Kids Expenses: How to Budget Out the Biggest Bills
Friday, December 5, 2014, 1:00 AM | Leave Comment
There’s no doubt that kids are expensive. Recent estimates state that parents will typically spend about $300,000 until a child turns 18, but this figure includes things like housing and food, which benefit the entire family. Still, things like activities, clothes, child care, health issues, and education really add up.
You can save money on some of these expenses by getting things used or free, but there’s no getting over many of the larger ones.
Learn how to budget for these expenses so that they don’t become a big financial burden.
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Child Care Costs
If possible, look into local child care costs before you need their services. The high costs might surprise you. If you can save up some of the money before your baby is born, it can help, especially since you may have lost income in taking care of your baby during her first three months. If your employer offers a flexible spending account for child care costs, sign up for it. They’ll deduct the money right out of your pay check, and you won’t have to pay taxes on it. If not, many families can get a deduction when filing taxes.
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Medical Expenses
Budget for expected medical expenses when you can, particularly things like glasses and orthodontics. A flexible spending account through your employer or a health savings account that you fund on your own, can help you pay these bills tax free. It’s easy to save when you choose to have automatic withdrawals funding your account. When you visit a service provider, like a Dr. Bishop & Associates vision center for Calgary contact lenses or a dentist for those middle school braces, you’ll be able to use a special debit card to access that money.
If you’ve had an unexpected medical expense, talk to the provider about setting up a payment plan. You can typically do this without paying an interest on the money you owe. Let them know how much you can afford to pay each month and the provider will work with you.
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Educational Expenses
A 529 plan, or an educational savings account (ESA) is a good way to save money over time for a future educational expense. They work similar to a 401k or IRA, investing in stocks and bonds to help your money earn additional interest. Again, automatic investments are helpful, but you can also add extra funds your children receive as birthday money or any bonus money you receive from your employer. When you save money for college throughout your child’s early years, it’s not as hard to pay when they go off to college.
Having a child means spending a lot of money, but proper planning will make it hurt a lot less. Make sure you’re ready to both spend and save. Your kids will thank you in the long run.
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