Cost of Raising a Child: 4 Months In

How Much Does it Cost to Have a Baby?

My wife and I are first time parents and we are now four months into the “parenting” process. I made it a goal to track all of our child care expenses so I could truly report on the cost of raising a child. I invite all of my readers to follow along our journey as I diligently track all expenses involved in truly raising a child these days in middle class America.

Prior to us having a child I did some research and the consensus was that it costs roughly $14,000 per year to raise a child, which equates to roughly $240,000 (without college). Don’t get me started on how much college will cost for my child




How Much Does It Costs to Raise a Child?

We are four months in and thus far we have spent $1,707 on my daughter in total. We have lucked out and received a number of hand-me-down clothes and toys, as well as a ton of gifts and gift cards from our baby shower that are still holding us over comfortably. Albeit, we’re about out of gift cards now.

However, we do still receive coupons regularly from baby formula companies (Enfamil, Similac, etc.), as well as Walmart for substantial discounts. In fact, just a few days ago we received a coupon from Walmart for $20 towards their brand of formula called “Parent’s Choice”. Their tub of baby formula is huge (35 oz) and only costs $20, so its free with the coupon. It’s not a named brand like Enfamil or Similac, but even our pediatrician told us to simply use the cheaper one possible…because they are all the same and perfectly fine/healthy for our baby girl.

We also did a “diaper raffle” at our baby shower in January, where if you brought a pack of diapers you would be entered to win a prize. Luckily all prices were donated from others (wine, luggage, etc.). We received a ton of diapers and probably haven’t touched 50% of what we received. Lucky us, huh!?

Well our little girl is still growing slowly and at 4-month’s old is still in newborn diapers, so we actually had to go and buy a yet another small pack of newborn diapers from Target ($25) to hold us over until she reached size 1. We actually tried using our size 1 diapers for a week and they just didn’t hold anything…I’ll just leave it at that.

Like May, our expenses increased a great deal due to part-time child care. We now have two full months of child care expenses under our belt (May and June) and have spent a grand total of $880 on part-time (2 days per week) child care. We consider ourselves very lucky though, as we have a nanny who comes to our house two-days a week, a nanny our daughter loves, who really doesn’t costs us that much.

Cost to Raise a Child: 4 Months In (2017)

  • 1st month = $414
  • 2nd month = $105
  • 3rd month = $545
  • 4th month = $643
  • Since inception (March, 2017) = $1,707

 

June

Item Price
529 contribution $50
Child care $470
Bed rails $43
Headbands $20
Diapers $25
Formula $14
Bath wash $5
Blankets $16
Total $643




Cost of Raising a Child: 3 Months In

My wife and I are first time parents and we are now three months into the “parenting” process. I made it a goal to track all of our child care expenses so I could truly report on the cost of raising a child. I invite all of my readers to follow along our journey as I diligent track all expenses involved in truly raising a child these days in middle class America.

Prior to us having a child I did some research and the consensus was that it costs roughly $14,000 per year to raise a child, which equates to roughly $240,000 (without college). Don’t get me started on how much college will cost for my child




How Much Does It Cost to Raise a Child?

We are three months in and thus far we have spent $1,064 on my daughter in total. We have lucked out and received a number of hand-me-down clothes and toys, as well as a ton of gifts and gift cards from our baby shower that are still holding us over comfortably.

We also did a “diaper raffle” at our baby shower in January, where if you brought a pack of diapers you would be entered to win a prize. Luckily all prices were donated from others (wine, luggage, etc.). We received a ton of diapers and probably haven’t touched 80% of what we received. Lucky us, huh!? Well our little girl is growing slowly and is still in newborn diapers, so we actually had to go and buy a small pack of newborn diapers from Target to hold us over until she reached size 1. So we’ve have now collectively spent $15 on diapers in the first three months. Not bad…thanks to our baby shower diaper raffle.

