It takes about $15,000 per year to raise a child in the United States. That's a pretty big number when you consider that the average family only brings in about $50,000 each year - doesn't leave much left over, does it? However, while having a child is definitely a financial commitment you and your partner make together, the commitment becomes easier on the pocketbook and the mind when you have a plan for each of your kid's financial life stages. By knowing what to expect, you'll know how to adjust your spending and saving to make sure everything is covered.
The baby stage can be a shocker because you'll be making a variety of big ticket purchases one after another. After all, buying a crib, stroller and swing won't be cheap. Add that to the medical expenses associated with childbirth and you might be feeling the squeeze early. Having insurance and a health savings account set aside for medical expenses could help reduce the burden. You can also make obtaining the larger items easier by asking relatives and friends for donations toward the items in lieu of shower gifts. It's a small way to start your child out right and save you from baby-related debt.
As your child progresses from diapers and bottles to backpacks and crayons, it's the perfect time to establish rudimentary guidelines for spending. Opening a children's bank account for your child can help him or her understand how to save money. Also, you might want to start a college savings account that you contribute to regularly. Meanwhile, plan to spend your biggest bucks on medical and dental expenses, along with school supplies and clothes at least once per year. By anticipating these times of higher spending, you're not caught unaware of a sudden outpouring of expenses. Learn techniques to help teach kids about money from TransUnion.
The teen years are one of the most expensive financial life stages, especially when it comes to clothes and electronics. Just make sure that you're still contributing to your child's college fund. A state-based educational savings plan is one way to keep your contributions protected. Your child can also contribute his or her own funds. Your teen can get a job and help pay for some of the more pricey expenditures with you. Having a job teaches hard work and spending skills - buying an outfit now might not leave enough money for that iPod later.
When your high school grad is ready to leave the nest, you should hopefully have savings in place to help ease the burden of a post-secondary education on both of you. In case your savings is not enough to cover all of the expenses of college, encouraging your child to apply for scholarships of all shapes and sizes while looking into student loans can help reduce his or her debt after graduation. Don't forget the smaller expenses associated with leaving the nest; it's the first time your child will need to pay bills, buy food and keep track of expenses, so a lesson on budgeting might be a good idea, too.
For more financial management tips for different life stages, check out TransUnion.