The recession has many reconsidering whether now is the right time to take the parenting plunge. In general, economic downturns and declining birth rates go hand in hand.
But some parents, me included, can’t shake the urge to have a baby, no matter what the economic tea leaves say. And I’d argue that most of us don’t have to put our family plans on hold with a little financial planning. Here are three to-dos that served me well when I considered having a family. I’ve recently dusted them off as my husband and I prepare for kiddo number three.
1. Make a Baby Budget. No doubt you’ve heard that kids are expensive. Instead of fretting about the nebulous six- or seven-figure price tag, give your budget a trial run before baby arrives.
Make a list of all the new items that will enter your life, such as diapers and baby food. Then scrutinize your current spending in search of costs that will likely shrink. Think movies, concerts, and meals at the latest restaurants. But don’t cut too much. Just because you’re having a kid doesn’t mean you’ll no longer nurture your love of movies and music with DVDs and downloads. And expect your pile of take-out menus to grow for a while.
Considering a switch to one income? Try living on that amount of money for a few months.
Using childcare? Well in the majority of states, including Minnesota, the average cost of full-time infant care can exceed the bill for tuition at a public college, according to the National Association of Child Care Resource and Referral Agencies. Until recently, the check I’d write out for childcare was for more than our house payment.
If you’re feeling the pinch during your trial run, think about ways to supplement your income or reduce expenses. It’s possible you might have to curb your retirement savings for a stretch, but keep contributing something so you’ll qualify for the full company 401(k) match. Free money is free money.
2. KNOW your benefits. It’s important to understand how to maximize your workplace benefits for baby. Adding a child to your family is usually considered a life-changing event that reopens your benefits enrollment period. This means you could switch health insurance options, participate in a health savings account or flexible spending account, and enroll in a dependent care account.
For now, examine whether your insurance or your partner’s is better for your family. Determine your out-of-pocket costs for delivering a child or whether your company offers adoption benefits. Double check your short-term disability policy and your family leave rules as well. Navigating the complexities of your benefits is easier now than when you’re sleep deprived.
3. Learn to love hand-me-downs. The U.S. "mom industry" — from diapers and cribs to ridiculous pee shields for misfiring males — amounts to $1.7 trillion per year, estimates Pamela Paul, author of Parenting Inc.
It’s easy to get carried away with baby gear, but trust me, for every parent in search of a crib, there’s another parent just dying to rid her basement of loads of safe, quality gear. Tell anyone and everyone what you need, and chances are they will beg you to cart their items away. Otherwise, try craigslist.org and other online classified sites, garage sales, and kid consignment stores. Next thing you know, you’ll have much of what you need, with money in the bank and confidence that yes, you can afford a child.
Kara McGuire is a mom and personal finance columnist for the Minneapolis Star Tribune.
