The birth of a baby is a joyous occasion for many couples. Unfortunately, for the unprepared, reality can soon crash the party.
This is especially true for military couples. Long separations, new duty assignments, and single-spouse incomes can add to the stress of raising a newborn. Planning ahead for the monetary needs of raising a new son or daughter can remove much of this pressure and allow you to enjoy the precious moments.
The U.S. Department of Agriculture estimates that the cost of raising a child born in 2009 through age 17 for a typical middle-income child will total $286,050 -- adjusted for inflation. This doesn't include the cost of a college education.
Thankfully for military families, the largest category of these expenses for families is housing -- much of which is subsidized for many servicemembers. Still, that is a daunting figure for anyone.
But take a step back, count to 10, and start to plan. Some simple steps can help you create a financial plan of attack for bringing up baby without financial worry.
1. Budget Mindset
When deciding whether to have a child -- or shortly after you discover that you're expecting -- it makes sense to understand the monthly financial commitment you're about to understake. Make a visit to your local grocery or department store to see the cost of diapers, baby formula, and wipes.You'll quickly understand the need to find a few extra dollars each month for just the basics. Find areas where you're comfortable making concessions such as cloth diapers or generic formula.
2. Be Realistic
It's easy to get up in the pressure to be a "good" parent by having the latest and greatest accessory or baby toy. Much of this can probably be attributed to good marketing. Instead, do a realistic assessment of both your child's needs and your ability to afford these items. Owning a SUV or minivan isn't required of parents. Brand name diaper bags don't potty train your child sooner. Slightly used baby clothes can be found as hand-me-downs, on eBay or at local consignment stores. And think hard before buying a new home to accommodate your growing family -- becoming house poor but baby rich is not a good thing. Identify areas where you want or can splurge, but be realistic about the others.
3. Find Freebies
There are many services for both military and non-military family members that provide interesting or useful freebies for new parents. For example, newborns can attend a Ringling Brothers Barnum & Bailey Circus for free.
Another secret weapon for military families is the base commissary. That is why The Defense Commissary Agency launched the LiA?l Heroes Baby Program to ensure commissaries met the needs of the entire family, including newborns. DeCA estimates that based on 2008 USDA retail grocery costs, the average family of four can save $3,400 per year by shopping at their commissary.
4. Plan Ahead
Barring private education, the cost of raising a child decreases around age 12 when additional care for children outside of school hours is no longer necessary. However, if you wait this long to begin planning for college expenses, it's too late. According to the College Board, the average cost of tuition and fees at a public college for the 2009-10 school year was $7,020 while a private college was $26,273. Take advantage of the miracle of compounding interest and tax-free savings to help remove some of this burden from your children. Search for military specific scholarship opportunities, start a 529 or other investment vehicle early, and sock away extra income as you can. It also helps to enlist grandparents and family members who want to give gifts to consider donations to these funds.
It's important to not let the huge estimates of raising a child strike too much fear into your heart. But it's equally important to think ahead and create a plan of attack so you can reduce the financial stress of a newborn and instead enjoy all the little moments of raising your child.