As you prepare for your new baby, you’ll need to look ahead over the next few years and understand what sort of costs are associated with your child at every age. Even by conservative estimates, the cost of raising a child for the first 17 years can be $9-10,000 per year. If you are adding private school tuition, some families will pay more than $230,000 before the child turns 18. So before you bring that baby home from the hospital, a solid understanding of the monthly and yearly costs of raising your child will help you assess the fiscal needs of your growing family.
Your first year may be a bumpy ride as you make the adjustment to being new parents, and also as you make a lot of one-time purchases for your new bundle of joy. Nursery furniture, strollers, car seats, high chairs and other necessary items can be quite pricey, but you can always resell them at yard sales and recoup that money later if necessary.
Baby formula and diapers will probably set you back about $2000 a month in the first year. The good news is that your baby will be potty trained at the end of that second year, so some of those expenses will go away. However, clothing and toys will continue to be major expenses throughout those early years. Newborns and toddlers (between ages 1-3) grow quite rapidly, and you may find that you’re getting rid of brand new clothing before your child has a chance to wear it, just because it’s too small.
And don’t forget day care expenses and insurance premiums. If both parents are working, you can expect to spend at least $8000 a year on day care. In addition to health insurance, you may want to look at affordable term life insurance to take care of your new dependent in case anything happens to you or your spouse. And don’t forget to amend your will – or draw one up if you don’t have one. All of these expenses can seem overwhelming, but they don’t have to be if you are prepared.