Child Financial Planning Tips
- Reshuffle your budget: Account for baby items in your budget and adjust regular expenditures.
- Create a special savings account: This will help with emergency expenses or even diapers, clothes, etc.
- Plan ahead for college expenses
- Manage your debt: Begin to cut back on credit card debt and other debts.
- Take advantage of the Child Care Tax Credit. Ask your payroll manager for instructions on how to add an extra allowance for your child on your W-4 form.
The national birth rate apparently took a dip during the Great Recession, right alongside the nation’s financial stability.
While there may be any number of explanations why fewer babies are being born in the United States, job loss, reduced income and other economic factors are bound to play a role when deciding when, or if, to have a baby, experts say.
The Centers for Disease Control reports the U.S. birth rate has hit an all-time low at 63.2 births per 1,000 women ages 15-44. The birth rate in 2010 was 64.1, down from 69.3 in 2007.
In the Nashville area, the Women’s and Children’s Hospital at Centennial has seen a drop-off, with 3,286 babies born in 2007 and 2,488 through the end of October 2012.
Baptist Hospital’s births have remained basically flat during the recession years, with 6,601 in 2008, 6,723 in 2011 and 5,004 through the end of October.
Another Child in Day Care?
Nashville marriage and family therapist Jo-An M. Fox says she believes insecurity over jobs and income go hand-in-hand with waiting or delaying having a child, although she says she has yet to see any recent study that connects the two issues.
“My couples say a lot, ‘I’d like to get another job, but I’m afraid I won’t find anything because the jobs are bad. We have one child now, but she just started kindergarten, and I don’t know if we could afford another child in daycare right now with what we’re earning,’” Fox says.
Fox, who began her Nashville practice in 2004, says most of her clients have been struggling financially during the past four or five years. Many cite child care expense, piled on top of day-to-day bills, as a reason to hold off adding to or starting a family.
The U.S. Department of Agriculture reports it costs an estimated $235,000 to raise a child from birth to age 17, including the cost of day care.
“I definitely see the strain of the economy,” Fox says. “It hampers (a couple’s choices). Mom now has to stay at home after having more kids because of the cost of day care.”
The Family Solution
The cost of day care is not a problem for Kizzy and Van Reid, who rely on their families to watch the kids, including a 2-year old daughter and twin 8-month-old boys. By depending on both large families, the Reids are saving at least $1,200 a month for day care.
“I know them, I know they’re not going to be hurt. I know they will give them their medicine when due,” Kizzy Reid says.
“Some things you have to cut out. I can’t get my hair done like I used to. You just have to balance things and do what you’ve got to do. I’ve got a car coming, and we have the kids. We have to do things,” she adds, referring to couponing, cost-cutting and coping with a shrinking budget.
Skip the Expensive Wedding, Maybe?
Watching costs and sticking to a budget is the way to go when planning a family, says Marcus T. Henderson, Sr., a financial planner and president and CEO of Henderson Financial Group, Inc.
Despite financial strains, he says, all couples need to take a look at finances and plan from the beginning on how to pay for the expansion of the family.
“My father used to say, ‘Be careful. You can have enough children to put you in the poor house.’ We’re starting to see the effect of that. We’re starting to see families that are looking at that. They are feeling the economic impact,” Henderson says.
Henderson says he has counseled several couples needing help to financially plan for children, and says planning for your child begins before you’re married.
“Start to think about everything from the beginning, including your wedding. Do you still want to have a wedding that costs $20,000, or should we do a $10,000 wedding and use the other $10,000 to buy a home?” Henderson says.
Kizzy Reid, who recently took a financial planning class and oversees her family’s finances, also has advice for couples preparing for children.
“Keep God first. That’s No. 1. No. 2 is, you really have to go with the flow of things.
“If you smoke or drink alcohol or do a bunch of shopping and you have more going out than coming in, it doesn’t take a rocket science to say we need to redirect this. If your lights are getting cut off and you have to keep paying a reconnect fee, you just have to use common sense and redirect the money. Nothing is getting cheaper,” she says.