How Can I Save On The Costs Of Raising A Child?
Q: My partner and I are excited to soon bring home our own little bundle of joy. How can we save money while raising our baby?
A: It’s hard to work and juggle child care around normal adult responsibilities! Costs have gone up as well – raising a child from birth to age 18 can cost over $300,000. That’s over $16,000 per year.
Here are four ways you can save on child care costs:
1. Use pretax dollars
Take advantage of a workplace benefit. If your employer offers a Flexible Spending Account (FSA), make an additional contribution to cover a variety of expenses related to dependent care.
Eligible services include medical care, day care, babysitting and even housekeeping. You can 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 you’re paying for, 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 for 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 some money come tax time.
2. Ask for hospital freebies
Young children, especially newborns and infants, need a lot of stuff. Those costs can add up quickly.
Many baby product manufacturers partner with hospitals to provide new parents with a starter kit of everything they might need. 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.
3. Think before you upsize
Growing families need growing homes. 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. Spending time with your child is the most precious gift you can give.