China Daily

China Daily

How much?
The US Department of Agriculture estimates that an average middle-income family will spend more than $165,000 to raise a child from birth to age 18. If you are looking at adoption, fertility treatments, or thinking of contributing to your child’s college education, take a deep breath because all the little extras are not included in that number.

Sara and Jason Bauman of Huntington Woods are currently undergoing fertility treatments and surrogate options to the tune of $40,000.

“It’s crazy,” says Sara. “But we really want a baby of our own.”

Typical first year costs for a baby include diapers, formula (if Mom is not breastfeeding), clothes, and doctor’s visits; today’s parents are looking at spending an average of $10,600 the first 12 months of their baby’s life alone!

But don’t let the numbers dampen your excitement. With a little preparation, you can get your finances in order, which frees you up to concentrate on your pregnancy and your much anticipated baby.

The pre-baby budget
It’s time to crunch the numbers and see where you stand.

“The hardest thing for people is to sit down and work on a budget, but really, it is not a bad word,” says Certified Financial Planner Mike Rautiola of RFC Financial Planners in Ann Arbor.

His suggestion? Save every receipt for two months and then add them up before dividing costs into categories like mortgage/rent, groceries, utilities, entertainment, and incidentals like pedicures and massages. If necessary, you can then trim out unnecessary extras (like the pedicure you won’t have time for, anyway) and create a baby-friendly budget. And if one parent is planning on staying home after the baby arrives (or taking a temporary unpaid maternity leave), now is the time for the one-income trial-run.

Where there’s a will
No matter how unpleasant the thought, you need to get a will or update your old one in order to make sure your baby is raised by the person you want and not the one the court appoints should something happen to one or both parents. Also, make sure that you state how your child’s finances will be managed and by whom.

Don’t forget about your retirement and life insurance policies provided by your employer, says Rautiola, and update the beneficiaries to reflect your current documents. Just as important are adequate life insurance policies. Make sure you, as parents, are covered, should something happen. Also look into purchasing term insurance for your child’s first 20 years.

Insure this
The cost of raising a baby is one thing. The cost of having one is an entirely different story with a tab that the March of Dimes says can exceed $10,000 for a cesarean birth. If you can, it is best to get health insurance before beginning attempts to conceive. And once the baby is born be sure to add him or her to the policy. If necessary, information is available from state health departments on HMO-style health plans for children and Medicaid.

Save, Save, Save
Trying to conceive or not, Ruatiola suggests that clients try to keep at least six months of emergency reserves in a savings account. If this is already available, new parents can use a bit to help defray initial baby costs. If not, aim to try saving a minimum of $200 per month plus 10 percent of each paycheck.

Shopping smart
We know. It is tempting to buy all those cute baby clothes (but don’t….they really do grow that fast!) and the best of everything. But if hand-me-downs (like cribs and other necessities) meet current safety standards, skip the $2,000 model for the gently used or worn options. The baby won’t know the difference, and you can use that cash for diapers.

Oh, and I almost forgot, congratulations!