Our expenses increased a great deal in May because my wife is back to work and we now have to pay for part-time child care. My wife was actually back to work at the beginning of April but we received lots of family help since my daughter was only 2 months old. We do get some family help still, but from now moving forward we will have to pay child care expenses monthly for a nanny who watches our daughter.

Cost to Raise a Child: 3 Months In (2017)

  • 1st month = $414
  • 2nd month = $105
  • 3rd month = $545
  • Since inception (March, 2017) = $1,064

 

May

Item Price
529 contribution $50
Child care $410
Ear piercing $40
Co-pay $30
Diapers $15
Total $545

How Much Does it Costs to Have a Baby?

Looking a head to next month, we should finally have all of our final bills in from the hospital so we can measure the literal cost of having a baby. Our June ‘cost to raise a child‘ report is going to be a big one! In reality our costs thus far to raise our child have been very, very low. But next month that all changes. Stay tuned for the June, 2017 breakdown…




Cost to Raise a Child: Two Months In

My wife and I are first time parents and we are now two months into the “parenting” process. I made it a goal to track all of our child care expenses so I could truly report on the cost of raising a child.

Prior to us having a child I did some research and the consensus was that it costs roughly $14,000 per year to raise a child, which equates to roughly $240,000 (without college). Don’t get me started on how much college will cost for my child

We are two months in and thus far we have spent $519 on my daughter in total. We have lucked out and received a number of hand-me-down clothes and toys, as well as a ton of gifts and gift cards from our baby shower that are still holding us over comfortably.

Cost to Raise a Child: Two Months In (2017)

  • 1st month = $414
  • 2nd month = $105
  • Since inception (March, 2017) = $519
April 2017
Item Price
Clothes $48
529 contribution $50
Baby photos $7
Total $105


Cost to Raise a Child: April 2017

My wife and I are first time parents and we are now one month into the “parenting” process. I made it a goal to track all of our child care expenses so I could truly report on the cost of raising a child.

Prior to us having a child I did some research and the consensus was that it costs roughly $14,000 per year to raise a child, which equates to roughly $240,000 (without college). Don’t get me started on how much college will cost for my child

We are one month in and thus far we have spent $414 on my daughter in total. We have lucked out and received a number of hand-me-down clothes and toys, as well as a ton of gifts from our baby shower that are still holding us over well.

Since inception (March, 2017) = $414

March 2017
Item Price
Clothes $30
Wall art (name) $80
529 contribution $100
Hospital photos $70
Baby announcement $25
Vitamin D drops $9
Birth certificate $50
 529 contribution  $50
Total $414


Cost of College Calculator

Previously I wrote about my newborn daughters projected college costs in the year 2035. If any of my fellow Millennial parents out there have done this, I assume there was sticker shock for you as well. The future college costs numbers are truly staggering. Now that I know what my daughter’s costs ranges are 18 years from now, I now have to figure out how exactly I go about hitting those numbers.

529 College Savings

Luckily I opened a 529 savings plan for my daughter when she was 6-days old, and I now have 18 years of compounding interest on my side. So let’s start crunching some numbers to see what exactly I need to contribute each month to my daughters 529 college savings plan.

In-State School #1

$170,000 (Tuition and Fees Only)

The first in-state public university I would like to send my daughter to costs $170,000 for four years’ worth of tuition and fees (no room and board).

$420 per month contribution x 18 years @ 7% annual return = $170,000

$310,000 (All Expenses – Tuition, Fees, Room and Board)

If I want to pay for all college expenses for my daughter at my first choice of colleges, that price tag would be $310,000. And that costs would include tuition, fees, room and board.

$760 per month contribution x 18 years @ 7% annual return = $310,000

In-State School #2

$92,000 (Tuition and Fees Only)

The second in-state public university I would like to send my daughter to costs $92,000 for four years’ worth of tuition and fees (no room and board).

