pregnancy and the first year of pediatric care.
  • 00:02:03
    Don’t forget it usually resets at the beginning of every calendar year!
  • 00:02:06
    Philip and I have calculated that with pre-natal care, ultrasounds, clinic costs, birthing
  • 00:02:11
    coach, childbirth classes, and--sue me, I’m worth it--pre-natal yoga classes and massages,
  • 00:02:17
    we’re going to pay about $5,300 out of pocket, just to get us to the birth.
  • 00:02:24
    There’s not a lot you can do about medical costs, but you can have a bit more control
  • 00:02:28
    over stuff like cribs, car seats, onesies and strollers.
  • 00:02:33
    This is where family, friends and craigslist can come in real handy.
  • 00:02:38
    Remember, this thing is only going to stay the same size for about .5 seconds, so don’t
  • 00:02:43
    splurge on items that will have a short shelf-life.
  • 00:02:45
    There are lots of parents out there who need to offload the things their kids have outgrown.
  • 00:02:51
    So far, we’ve only had to spend around $100 on maternity clothing thanks to friends and
  • 00:02:55
    some serious thrift.
  • 00:02:57
    We’re also anticipating around $300 for a used crib, $200 for a bassinet, $300 for
  • 00:03:02
    a fancy but used stroller set, $500 for the first year of baby clothes, and another $800
  • 00:03:07
    for car seats, room decor and whatever else we might not get from our registry.
  • 00:03:13
    Unless you live in a country with generous maternity leave (aka not the U.S.), a working
  • 00:03:19
    woman will need to factor in a certain amount of time off to get her baby through the first
  • 00:03:23
    few months.
  • 00:03:24
    Your choice is to either set aside part of your budget in the months leading up to the
  • 00:03:28
    birth to build a maternity cushion, or live on a tighter budget after the baby’s born.
  • 00:03:34
    Neither choice is super-appealing, but either is preferable to piling up debt.
  • 00:03:42
    The average baby will consume about 30 oz. of breastmilk or formula a day.
  • 00:03:47
    Breastmilk is essentially free, while formula costs on average about 11¢/oz, so you’re
  • 00:03:52
    looking at somewhere between zero and $100 a month to feed the little tyke.
  • 00:03:58
    Diapers are a bit more expensive.
  • 00:03:59
    A baby will need, on average, about 225 diaper changes a month which means that, depending
  • 00:04:05
    on the brand, disposables will cost you between $90-$300 a month.
  • 00:04:10
    Cloth diapers can save you about half that… if you wash them yourself.
  • 00:04:14
    If you use a laundry service, expect to pay about the same as disposables.
  • 00:04:19
    And while cloth diapers do cut down on waste, according to one study, the electricity and
  • 00:04:24
    water required to wash them mostly cancels out any benefit to the environment.
  • 00:04:30
    No way around it, you will be adding two adorable little carbon footprints to the world.
  • 00:04:37
    This is the big one.
  • 00:04:39
    Child care is the #1 expense for most families and it can take a million different forms.
  • 00:04:45
    There’s daycare, nanny-share, free grandparents, private nannies or a spouse that stays home.
  • 00:04:52
    According to The National Association of Child Care Resource, the average cost of center-based
  • 00:04:58
    daycare in the United States is $972 a month.
  • 00:05:01
    And the average nanny can cost anywhere from $2,000 to $3,000 a month for full-time care.
  • 00:05:06
    Nearly one in three families report spending 20 percent or more of their household income
  • 00:05:11
    on child care alone!
  • 00:05:14
    The best way to start nailing down a number is to ask your friends and family who live
  • 00:05:17
    in the same city what their method of child care costs.
  • 00:05:21
    The US Department of Agriculture also has this handy online calculator that gives you
  • 00:05:26
    an estimate of child-raising costs based on your region and preferences.
  • 00:05:30
    I never really thought of babies as agriculture, but I guess they do produce a lot of fertilizer.
  • 00:05:35
    It’ll be a long time before Julia and I really know what the cost of raising this
  • 00:05:40
    particular human will be, but one thing we’re already glad we did is build up a 3-month
  • 00:05:45
    emergency fund.
  • 00:05:46
    Knowing that we can deal with unexpected costs without accruing debt helps us sleep at night.
  • 00:05:51
    If only we could save up an emergency fund of sleep.
  • 00:05:55
    So if you think you might have a child in the near future, start feathering your nest
  • 00:06:00
    with cash now.
  • 00:06:02
    Remember, just because you’re going to be a new parent doesn’t mean you need a new
  • 00:06:06
    house or a new car--baby won’t judge!
  • 00:06:09
    It’s way more important that you’re not financially stressed during those first magical
  • 00:06:15
    years.
  • 00:06:16
    And that’s our… three cents!
Tags
  • parenting
  • childcare
  • budgeting
  • expenses
  • baby
  • financial planning
  • maternity leave
  • medical costs
  • feeding
  • diapers