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| The Basics | The hidden costs of parenthood
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Kids are a joy; the bills for raising them aren't. It's more than just college and bigger houses. Here's how to control the costs you may not have considered.
By Liz Pulliam Weston
Kael and Lisa Doan-Loftus are planners. Before getting married two years ago, the two Los Altos, Calif., technology workers created a massive spreadsheet detailing all the expected expenses of their wedding.
Theyd like to be just as prepared for their next big project: having kids. The self-described aspiring parents know that not every child-rearing expense can be predicted, but they dont want to be blindsided by costs they should have been able to anticipate.
We both remember how great our parents did with planning, said Lisa Doan-Loftus, 35. But there are a lot of (financial) pressures on families today that didnt exist back then.
In addition to saving for their own retirements and dealing with the high cost of housing in many areas, families often struggle to cover the big-ticket items: child care, saving for college, buying auto insurance for teenagers, moving up to bigger houses and cars to accommodate a growing brood.
But there are a lot of other, less-discussed expenses that add up over time. I asked a bunch of parents to talk about the potential budget-busters they werent expecting, but wound up paying just the same. Here is a sampling of some of those hidden costs:
Health insurance
You may have a vague understanding that your medical costs will increase with a child, but you may be surprised by how big a jump is in store.
Blue Cross of California, for example, charges $625 a month to cover a 30-year-old couple under an HMO plan. Add a child and the monthly tab spikes to $965.
If youre employed and your company provides health insurance, youll get help with those costs; the average employer still pays about three-quarters of their workers insurance premiums.
But youll still feel the bite. In 2004, the average employee paid $2,664 in annual premiums for family coverage, according to a study by the Kaiser Family Foundation and Heath Research Educational Trust. Singles paid premiums averaging $564 a year. Youll probably find yourself visiting the doctor or even the emergency room more often, thanks to childhood immunizations and accidents.
Then, theres all the stuff thats not covered, like allergy tests, braces for their teeth (figure $5,000 to $10,000 or more) and replacements for the eyeglasses, contacts or retainers they lose.
My son went through two expensive retainers in elementary school before we came up with an effective system, which involved him carrying a retainer case everywhere he went, said Nan Mead, parent of a now college-age son and communications director for the National Endowment for Financial Education. He was not allowed to leave home without it.
How to cope with added medical costs? Some suggestions:- Use your employers flexible spending plan, if one is offered. These allow you to put aside pretax money to pay for medical expenses that arent reimbursed by insurance.
- Negotiate. As outlined in Haggle with your doctor, cut your bill, medical expenses arent carved in stone.
- Take advantage of state-sponsored health plans if your family is strapped. One of the ways Toby Dillons family of four survives on his $25,000 annual income is by signing up for Utahs Childrens Health Insurance Program, which covers their immunizations and checkups.
The food bill
Food is a big part of most peoples budgets, and the cost grows along with the child. You can expect your food budget per kid to just about double as your children grow up, according to statistics gathered by the U.S. Department of Agriculture. |
Source: Department of Agriculture
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What you buy typically changes as well. Even those who were fairly frugal before parenthood find themselves reaching for convenience and costlier packaging.
Every week, my shopping cart is filled with things we never bought before, like graham crackers, Cheerios, granola bars, grapes, cheese, juice boxes, said Michelle King, a Winona, Minn., mother of a 20-month-old son who, she says, is certainly worth the small fortune I pay out in Teddy Grahams.
Some of these purchases may be all but inevitable. But home economists say the best ways to save on groceries, and provide good nutrition for your kids, are the old stand-bys:- Make lists and stick to them; dont shop when youre hungry.
- Shop without the kids if at all possible to avoid the gimmies.
- Buy foods that are as close as possible to their natural state; avoid overly packaged or processed food.
