Let’s just cut right to the chase – no, you are unlikely to EVER be financially ready to have a baby. And that’s OK! Very few couples, at least young couples, understand the financial responsibility and undertaking of having a child.
As you probably know, most of Britain has been having baby fever as Prince William and Duchess Kate recently gave birth to their first son. As expected the royal couple were put up in the Lindo Wing of St. Mary’s Hospital, which is where Princess Diana delivered Prince William and Prince Harry and is considered the Rolls Royce of hospital rooms. All in all, it’s reported to have cost the royal family $15,000 to deliver in the Lindo Wing. Sounds like a lot of money doesn’t it? Well not so fast.
According to research obtained by Elisabeth Rosenthal of the New York Times by Truven Health Analytics, the average total price charged for pregnancy and newborn care in the U.S. is $30,000! Truven reported that since 1996, costs for delivering a baby have tripled. So the question becomes, have you checked your insurance coverage of maternity care?
It’s not realistic to assume you’ll be able to save enough money in advance of having a baby to cover all of the costs associated with having children. Data from BabyCenter.com shows that the total estimated cost of raising a child in the Midwest from birth until age 18, including paying for a public college, would be $250,360-$465,010. If you were to ask a parent how they manage, most would simply say “we make it work.” But closing your eyes and hoping little Tommie becomes a basketball star and Susie gets a full academic scholarship is not the best way to plan for their future.
While the costs seem high, it’s not impossible to keep from going into debt while raising a child. The best way to achieve financial success when other people (spouses or children) are involved is through open dialogue. Many families simply don’t communicate about their finances, and in a world with unprecedented expenses and the normal surprises, communication will be key to happy relationships. Money doesn’t grow on trees and we need to make certain we all understand you simply can’t do it all. Setting a budget and following it from day one can help keep new parents on track and off on the right foot as the midnight feedings and diaper changing draws their focus away from their other important matters. It’s also often a good idea to setup a 529 account for the little one. Just like planning for retirement, the earlier you start planning to pay for a college education the easier the burden becomes and the quicker a habit can be formed in saving a set amount each month or year.
Having a baby is an exciting time and can open your eyes to a whole new world. I wish William and Kate the very best in their new adventure.
Joseph “Big Joe” Clark, whose column is published Sundays, is a certified financial planner. He can be reached at email@example.com or 640-1524.