Are you interested in having another baby, but are stressed out about the financial implications of adding to your family? The fact of the matter is that raising a child can get extremely expensive in the long run. Although your decision might not be based on dollars and cents eventually, your financial stability and many other aspects related to money must be taken into consideration when making such a decision.
It's extremely important for you to take note of how another little human could impact your family so that you can find ways to go about things without disturbing your current lifestyle.
Come to think of it, deciding whether you wish to have a second child is even harder than deciding on having your first one. It is way more complex than simply asking, “Do we really want to have more children and do we have enough money? Yes? Great let’s go!” To be honest, adding another child to your family is like creating a whole new family all over again. For this reason, make sure that you ponder over these financial aspects before making this choice:
6 How Much Do You Make Each Month?
We all know how bad the economy is struggling these days. Before trying to have another baby, you need to be honest to yourself – how secure is your monthly income? Have you saved up enough to cover at least six months of expenses in case you or your spouse ends up losing their job?
Although the thought of getting a second part-time job may not sound too appealing to you, but take into consideration how far a second paycheque could go for you in terms of adding to your savings. If this isn’t possible for you right now, try to think of ways through which you can supplement your income. This includes babysitting or selling items on the internet. Apart from that, it’s also highly recommended for you to look for small ways to save money around your home.
For instance, you should consider using compact fluorescent light bulbs; prepare your meals at home instead of eating out and using your local library for book and movies. Trust me, your savings are definitely going to add up in the long run. Although money isn’t everything, it is however necessary for you to have a bit of financial stability in your life when you’re raising a family.
Time it well
Each child is going to cost thousands of dollars a year to care for, so a bit of extra cash is much-needed. Before conceiving another baby, make sure that you have a bit of extra cash in your monthly budget.
No matter when it happens, having a second baby is definitely going to be expensive. The timing of your second pregnancy can have a serious impact on the amount of extra money that you have to shell out. Hence, it is best for you to come up with a plan to save up a bit of money first and then think about having your second baby.
2. Will You Be Able to Afford Healthcare?
To get things started, you need to consider the prenatal costs that are going to be covered by your health insurance. The fact is that you will have to make multiple visits to your doctor all through your pregnancy, and well, the cost is definitely going to add up.
Also, you must take things like prenatal vitamins and other supplements that you may have to take from time to time into consideration. While you’re at it, keep in mind that having your second baby is going to add to the costs of healthcare, thereby deeming it necessary for you to pay higher premiums.
The different aspects associated with health insurance can prove to be rather confusing and overwhelming. For this reason, it’s highly recommended for you to just speak to your insurance representative in great detail so as to streamline the process. This way, it will be totally possible for you to get the best of your health care insurance.
Being pregnant can be expensive
Early and continuous prenatal care is essential both before and throughout your pregnancy to help ensure a healthy delivery and healthy baby, for those who have health insurance, all prenatal visits and diagnostic tests will probably be covered in their insurance as these are generally considered ‘preventive’ care. However, for those who don’t have health insurance, the average cost of prenatal care is expected to be around $2,000.
5 Can You Afford All ‘Start-up Items’ that Your Baby May Need?
Alright so let’s put things straight. Diapers alone can easily cost nearly $100 a month for a newborn baby. With that, if you add in formula, the total amount is going to come down to a hefty monthly bill. However, there’s good news in this regard. Considering that you already have a child, you’re probably going to be stocked with lots of baby gear and clothes, so you will probably end up saving a bit of money.
However, in order to save up more, it’s highly recommended for you to shop around in thrift stores for any big ticket items or furniture that you might need for your second baby. Also, in case you have a family member or friend who is pregnant with her next child, consider doing a clothing swap to freshen up your baby's wardrobe or to stock up on clothes for the opposite sex if you need them.
Do keep in mind, though, you may need to replace some of your gear. For example, the American Academy of Pediatrics (AAP) recommends avoiding older, used car seats to ensure maximum protection for your child. Most have an expiration date printed on them and if they don't, the rule of thumb is six years from the manufacture date. The AAP also recommends using cribs certified by the Juvenile Products Manufacturers Association.
Plan it out
Although money is not the only consideration when it comes to planning on another kid, it is definitely one of the biggest ones. As a parent, I am sure you already know how expensive having kids can be. Although some of the expenses will be lessened with a second child (such as baby gear and clothes), others like daycare are huge expenses that you need to plan for.
