Babies cost more than a new house. Babies cost more than a high-spec sports car. Babies cost so much money that you’d have to be beside yourself with emotion to even begin to think about starting a family (love is a costly drug). What are we going on about? In 2017, the US Department for Agriculture estimated that the average cost of raising a child from birth to the age of 17 in modern day America is nigh on a quarter of a million dollars ($233,610). Still thinking about painting the spare room in pastel colours swapping your performance vehicle for an SUV? Over a bottle of wine and a rose-tinted discussion about the future, babies may seem such a good idea – until you have to pay for them (for extra ideas on saving, use a budget calculator).
So, what can we do to prepare our finances for the arrival of our first loving, gurgling, beautiful little bouncing bundle of joy? Because if you don’t have a spare quarter of a million dollars to spend on a child who will soon grow into a teenager who thinks you’re the most embarrassing parent ever, you might need some help.
Say Goodbye to $62.50 Each per Week
If you are planning your family, one study shows that the average couple will need around an extra $125 per week compared to the lifestyle they enjoyed prior to bringing their first child into the world. There are many ways you can cut back to save just under ten dollars per day ($8.93) in the early stages of your baby’s life. For example, perhaps you already pay a gym membership totalling around this figure, or perhaps you are accustomed to spending money on takeaways or evening snacks. Whatever you decide to cut, make sure it is sustainable (if you decide to cut your subscriptions to TV streaming services, for example, you will likely get bored and re-join the service before long).
Mine, Yours, Ours
This is no time to be secretive with your partner about your income (see average earnings). Make a spending plan that includes three separate considerations: “mine, yours, ours”. By splitting your combined monthly finances into money set aside for personal spending and money set aside for bills & baby, there will be no doubt as to how much money each parent is allowed to spend on themselves and how much money each parent is expected to contribute towards the house/child.
Final tip… in keeping with the ‘mine, yours, ours’ tip, you may benefit from setting up a joint account, into which the ‘ours’ payment is deposited by direct debit each payday. This will further help to iron out the creases in joint expenditure.