Activities
It starts early, with Mommy & Me or organized playgroup sessions costing $10 or $12 a pop. As kids get older, the costs just mount, whether theyre in the band, taking ballet lessons or playing organized sports. As public schools cut back their support of extracurricular activities, parents face ever-higher fees and ubiquitous fund-raising efforts to pay for things that used to be low-cost or even free. When you add in the cost of equipment, uniforms, private lessons, team pictures and transportation, families can spend hundreds, if not thousands, of dollars each year trying to create well-rounded kids.
Its remarkable how quickly, and to what degree, [the costs] can add up, Nan Mead said. But in many cases, if a family hasn't planned ahead for hidden expenses, they can wreak havoc on a budget.
One poster on the Your Money message board listed the following expenses incurred so far this year for two elementary school kids:
| Daughter (8 years old) | Son (6 years old)
| Soccer: $50
T-Ball: $60
T-Ball fund-raiser: $40
Fall hockey: $80
Winter hockey: $140
Hockey fund-raiser: $200
| T-ball: $40
Fall hockey: $70
Hockey fund-raiser: $200 |
Thats on top of the $300 or so theyve spent on sports equipment this year. The expenses do not count money the family in question will spend in gas, hotels and food once the kids are old enough to play on sports teams that travel.
Participation in the arts can be pricey, too. Playing in the Canton, Mich. high school marching band cost Alan and Patrick Moran $1,400 each annually -- a sum their mother Rosy collects through strenuous fund-raising as part of a Band Booster program. Thats on top of the cost of instruments, private lessons, music camps and other extras the family pays out of pocket.
To quell the costs, parents offered these tips:- Limit your child to one or two outside activities per semester.
- Arrange carpools with other parents to reduce the schlepping costs.
- Rent, buy used or borrow equipment until youre sure your child wont drop the activity.
- Gently steer your progeny. When it comes to musical instruments, for example, the bigger it is, the more it costs, one father said. So gently discourage junior from playing the tuba, and don't let them go near a harp!
Odds and ends
Here are a few more hidden costs parents mentioned:
Birthday parties. Competitive party-giving is a full-contact sport in some areas, as parents strive to outdo each other with elaborate entertainments, food and goody bags. Parents say money often substitutes for creativity, and that you dont need to spend a fortune for kids to have a good time.
Technology. Cell phones, video game systems, computers. Yesterdays high-tech toys are considered essential equipment in many families. Its up to you to set limits; many parents insist their offspring use allowances to help pay for games or extra cell phone minutes.
Travel. The cheapest options may no longer appeal. Youll still travel -- perhaps more so if the babys grandparents and other relatives live far away. And theoretically you can get free passage for your child until shes 2 -- if you dont mind holding a struggling, squalling toddler on your lap for the whole, packed flight. (Voice of experience: Dont do it. Buy the kid a seat.) But nonstop flights suddenly become a priority, as do bigger hotel rooms.
Tutoring. Your child may need extra help in school, or getting ready for college entrance exams. Few schools provide drivers education, which typically costs $500 or more from a private company.
Furnishings. Tricking out the babys nursery is just the start. Youll probably wind up replacing your furniture, carpet and wall coverings more frequently thanks to the added wear and tear. The sofa has been peed on, spilled on and puked on, one poster said. I would invite you over, but where would you sit? And you might as well add the carpets too . . .
Time. This one can be hard to quantify, but many parents said their time crunch leads them to spend more on restaurant meals, household help and many purchases, since they have less leisure to comparison shop.
Dont forget the career
Then theres the effect of kids on your career. Since there are only 168 hours in a week, many parents find themselves cutting back on their work hours to spend more precious time with their only-young-once offspring.
Kids take up time, gobs of it, one father wrote. We have dropped our working hours from 80-90 hours per week to the regulation 50. This without a doubt has impacted our careers and indirectly cost us money.
As with any other worthwhile venture, parenthood involves trade-offs and risks. But the Doan-Loftuses hope that knowing about these costs upfront can help them budget and avoid overspending.
We all know that families have to stretch, Lisa Doan-Loftus said. But its really important to [protect] our financial health at the same time.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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