The cost of raising just a child nowadays could cost as much as a house (if not more) over the span of 18 years (not including college tuition!). This enormous price-tag has a lot of potential parents wary about starting a family, especially when they’re still paying off student loans, saving for a home and enjoying youthful hobbies like traveling while they still can.
A recent survey of adults aged 20-45 years old found 43% of them waited longer to have children due to financial concerns, so you’re not alone in wanting to postpone having a family (or not have kids at all, which is another increasingly popular lifestyle option). If you truly want children in the near future but you’re unsure how to keep costs down as a parent, here are some of the best strategies for saving money as a parent and prepare for the cost of raising a child.
Stick to Your Family Budget
First and foremost, you need a budget before, during and after having your first child. Winging it might’ve worked in college and your early 20s, but once a kid comes into the picture, it’s time to get serious about budgeting.
In a world of Instagram/Pinterest-influenced parenting, it can be tricky staying within a budget when everyone else looks like they’re splurging on cute clothing, backpacks, toys and other fun items for their kids – not to mention outrageously expensive family vacations – but this “keeping up with the Joneses” mentality is almost guaranteed to be a budget-breaker.
As tempting as it may be to throw lavish birthday parties for toddlers, go on amazing tropical getaways with your infant or send your school-age kids to the best summer camps money can buy, figure out what works for you and your budget and focus solely on that. Reality isn’t always fun, but comparing yourself to other parents (who may be silently struggling with debt, unemployment or other financial issues behind the scenes) is something you must consciously avoid at all costs.
Find Affordable Alternatives to Childcare
Did you know there are many more options for parents beyond paying for an expensive childcare center or having one parent quit their job to stay home with the kids? Some of these cost-effective options include:
- Grandparents or Relatives
- Babysitting Exchanges or Cooperatives
- “Sharecare”
- Work/Childcare Spaces (where parents can work in an office-like setting while their kids play with children of other working parents)
- YMCA
- Nonprofit Childcare Centers
- Bring Your Baby to Work Programs (not a widespread phenomenon but ask your employer if accommodations are possible)
- In-Home Nanny Living Rent-Free (e.g., college students or recent grads working unpaid internships who need affordable housing and would gladly watch your kids in exchange for free room and board)
Learn to Say “No”
Kids always want more, more, more. They want the cool toy their friend has, that new bike they saw a neighbor kid riding, a pony, tablet, smartphone, car…they want it all! But until they understand that money isn’t an infinite resource – some teenagers don’t even realize this yet, so it may take a while to sink in – you need to get comfortable with telling your kids “no.”
Better yet, explain why you said no. This way, it won’t look like you’re just a mean parent who’s rejecting their hopes and dreams; you’ll appear as a responsible, rational adult, which they will likely emulate when they get older and possibly pass on your financial wisdom to their own kids someday.
Teach Your Kids About Money
It’s important that your kids’ personal finance education doesn’t end at “we don’t have enough money in the bank to buy that right now.” Instead, you should teach your kids about as many different money concepts as possible because most schools won’t teach them this and these are lifelong skills that will benefit them tremendously in college and beyond.
You should teach your kids about budgeting/saving, encourage them to develop their own creative strategies for earning money, and give them a set allowance in exchange for chores to help them learn the concept of “work = pay.”
Embrace Thrifting
Teaching your kids about personal finance is one of the most valuable lessons your children will ever learn from you on the way to adulthood, but there’s so much more you could do on the parental side of things to keep costs in check while they’re still young and living with you. Instead of buying them new clothes and shoes as soon as they outgrow the old wardrobe, you could take up thrifting to save money on clothes (and likely find much higher quality clothing for lower prices at secondhand stores).
Thrifting is also useful for saving money on kids’ bedroom décor, school supplies, sporting equipment, and so much more! Sure, stigmas surrounding thrift stores still exist, but go into any Goodwill or Salvation Army store and you might be surprised by how good the quality of many items for sale can be.
Open a 529
Last but not least: open a 529 account to begin saving for your kids’ future education as soon as possible. College tuition inflation has outpaced nearly everything else since the 1980s, and there’s no sign that employers will stop caring about college degrees in the future. To help your kids avoid graduating with a ton of student loan debt, a 529 will help you grow a savings fund to pay for higher education expenses when they’re older.
The cost of raising just a child could cost as much as a house or even more over the span of 18 years. And, this cost doesn’t even include college tuition.
The enormous price-tag has a lot of potential parents wary about starting a family, especially when they’re still paying off student loans, saving for a home and enjoying youthful hobbies like traveling while they still can. These are some of the best strategies for saving money as a parent to help you combat the cost of raising a child.
What about you? Are you blown away by the cost of raising a child? How are you saving?