John McMillin: Financial planning advice for parents to be

John McMillin • Updated Sep 2, 2018 at 9:00 AM

Babies are so cute. However, what does it really cost to have a baby and raise a child to 18 years old? Currently, the U.S. estimate is close to $200,000 without higher education for your child.

With that much money in question, it would be a wise move to build additional savings before you begin the journey of parenthood. Let’s start with pregnancy.

The cost of maternity care and delivery can range significantly and depends on your health insurance provider. The factors that come into play are your health insurance plan’s premiums, co-pays, co-insurance and deductibles. If you have health insurance through your employer, review your health plan to see what is covered. If you do not currently have health insurance, pregnancy is considered a “qualifying event” that allows you to purchase health insurance in the health care marketplace. Nowadays all health insurance policies include maternity care as part of their standard package.

Once the baby arrives, you’ll need to know how much leave you and your co-parent will receive from your jobs. Some employers offer paid time off, while others will allow you to use sick and/or vacation time once the baby arrives. Employees of companies with 50 or more workers are covered by the Family and Medical Leave Act and have the right to take up to 12 weeks of unpaid leave.

Next, we need to look at the total cost of raising a child, which includes the following categories:

• Housing: About 30 percent of the cost of raising a child is the family’s housing at minimum. Having children means that you might decide to live in a larger home than you would if you were by yourself. It could also mean more bedrooms and extra space.

• Education and child care: There are more two-parent working families now than ever, and child care is a necessity and makes up close to 20 percent of the cost of raising a child. According to the USDA, the expenses in this category include daycare, baby-sitting and elementary and high school tuition, books, fees and supplies. For families paying for full-time, year-round day care, this amount could grow.

• Food: Food costs take up about 15 percent of the total cost of raising a child. 

• Transportation: Similar to food costs, transportation makes up about 15 percent of the cost of raising a child and includes the down payment you made on your car as well as your car loan, fuel, maintenance and repairs, and insurance.

• Health: Health care for child, including emergency room visits and more, can take up to 10 percent of the child-raising cost.                

• Clothing: Clothing amounts to about 5 percent of the cost of raising a child.

• Other: Add the remaining 5 percent of this amount to be those things that simply don’t fit in the previous categories.               

What happens if your income falls short of the amount you need to care for your child?  Know that there are public benefits that act as a safety net for families in need. Children’s Health Insurance Program and Medicaid provide needed health coverage; WIC, SNAP and school breakfast and lunch provide food; and Fuel Assistance and Weatherization Assistance can keep your home heating bills down. For some families, unemployment insurance or Temporary Assistance for Needy Families provides temporary direct payments to cover the costs of running a household.

Having a child is a priceless experience. But a pre-planning goes a long way in creating the family life you want.

John McMillin is president of United Way of Wilson County and the Upper Cumberland. Email him at [email protected]

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