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Want to Have Kids? Better Plan on These Costs

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You don’t need to be a parent to know that bringing home a baby isn’t cheap: You have to buy diapers, car seats and strollers, plus all new clothes and furniture. And these costs are just a drop in the bucket.

Between housing, food, transportation and everything in between, it costs an estimated $245,340 to raise a kid from birth till his or her 18th birthday.

My own time in the parenting trenches has been a learn-as-you-go experience where finances are concerned—but it doesn’t have to be that way for you. Here are four costs that are easy to underestimate, and some tips to plan ahead like a pro.

1. Hospital Costs

Delivering a baby can inspire a whole new level of sticker shock. According to a 2013 report, the average total cost of pregnancy, delivery and newborn care is in the $30,000 range. (Cesarean sections jack up the figure to $50,000.)

Deep breaths. This, of course, is without insurance.

How much can you expect to shell out personally? The answer varies widely depending on where you live, your insurance, what medical services you receive and how long you stay in the hospital. That said, it isn’t uncommon to owe anywhere from $2,000 to $6,000.

Keep in mind that you won’t receive one comprehensive bill. Instead, separate invoices—from obstetricians, anesthesiologists, pediatricians and the hospital—can trickle in for months. What’s more, there’s a real chance some providers will be considered out of network. After my first delivery in 2009 at an in-network hospital, I was hit with an additional $400 bill for my daughter’s pediatric exam. The hospital’s pediatrician, unbeknownst to me, was out of network.

The fact that medical fees are so difficult to nail down in advance is why Mary McCraw, a Certified Financial Planner with The Arkansas Financial Group, suggests beefing up your savings as much as possible. “The earlier the better,” she says. How much? Contact your insurance company early on to get a ballpark figure for prenatal visits, delivery and newborn care to help set a savings target.

Also, be sure to clarify their stance on out-of-network providers from the get-go, as these bills can seriously increase your expenses. (And talk with your doctor and hospital about the network status of every provider you may see.) Finally, confirm when your insurance year is up. If it renews during your pregnancy, it means your deductible will reset.

2. Lifestyle Upgrades

Is your home large enough for you plus baby? Plus nursery, stroller and a slew of toys? These may seem like obvious considerations, but they do tend to get overlooked, or underestimated. And they can be even tougher to contend with if your pregnancy comes as a surprise.

Case in point: I got pregnant right after my husband and I spent a boatload of money moving into a teeny, fifth-floor walkup apartment. Needless to say, we were packing up again shortly after, which cost us thousands.

Similar scenarios include having to upgrade to a bigger car, a double stroller, a next-level car seat and so on. What I’ve learned is that having a separate fund for random baby expenses that you add to relentlessly during pregnancy (and after, too) is a fantastic idea that’ll keep you from tapping your emergency savings or reaching for credit cards to cover pop-up expenses.

3. Parental Leave Pay Gaps

It’s no secret that the U.S. isn’t known for great parental leave policies: The Labor Department says it’s the only developed nation where paid maternity leave isn’t the norm. (Paternity leave is even more unusual.)

After delivery, mothers can usually expect six weeks off (eight weeks for a C-section). But that doesn’t mean it’s paid. A 2012 Labor Department study found less than a quarter of women who took maternity leave got pay. For men, it was only 13 percent. Where you live matters: California, Rhode Island and New Jersey actually offer paid family and medical leave, with New York joining them in 2018.

Most new fathers use their sick and vacation days to stay home. And while 90 percent of U.S. fathers do take some time off, the majority, a whopping 70 percent, don’t take more than 10 days.

In a nutshell, parental leave is all over the place. McCraw strongly advises contacting your HR department well in advance to find out what to expect. From there, the goal should be to save up enough money to cover any unpaid time.

4. Child Care

Child care is easily one of the biggest expenses of parenthood. According to a 2015 Economic Policy Institute study, the costs of infant care exceed the average price of in-state college tuition in 33 states and D.C. If you’re in a two-parent household with two kids, the numbers are more staggering: Child care for an infant plus a 4 year old will likely make up 19 to 28 percent of your family budget.

The numbers vary by state, but the Institute for Women’s Policy Research reports that in places like D.C., Massachusetts and Minnesota, the bill is comparable to one-third of women’s median earnings.

Because of the steep costs, some parents opt to step away from the workforce to care for little ones. Of course, this creates its own subset of problems, especially for women who then have to reenter their industries with a large gap in their resumes—and possibly in their paychecks, too, compared to those who never left.

For those who don’t want to or can’t afford to pause their careers, McCraw suggests looking into in-home alternatives. And work-from-home parents should factor in childcare costs too. When I transitioned to full-time freelancing, I was stoked to eliminate the hefty daycare bill for our then 2- and 3-year-old girls. But I soon realized that working from home while caring for two children is much easier said than done, and immediately wished I’d made room in my budget for a regular sitter.

Because my state offers free pre-kindergarten, my load lightened significantly when my little one turned 4. Check to see if your state offers something similar. You may be eligible for free half-day care, which can keep a considerable amount of cash in your pocket.