You're getting ready to bring home our own little bundle of joy. You've been
crunching numbers and don't know how you can make the finances work without getting three or four more jobs, though! How can you save money while raising your baby?
Being a parent is demanding and exhausting work. It's hard enough to work one job and juggle child care around normal adult responsibilities. What no one is fully prepared for, though, is the costs involved in raising a child.
New reports put the cost of raising a child from birth to age 18 at just over $300,000. That works out to over $16,000 per year. Of course, having children has rewards that are well worth the financial cost, but there's nothing wrong with trying to trim those expenses. Here are four ways you can save on childcare costs:
1.) Use pre-tax dollars
While you may not be able to reduce spending in some areas, you can save money in the long run by taking advantage of a workplace benefit. If your employer offers a Flexible Spending Account (FSA), you can make an additional contribution to cover a variety of expenses related to dependent care. For 2016, parents are entitled to an additional $5,000 in contributions for a married couple.
Eligible services include medical care, day care, babysitting and even housekeeping, provided one of the duties of the housekeeper is child care. You can also use a dependent care FSA account to pay for delivery and other related expenses. Taking advantage of this program doesn't reduce the costs of the services, but it does cut your tax bill at the end of the year. Unlike a typical FSA, a dependent care FSA can only reimburse you with money you've already spent. This means you may have to wait a while as the balance builds before you can take advantage of the program. Still, when coupled with programs like the Child Care Tax Credit, you can save money come tax time.
2.) Ask for hospital freebies, but skimp on extras
Young children, especially newborns and infants, need a lot of stuff. Between diapers, formula, skin cream and baby powder, those costs can add up quickly. Rather than rushing out to buy it all in the weeks leading up to birth, though, consider letting the hospital foot the bill for the basics.
Companies that manufacture baby products know their biggest source of revenue is in repeat customers. They're eager for you to try their products, knowing you'll definitely be in the market for more of it. In many cases, they've partnered with hospitals to provide new parents with a starter kit of everything they might need. The only catch is that people working in hospitals frequently forget to give them out. Be sure to ask someone working at the hospital if there are any samples of baby goods or coupons you can take home. This strategy can work from birth through early childhood; many pediatricians also partner with baby supply brands.
On the other side of hospital expenses, much of the cost of delivery may be optional. For instance, many hospitals have an incredible surcharge for private delivery rooms. In some cases, that surcharge can be as much as $500 per day! With nurses, doctors and family coming in and out, even so-called "private" rooms won't offer much privacy!
3.) Think before you upsize
Growing families need growing homes. There's no question about that. However, when it comes to timing that upsize, new families should think about their immediate needs. The hospital bills and other expenses can really take a bite out of your savings, making the months after childbirth a poor time to think about a new home.
Before you start shopping for a new house, ask around about how much space newborns actually need. Can a crib in an office or guest room work for the time being? It'll be a few years before your child will need the privacy and independence of their own room, and your other housing needs may change in the interim. Hold off on moving until you're in a better position to do so.
4.) Don't let guilt win
Much of the baby products industry is built on guilt. No one wants to talk about money when it comes to things that might help a baby's development. That's how companies can get away with charging hundreds of dollars for plastic toys.
The inside secret is that babies don't need your stuff. They need you. Children thrive in supportive, caring environments, not just those filled with the latest and greatest baby "learning" toys. So, when it comes to birthdays, Christmas or "just because" gifts, remember that the best gifts really are free. Spending time with your child is the most precious gift you can give.
YOUR TURN: Parents, what were your biggest spending regrets from early childhood? New and expecting parents, what are you most worried about for your new little bundle? Let us know in the comments!