06.29.2011 / Bringing Up Baby on a Budget.
Welcoming a new baby into a family is an important time in your life. However, along with this new bundle of joy comes some additional expenses and some tax benefits too.
"Along with this new bundle of joy comes some additional expenses and some tax benefits too."
According to the U.S. Department of Agriculture, those new tiny toes could cost you almost $300,000 from birth to age 17 (1). But having a baby doesn’t have to nickel and dime you into debt. By laying out a smart spending and savings plan for the short-and long-term, you can prepare for all those expenses your little one will require. To help, we’ve put together a quick “To do” list for you, to help you get ready for your new arrival.
To do: Start thinking about budgeting during pregnancy. If you haven’t already, review your health insurance policy to see what is covered, what is considered an out-of-pocket expense and how much your monthly premium will increase with an additional dependent.
To do: Create a baby budget that includes food, transportation, clothing, health care, education, daycare and so on. Examine your current budget to find areas where you can pare down in anticipation of baby’s needs and get in the habit of spending less even before the baby arrives.
To do: Along with the pleasure of welcome your new baby into your family you also get the opportunity to claim your newborn as a dependent, reducing your taxable income. Also, as a parent, you may also qualify for the child tax credit, the earned income credit and a child care credit.*
To do: Start a savings account. The sooner you start, the more you’ll be able to save and the less financial drain you’ll face when your child graduates from high school. Also, as your child gets older and start earning income, have them make monthly contribution to this account too. Remember, it’s ok to have your child help contribute to their education. You’ll find they may even be more thankful for it, if they use their own money.
To do: Remember to apply for a Social Security card for your baby.
This is a very special time in your family’s life as you welcome a new member. Hopefully you will find this “To do” list helpful, as you start on a new journey in your life.
Are you expecting a new baby or have you just welcomed one into your family? If so, please share any tips or advice that you have found helpful.
(1) “Expenditure on Children by Families,” 2008, United States Department of Agriculture- Center for Nutrition Policy and Promotion, figure extracted for a middle-income family with a child born in 2008 can expect to spend about $221,190 ($291,570 when adjusted for inflation) for food, shelter, and other necessities to raise that child over the next seventeen years.
*This article does not constitute legal, tax, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.