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Can We Afford Raising a Kid Now? Here’s What You Need to Know About Budgeting.
Parenting is cute; but have you considered the cost?
If you are here, that means you’re considering whether it’s appropriate to cross that line. Or perhaps you are expectant and hope to see what’s in it for you. Whatever the case, deciding to have a child is a beautiful move that comes with its fair share of glories and challenges.
One of those challenges is settling on a budget for parents. We’ve heard it everywhere, raising a kid is expensive. But rarely do we get the fine details of what makes the process expensive? Another thing they don’t tell you is that what most people consider as necessities for their children are mere wants that could be done away with. This became more evident that the COVID budget for parents took a dip. Parents had to make amends in their budget line for kids to survive the period.
And guess what? It worked for most families.
That said, we will look at the budget for parents and gross estimates according to the government’s statistics. We’ll wind it off with creative tips for parents on a budget. Be sure to stick around to the end.
Rough Estimates of Budgets for Parents
Since 1960, the United States Department of Agriculture (USDA) has provided a budget overview for parents raising a kid from birth until maturity. Note that these estimates don’t include college fees. However, the data represents significant variations depending on the location of individuals, income levels, spending culture, and other factors.
That means that depending on your current living standards, this budget line estimate for parents from USDA could be an exaggeration or could also be below your means.
As of 2015, the estimated child-rearing expenses from birth to 17 years for a middle-income married couple of 2 kids was $233,610 (without accounting for inflation). That’s a family bringing in a gross income range of $59,200-$107,400 before tax annually.
$233,610! That adds up to $12,980 yearly.
The figures are much higher in 2021 if we account for inflation. Let’s get into the composition of this estimate, and eventually, we’ll come up with the best budget for single moms. We’ll start with the most negligible costs and move upwards:
Clothing – 6%
As already said, the data presented is somewhat arguable. For instance, if you are fashion-conscious and clothing is a big part of your lifestyle, the budget will be way more than 6% of your total income. Similarly, you may live in areas where it’s necessary to buy clothing for all four seasons, thereby raising your aggregate expenditure.
These minor factors vary from family to family. As the child gets older, clothing expenses generally increase (or fall for some families). Moreover, families with multiple kids may lower their clothing expenses if older kids share their attires with the younglings.
Miscellaneous/Others – 7%
Parents need to budget for other necessities aside from the primary needs – food, clothing, education, and housing. These creeping costs may quickly add up to a high of $1000 annually. Getting to terms with these costs and finding ways to adjust is a major step in creating a survival guide for parents on a low budget.
These miscellaneous costs include personal care products such as toothbrushes, haircuts, salon costs, and combs. It also includes entertainment expenses and sports equipment, toys, portable media players and non-school reading materials.
Healthcare – 9%
Plan and improve your health insurance. Updating your policy as the number of family members increases is of prime importance. Moreover, make sure you adopt a lifestyle that minimizes your kids’ instances of falling ill.
Your healthcare expenditure as a single mum may be slightly higher than if you were a couple. That makes it even more compelling to know how to budget as a single parent.
Transportation – 15%
As your young family grows, you may need a bigger family car to accommodate every member during those most-wanted long trips. If anything, more families are finding it convenient to add a second car to make room for kids. They’ll certainly want to entertain their friends or go out on a game and everything else that kids do at some point.
As such, you may find yourself spending more on gas, car insurance, vehicle maintenance, and the likes. Once they reach the legal age, your insurance provider may charge you more to add them as drivers in your auto policy. You may want to source policies that give family discounts or list the oldest member in the house as the primary driver.
Childcare and Education – 16%
The estimate here assumes that you will use a certain fraction of your income on childcare and education and apportion it equally among all your kids. Younger kids will need childcare, including daycare, whereas their older counterparts may need education. But if you decide to be a housewife and take care of your kids and go the courageous step to home-school them, then your average costs may quickly go down.
Food – 18%
The older you get, the hungrier you become. That’s one element parents have to deal with. It may seem frustrating at times when your bundles of joy can’t seem to have enough to eat. However, it’s also pure bliss for many parents who get intimate moments going for groceries and cooking alongside their kids. These bonding moments are priceless.
However, the food budget for parents varies depending on income levels. We’ll give you tips on the budget for new parents to keep it low but healthy.
Housing – 29%
Hoping you intend to increase your numbers, it may be necessary also to enlarge your space. You may need to consider different elements with your spouse as you develop a housing budget for parents.
For example, you may decide that a more extensive garden is of utmost importance to both of you to grow your domestic food. This may mean a pricier mortgage if you can’t afford to pay it upfront, but at least you’ll cut on food expenses. Alternatively, you may decide to move to the suburbs and compromise on the quality of the school to be near work and pay less rent. Whatever your considerations are, housing generally carries the biggest share of the budget for parents.
Healthy Budget Tips for Parents
For this budget planner for single parents and married couples to work, you need to be intentional. In economics, we appreciate the nature of demand and supply. Needs and wants will always be present, but resources to satisfy them will never be sufficient. As such, parents need to be intentional in making choices and sacrifices. We need to be intentional in differentiating between needs and wants.
Consider the following budget ideas for parents on a low-medium income:
Buy Second Hand
It’s time to become friendly to discount stores and second-hand markets. This may lower clothing and other expenses, including toys and entertainment devices.
Buy Food from Local Grocery Stores
This works all the time. Don’t get used to eating out or ordering from McDonald’s. Inculcate a healthy diet culture that your children can maintain as they age. Giving kids certain foods will always make them hungry. On the contrary, feeding them whole foods rich in protein and fats will ensure they are fuller for the entire day. It’s cheaper and healthier in the long run.
Discounts on Health Policies
Seek out a friendly provider who specializes in families. You may be surprised to pay a couple of hundreds lower in your health care plan with a different provider.
Renting is Expensive
Work towards owning your house.
If this means working double shifts to pay your mortgage or adding another source of income, well and good. But in the end, you will have a house and the expenditures won’t be so high. However, you need to create balance and also spend time with your family.
Raising a child doesn’t have to be an unmanageable task. As one wise person once put it: “If I had to wait until I could afford a child, I would have had to wait my entire life.” That said, it’s a brave step to bring a new life into this world. Don’t let the costs get you down. There’s always light at the end of every dark tunnel.
What is the average annual budget for parents to bring up a child in your locality?
By Daniel Miller
who is an experienced specialist in the business and financial area. Daniel has also worked as a financial advisor at LoanSolution.com and provided consulting and advice about budgets, savings, insurance, stocks, retirement funds, tax advice, etc. He is currently doing specific research on the topic.