$225 per month contribution x 18 years @ 7% annual return = $92,000

$111,000 (All Expenses – Tuition, Fees, Room and Board)

If I want to pay for all college expenses for my daughter at my second (much cheaper) choice of colleges, that price tag would be $111,000. And that costs would include tuition, fees, room and board.

$275 per month contribution x 18 years @ 7% annual return = $111,000




I Opened a 529 for My Baby at 6 Days Old!

I don’t use this Millennial personal finance blog to brag about anything I do financially, whether it be via investing or my professional career and my salary. However, I do want to take a minute to pat myself (and my wife) on the back because we just opened a 529 college savings account for our newly born daughter, who is less than one week old. To be exact, she wasn’t even six days old actually!

529 college savings plan

I know there may be some naysayers out there, considering you can technically open a 529 college savings plan prior to your child’s physical birth. You can open an account long before you even have a child or the minute you find out you’re expecting. I was fully aware of this option but I just couldn’t bring myself to opening an account for a baby we hadn’t had yet. I know the risks are ultra-low of complications with the baby, but I just felt like it was a possible jinx if I opened a 529 before my baby was born. But I was determined to open a 529 nearly immediately after she blessed us with her presence.

Oddly enough, I actually opened my account for my 6-day old the same way you would if you opened a 529 college savings plan for a child 6 months before birth. I didn’t yet have a social security number for my daughter, which along with a name and birthday is all you need to open a 529 college savings plan. So instead I opened the 529 and assigned myself as the “student”, aka the beneficiary of the plan. Once I have a social security number for her I can then transfer the account over into her name. Any transfer within your family is free of charge. It is no different than the transfer policy from one child to another due to one child receiving a scholarship and deciding not to attend college.

The process for opening my daughters 529 college savings plan could not have been easier. I was able to quickly setup the account and connect it to my bank account via a routing and account number. I easily setup an automatic monthly transfer that begins this April. And then I setup an auto increase on her birthday each year. So beginning in March 2018 I will contribute $25 more each month, and then again in 2019, 2020, etc. I was then able to make a one-time contribution to kick start my daughters 529 college savings plan.




Automate Your 529 Savings Plan

I love automating my savings goals and this 529 plan allowed me to do this effortlessly. I will now be contributing to my daughters 529 at least monthly and that amount will go up each year to ensure I save as much as possible. We hope to receive some “college money” as gifts for her birthdays over the years from grandparents and other family members as well. We can then easily log in and make a contribution to her account when that happens. Its great.

Future Cost of College Calculator

And I am going to need all the help I can get to afford college in 18 years (year 2035). I played with a future cost of college calculator and the projected costs are unreal. Seriously, unreal what the anticipated costs of college would be in 18 years. For an in-state public university in my state, college tuition is expected to range from $92,000-$170,000, depending on the university, in the year 2035. Again, these ranges are only for in-state public school, nothing private, and these costs are only for tuition and fees, no room and board. If I want to pay for all college expenses (tuition, fees, room and board), that will run me anywhere from $111,000-$310,000 for four years of college. Wish me luck…at least I opened her account when she was 6-days old so I now have compound interest on my side.




What Does it Cost to Raise a Child?

Earlier this month my wife and I welcomed our first child into this world. It’s truly a miraculous experience. Witnessing the birth of your child and the miracle of life is truthfully life-changing. Everyone says you’ll never really be ready to be a parent. While I agree with that to an extent, I do believe waiting as long as my wife and I did benefit us greatly.

We’re in our 30’s and we’ve been married for nearly nine years. Last year we decided it was finally time for us to begin a new chapter in our marriage and lives; and that was to start a family and have a kid. We knew we were ready emotionally and financially. We were more mature than when we were married and obviously much better off financially. So when people say you’ll never really be ready, they may be partially right because no one knows what it’s like to raise a child until you actually do it, obviously. But financially speaking it makes a huge difference to ensure you’re in a good spot and have your financial house in order before you bring a child to your house.

