Since I had my children, I always wondered what the number was. I recently read in Time Magazine the latest estimated numbers on how much it costs to raise a child. A child born in 2007 costs $204,060 from birth until age 18! It includes food, housing, childcare, and education. It sounds like a lot of money but upon closer examination, these numbers are actually too low. With today’s cost of living, I would estimate it at least $400,000. They underestimated child care, housing costs, education (even with public school). It also did not include saving for college. Just saving for a public university adds another $145,000. Don’t let these numbers scare you. Make priorities in your spending and don’t say YES to everything. A few more tips for spending smarter for the little ones in your life.
1) Pick a Party or a Gift. As your child gets older, present to her the option of a large birthday party or an extra special gift – not both. Your child is now involved in the process of prioritizing expenses and you are sticking to your budget.
2) Teens and Cars. Sounds like a recipe for disaster but doesn’t have to be. If your teen needs a car and you are considering buying them one, be sure you are saving enough for your retirement and for their college fund before you buy them a car. If you do end up buying them a car, buy a used car. Buying them a new car sends the wrong message at this age. They should pay for some of the expenses – gas is an easy one.
3) Kids and Credit Cards. Giving your child a credit card can be a tremendously valuable lesson – if done properly. One way to do it is to allow them to charge up to a certain amount (i.e. $50) a month or just one item. Then they can help pay it off with their allowance or work earnings. It also teaches them about interest rates.
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