My $30,000 Mistake Raising A ChildSubmitted by Creative Wealth Strategies on September 9th, 2014
My wife and I had our third child in June. When my wife was pregnant with him, I was painfully reminded of how important proper planning is to avoid costly mistakes. Because I made a mistake that cost me $30,000! I'm not sure if she planned it or if by coincidence, but two months after my wife and I got married her car died. We didn't have children at the time but thinking ahead, I bought her a very practical and affordable hybrid SUV. On the premise it would be perfect when we did have children she could drive it for the next 10 to 15 years. Thus allowing me to go over a decade without a car payment!
Great plan, but one big problem! I didn't factor in the need for a third row to fit my third child. That was a $30,000 mistake because I had to buy a bigger SUV to provide our needs.
My point in sharing this story is to emphasize the importance of planning not just for the expected but the unexpected costs that are bound to occur when raising children. The cost to raise children is already expensive and you don’t want to compound it by making financial mistakes.
According to a news release from the USDA www.usda.gov a child born in 2013 will cost a middle-income American family an average of $245,340 ($304,480 adjusted for projected inflation) for food, housing, childcare and education, and other child-rearing expenses up to age 18. The scary part of this report…this doesn't include college cost.
The USDA report also stated the housing costs are the greatest child-rearing expense for middle-income families, making up roughly 30% of the total cost of raising a child. I was surprised that child care and education cost were only 18% of expenses; if feels so much higher than that, at least in my household. Food was the third biggest expense at 16%.
A Few Tips to Reduce Expenses
1) Have a plan and budget for everything – this will take discipline but it works.
2) Have emergency reserves – things happen, like a medical illness, that can put you in debt if you don’t have adequate savings.
3) Live within your means - all of us want the best for our kids, but be practical.
4) Make gender-neutral purchases when possible for things like bedding and clothing. When my daughter was born we bought pink everything, all this “stuff” became useless when we had two sons afterwards.
5) Use hand-me-downs – most parents are good at this concept already. I’m overjoyed when I see my wife walk in with hand-me-downs because I know my bank account is intact!
6) Eat out less – this is tough because it’s convenient and moms (some dads) are already maxed for time, making cooking everyday difficult. But the savings could be substantial over the course of a year.
As parents we are all going to make mistakes, but hopefully some of the things I've shared resonate with you so you can avoid the big ones.