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A New Budget for the New Baby
By Rochelle Caviness
According to a 1998 report issued by the U.S. Department of Agriculture, the average American family will spend close to $9000 on their new baby, during its first year of life.
When added to the actual cost of having the child, it costs more than $170,000 to raise a child – not counting college!
The numbers are staggering, but don't panic. With a few cost-cutting maneuvers and a good budget, you will be surprised just how easy it is to manage your budget and supply your babies with all its needs.
MAKING A BUDGET
In a perfect world, you would have developed a budget, and begun saving money for the baby years before it arrived. However, things seldom work out that way.
What is a budget?
A budget is simply a money plan, which formalizes how you plan to spend your money. The trick in making a plan is to figure up your expenses and then make your income stretch to cover your needs. By taking the time to make a budget, and sticking to it, you will always know that you'll have "just enough."
Step One:
With your new baby, you have a lot of new expenses but the same income. To "find" extra money, start by keeping a log of every penny you spend. You may be surprised how much money you spend on things like coffee and lunches out or how much you really spend on clothes. Once you are aware of where your money is going, you can begin to save it or to reallocate it toward the new baby's expenses.
Step Two:
If you have any credit card debt, pay it off and never use it again. The money you are now paying in interest can be better spent on diapers.
If you are deeply in debt, consider seeing a financial council. They will help teach you to manage your money and they will work with your creditors to arrange a payment plan that you can handle.
Step Three:
Now that you know what you have to work with, you can devise your budget. First, subtract your normal and necessary monthly expenses such as rent, utilities, and food. Next, subtract your required debt payments. What is left is your discretionary money. In your pre-baby days, this money probably went to dinners-out and CD's. Now it will go toward the baby.
JUST WHAT DOES A BABY HAVE TO HAVE?
- Clothes, a bed, diapers, a car seat, medical care, and food are necessities; everything else is a luxury.
A few cost cutting tips: -
Buy second hand baby clothes and furniture.
- Graciously accept all hand-me downs.
- A few words of caution: many older cribs, playpens, and car seats to not meet today's safety standards. For instance, many older cribs have rails that are set too far apart, making it possible for the baby's head to become stuck between the rails. This is one area when you might want to buy something new. However, just because it is new, doesn't mean you have to buy the fanciest, most expensive crib on the market. Your goal should be to find something safe and functional.
- Breastfeed your baby. Not only is breast milk good for the baby, but you will save on the estimated $1000 that a year's worth of formula costs.
- If you are in a two-income family, it may be cost effective to stay at home and care for the baby yourself. Figure out how much take home pay you make a year. Subtract the cost of the daycare, transportation to the daycare, and what it costs you to go to work (special work clothes, transportation, etc.). How much do you have left? Now decide which option is more cost effective for you.
By using your money wisely, and cutting cost whenever you can, you will find that you will be able to make your income stretch to meet your needs. Remember that your goal is to meet your financial needs, not to fulfill your wants. If, after all your needs and the needs of your baby are met, there is money left over, then you can spend it on 'wants'.
- However, you may want to take any excess money and start a college fund. By 2018, it is expected that a four-year education, at a medium priced school, could easily run over $150,000!
The information provided on this site is for informational purposes only.
Always consult your doctor for medical advice.
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