Becoming financially ready to raise a child

Prior to having our child earlier this month, we were able to pay off all of debts, except for our house, and build a fully funded emergency fund. It feels tremendous. We have a great sense of financial security because of it. Again, this is how we knew we were ready to start a family. Debt can really set you back, especially when you include a baby.

I remember when we first started discussing the prospects of having a baby a couple of years ago and that’s when I began looking into just how much it costs to raise a child. The articles out there around the costs of raising a child are truly remarkable. And these costs don’t even include college tuition, which is even more astonishing.


Cost of raising a child calculator

Per an article on CNN Money, a married couple in the middle-income range is estimated to spend approximately $234,000 to raise a child up until the age of 17. This number doesn’t include the cost of college or any private schooling prior to college. This total figure equates to roughly $14,000/year as the cost to raise a child.

A similar article on The Huffington Post and their projected cost of raising a child is slightly higher, coming in at approximately $245,000. This total figure equates to roughly $14,500/year as the cost to raise a child.

I used a calculator on CNPP, which is the United States Department of Agriculture Center for Nutrition Policy Promotion, and their figure was even higher. They gave me a projected cost of approximately $24,000/year as the cost to raise a child in my particular region of the country.

An article from NBC News game me a projected cost of approximately $13,000/year as the cost of raising a child.

Cost to send your child to college

I played around with several “cost of college calculators” to get an idea of what it would cost to send my child to college around the year 2035. I definitely plan on sending my child to an in-state public university to save some on tuition. I don’t think out-of-state or private is worth, unless they get a hefty scholarship. I’ve already discussed my views on public school versus private in a previous post. Anyways…there was definite sticker shock to what the calculators threw back at me and my projected in-state college cost in 18 years.

Much to my dismay the projected cost of college for my child in 18 years ranges from $92,000 (tuition only) all the way to $310,000 (tuition plus room and board, e.g. ALL college expenses for 4 years).

Cost of college tuition for my child

Below are my calculations for a couple different in-state schools I would like to send my child to. Historically over the last 10 years the cost of college inflation rate has been roughly 5%.

Cost of college tuition: my (child’s) first school

Cost of college for my preferred public, in-state university for my child, e.g. my alma mater. The school I am using below currently costs approximately $16,000/year to attend for tuition only, and when you include room and board that yearly cost jumps to nearly $30,000/year.

– In-state public, tuition only: $170,000 with a 5% inflation rate
– In-state public, tuition plus room & board: $310,000 (wow!)

Cost of college tuition: my (child’s) backup school

The backup university for my child, e.g. the cheaper state school, which is still a good school and clearly more affordable. A very viable option if we want to keep the cost of college down. The school I am using below currently costs approximately $9,000/year to attend for tuition only, and when you include room and board that yearly cost jumps to nearly $20,000/year.

– In-state public, tuition only: $92,000 with a 5% inflation rate
– In-state public, tuition plus room & board: $111,000

True cost of raising a child, including college

Based off of these averages it essentially costs nearly one half million dollars to raise a child and send them to a 4-year in-state, public college. On the low end it would be roughly $325,000, which includes raising and sending them to college, but only paying for tuition. On the high-end, the cost of raising a child could potentially costs as much as $355,000 if you plan on paying for all of their college expenses (tuition, fees, room and board).

My plan via this blog is to track just how accurate these numbers are. I really question the projected cost of roughly $245,000 to raise a child from age 0-17. The anticipated cost of college in 2035 does feel fairly accurate to me, unfortunately, considering just how expensive college continues to be.

However, I am encouraged that it has become such a hot topic these days and that one day the inflation rate or cost of college could be regulated, even if it’s just slightly. It’s almost inconceivable the cost of college for an in-state 4-year public school could cost $310,000. If this is true then many, many families will be severely ill prepared, and in piles of student loan debt (parents and students). And we think we’re in a student loan crisis now in 2017. Doesn’t look like there is an end in sight, whatsoever. Well, unless you start saving aggressively now via a 529. I do plan on having an account open for my child before they are 2 months old.