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Starting a Family

How to grow your family and your saving account

Family Finance Basics

By most accounts, including a new analysis from the Brookings Institution, raising a child can cost you upwards of $300,000 through the age of 18 — not including college tuition. But having a baby doesn’t have to break the bank. When you know what to expect and plan well, you can make the right money moves and tackle the challenges every new parent has.

Family Finance FAQs

Start with childcare, the biggest line item in the average American new family budget. The cost can range from 15-30% of net income. Be sure to include estimates for out-of-pocket medical costs and items like diapers, formula, baby food, car seats, etc. Compare notes with people in your circle of friends and family who have babies. It’s also a good idea to build in a cushion of $150-200/month for unplanned costs. The same goes for expenses a few years down the road, like guitar lessons or camp. Consider a high-yield savings account or laddering CDs to maximize your savings.

Open a saving account in their name to help them learn the value of saving money. Consider setting up automatic monthly transfers from your saving account to theirs as a form of allowance. Roth IRAs can be another great savings vehicle. And keep in mind that once they start working, teens can open their own Roth IRA accounts. Be sure to sit down with them to check their account balances periodically. The more they see their money growing, the more you’ll reinforce their savings goals.

Insurance covers most costs, but prices vary by city, state and even medical facility. Your best bet: Do your research well in advance. Contact your medical provider for estimates of total charges and your health insurer to confirm coverage. Be sure to ask about copays and other out-of-pocket costs from pregnancy to delivery and beyond. At a minimum, try to set aside funds to cover your deductible and copays. If you haven’t already, now’s the time to consider a tax-free health savings account.