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Bringing up a child is an ultimate joy for a parent. But, due to the increasing living cost, it is becoming difficult for the parents to handle the stress of raising a child. It is not only the cost of living that is increasing but also the cost of education is rising in leaps and bounds.
Factors to consider before planning a parenthood
According to the latest estimation of the U.S. Department of Agriculture, the average cost of bringing up the child till age 18 is about $245,000. That works out to about $13,000 per year.
Below are some factors you need to think about before planning for a baby.
The transition from dual income to single
With the birth of a child, the expenditure of a family climbs up. Even if you are not one of those parents who would like to have a designer stroller and clothes for the child, providing the basic necessities can become a hard thing. The total income may change after having the baby. For example, Will you get paid parental leaves? Will your spouse leave the current job?
Living cost is rising
The skyrocketing living cost is also alarming. The cost of the groceries along with the baby foods, gas, and all kinds of major expenses has increased in the past decade. The food prices are weighing down on the budgets of most of the parents.
Expensive higher education
When the child grows up to be in the college, the cost of maintaining the education of the child increases double fold. As per the stats, the average cost of attending a public university is about $25,000 a year. The cost of education in the recent years has increased. Thus, the student debt amount is increasing in our nation. The majority of the parents and students seek to finance with regards to the education.
How can you manage the cost of raising a child?
However, these scary figures will not stop you from having the bundle of joy if you consider some clever steps from the beginning. The cost of bringing up a child is now sky-high, but you shouldn’t accumulate debt in your way.
Here are some ways you can manage the costs of raising a child without falling into debts:
Plan a budget considering future expenses
Once you figure out what your post-baby expense will be footing, plan a budget including the additional costs such as maternity clothes, hospital costs, car seat, crib, child care, food, and diapers. You can use a child cost calculator online to do the math with ease.
Stay away from personal debt
Accumulating personal debt along with childcare costs can make your life more stressful. You should stay away from any type of consumer debts. Use your credit cards properly and pay the bills on time. Don’t overlook your equity bills as well. Thus, you’ll be able to live a debt-free life while dealing with other necessities easily.
Open a 529 college savings plan
529 college saving plan is a state-sponsored savings plan that gives tax-free interest. You need to contribute $500 into the account every month. This cushion will help you to find your child’s higher studies without taking out huge student loan.
Shop around while considering health insurance
You should shop around to get the best health insurance that provides extra coverage. You may save a significant amount when it comes to pre and post-birth medical bills.
Reduce unnecessary expenditures
You can lower the unnecessary expenditures to reduce the total expenses. The lower your monthly expenses, the easier will it be for you to manage the parenthood.
Take help from relatives
Now, colleges are accepting checks from grandparents and relatives for funding the college education of a student. When your relatives or grandparent ask you what gift you want for your child on birthday or Christmas, ask them to contribute the cash to 529 college savings plan.
Have your child attend a cheaper college
Consider cheaper colleges instead of extremely expensive ones to keep the expenses in your control. The tuition fees and other costs of such colleges are lower. Thus, you wouldn’t require to take on much debt to finance your child’s higher education.
Apply for grants
Once your child enters the college, fill out the Free Application for Federal Student Aid (FAFSA) to get financial aids. After applying, you’ll get a student aid report that mentions your EFC (Estimated Family Contribution). The report determines how much aid your child will get.
Keep your eyes open for scholarship
As per the report, $112.3 billion free money or scholarships is available for eligible students. The eligibility for getting the scholarship is based on financial need, merit or both. You need to fill out the FAFSA form to be considered as an eligible…. The Pell Grant is one of the most common federal programs, which is needs-based. It provides up to $5,550 per school year. Visit sites like Fastweb.com, SchoolSoup.com, SallieMae.com/scholarships and Scholarship.com to get more information.
Consider side hustle to improve the cash flow
A side hustle is required to improve the cash flow. Thus, you can manage the cost of raising a child and also save some money. You can get plenty of opportunities to make money online.
Build up an emergency fund
Try to save at least 15% of your income to build up an emergency fund. Thus, you can manage any emergency without accumulating unwanted debts.
Finally, be reasonable and practical with regards to your own life and the way you are going to bring up your child. You can also ask your child to consider a part-time job to fund his/her own studies. This way, your child can become more responsible in life.