4 Will We Need More Living Space?
The question that you need to ask yourself here is not whether you want to move – it is more so related to whether you would need to move to make space for the new addition to your family. If there is a definite need for you to move, then are you sure that you can afford the extra expenses pertaining to moving out? As you’ll be after a bigger home, you will obviously have to pay a bigger mortgage as well.
Although you can get your mortgage refinanced in order to lower your payments, it’s necessary for you to consider the costs involved before making this decision. Next, if you plan on renting a place to live, you must also give due consideration to the amount you’ll need to sign the lease.
A majority of landlords and management companies these days require first and last month’s rent together with a security deposit and at times a realtor’s fee. Also, apart from moving costs, you should also add in the expenses pertaining to furnishing a larger home, which, trust me, can be very expensive. In this case, refrain from buying all new furniture and instead look for cheaper ways to decorate your home.
A few more expenses
When trying to figure out whether you really need a new home or not, you need to consider the extra costs associated with this move too. Moving house can mean an increased mortgage and associated costs such as stamp duty, estate agent commission and legal fees so you need to prepare for these.
3 Do You Need a New Car?
In case your car is already filled to capacity, you need to think about the kind of car you will need in the future to make space for the new addition to your family. You’ll have to research whether it’s possible for you to save more money on a monthly basis if you lease a car or buy a used one. With a bit of research, there’s a good chance you may even get a bigger car for the same amount you spent on your current car.
But when looking for a new car, make sure that you shop around for new car insurance as well. Even though some expenses may be shared between your first and second child, adding a new member to your family is going to be as financially painful as the first. In order to accommodate baby gear, you’ll probably end up having to pay anywhere between $10,000 and $40,000, so the costs are definitely going to add up.
You’ll need a new car seat too
Apart from getting a new car, there’s a good chance that you will have to spend money on a new car seat too. Not only do car seats expire, they also become unusable in case they’re involved in a car accident where injuries occurred. Also, technology continues to improve on a yearly basis, so the car seats available at the moment have the newest safety technology available. So if you plan on getting a new car, you will also have to buy a new car seat for your newborn.
2 What About Daycare?
Those who already have a child in daycare would definitely know how expensive it can be. The worst part is that even adding another child to daycare may not let you qualify for a discount. From what is known, it can cost up to about $11,500 a year or just under $1,000 a month for a couple to send a child to daycare in the United States. Most importantly, the prices may even double the average if you live in an area or city with a higher cost of living.
Considering these costs, sending two kids to daycare will probably be out of the question for the average citizen. If possible, instead of sending your kids to daycare, try to think of ways to cut down on daycare costs. For instance, you could ask a family member or friend to watch your child one day a week, talk to your employer about flexible hours so you can overlap childcare with your spouse or maybe even consider nanny-sharing with a neighbor.
All of these options will allow you to save a significant amount of money that would have been spent on daycare – huge monthly savings are just about guaranteed if you choose to use one of these options.
A few calculations
I know a couple who pays about $130 a week for their child care. However, with baby #2 on the way, they are fairly worried as the amount is going to add up. For their second child, they will be charged $150, so in the long run; they’ll be paying nearly $4,500 a year. Instead of wasting this sum of money, try to work out if it would be better for you to work on a stay-at-home parent basis instead of putting your kids into daycare.
1 Will You Be Able to Save Up for Your Child’s Education?
Over the past decade, the average annual cost for college is believed to have increased by a full 6.5%. By the year 2030, it’s expected that a year of tuition will cost over $44,000 at a public school – the total cost of a four-year degree is going to cost around $205,000. So if you wish to add to your family, it’s best for you to consider setting up accounts right away so that you can be prepared to meet your child’s future academic needs.
If truth be told, money is one aspect that is always talked about whenever college is discussed. With so many graduates these days getting overloaded with student loan debt, and considering that nearly 19% of borrowers owe more than $50,000 upon graduation, things should be pretty scary and worrisome for you when you think of having another baby.
529 college plans may help out
Also known as Qualified Tuition Programs or QTP, 529 college plans work by investing after-tax money into the plan. The funds can then be withdrawn tax-free for use towards qualified education expenses like college tuition and books. Different countries offer various investment options, operating costs and annual fee, so make sure that you look into this option when planning on having another baby.