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Financial firsts: Prepare for added expenses and a lot of joy with first baby
First-time parents can feel a lot of stress as they dive into parenting and all the expenses involved with it. It is especially hard when there is no good go-to rule for preparing for parenting. Here are six ideas to keep in mind for new parents. - photo by Matthew Jelalian
David and Lauren Bonney had been married four years, when they had their first child, a boy named Max. They are now expecting a girl and better prepared this time around for the expenses children bring.

According to an annual study performed by the United States Department of Agriculture, the average cost of a child is between $10,000 and $25,000 a year, depending on the age of the child and income level of the parents.

Parents who make less than $61,530 generally will not end up spending more than $10,000 a year on a child, whereas those who make over $106,540 will end up spending more than $25,000 on a child by the time he or she enters high school.

You will never feel like you can afford a kid, said Lauren Bonney. The main thing is you have to decide can you work with what you have right now.

Below are six lessons that the Bonney family learned throughout the process of preparing financially for their first baby as well as lessons from other families and experts in the field.

1. Preparing before birth

David Bonney said that after deciding it was time to have children they determined they would need to make certain sacrifices to pay for the anticipated expenses. They canceled their cable TV subscription and cut back on travel.

Those were the big things we cut. Everything else was more of an adjustment, said Lauren.

She said most of the adjustments dealt with food. Instead of eating out, they would cook at home and put the money they didn't spend toward savings.

Their tax accountant suggested that they look into a health savings account to pay for future health care costs not covered by insurance.

Health savings accounts (HSAs) were created in 2003 so that individuals covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses, explains the U.S. Treasury Department. Generally, an adult who is covered by a high-deductible health plan (and has no other first-dollar coverage) may establish an HSA.

According to Lauren, their HSA helped them offset the medical costs that they incurred during childbirth. The Bonneys have already started putting money in their HSA to prepare for their next child.

2. Health care

The Bonneys were both surprised at the cost of health care from pregnancy through the first year. According to the USDA's study, health care accounts for about 8 percent of the cost of raising a child. The amount goes up as the child gets older, but it doesnt vary much from income bracket to income bracket.

The Bonneys have health insurance through Lauren's job at a for-profit college, Brown Mackie College. But the final bill for delivering the Bonneys' first child was around $5,000. There were additional medical expenses due to an unexpected kidney stone that Lauren had before the pregnancy.

After delivery, the couple arranged a payment plan through the hospital.

They said the lowest that we can go is $200 a month, with no interest. And so we jumped on that bandwagon and our goal was to at least have (Max's) birth paid off by the time he was a year old, she said.

They paid off the medical bills a few weeks ago.

3. Food and diapers

Although they made adjustments to their food bill before Max's birth, the cost of food unexpectedly resurfaced when Lauren discovered that she couldnt breastfeed.

Definitely formula and diapers were a huge cost, said Lauren Bonney. We would shop at Target and Meijer and we would look around for the deals. We would see a buy two and get a $5 gift card kind of thing and we would grab four and get stocked up for the future.

When Max grew out of formula they began making their own baby food from fruits and vegetables, rather than purchase it from the store.

Im kind of ashamed to say that unlike most parents who make their baby food because its healthier, we did it to save money, joked David.

Andrew Hanks, a professor of consumer analytics and behavior at Ohio State University, said that the USDA has performed multiple studies that indicate the Bonneys' practice is cheaper and healthier in the long run than buying processed foods.

Hanks suggested making sure at least half of a child's diet is fresh fruits and vegetables will not only cut food costs but improve healthy eating habits that can also cut down on future medical costs.

The other big expense to anticipate is diapers. The debate over the costs and benefits of cloth verses disposable diapers hasn't been settled. Joanne Goldblum, the founder of the National Diaper Bank, said cloth diapers are seen by many as a cheaper, albeit messier, alternative to disposable diapers.

"And while cloth diapers may be a cost-reducing solution for families (particularly those with a parent who can stay home) its not a practical solution for most low-income families," she told Deseret News National. "Most child-care centers wont admit children who wear cloth diapers and many low-income parents depend on day-care centers to take care of their children while they are at work."

There are ways to save money on disposable diapers besides coupons and sales.

Ryan and Shauna Nokes use disposable diapers for their 7-month-old daughter Lucy and have found savings through Amazon Mom.

They receive a shipment of diapers and wipes every two weeks that Nokes says he found is cheaper than buying diapers at the store.

4. Child care

After housing and medical care, the USDAs study on the cost of raising children says child care and education is the next most expensive category. The study found most parents enroll their children in public school, so most of the expense in this category falls under child care. says the child-care options range from a parent or a family relative to a nanny, a private home daycare or a commercial daycare center.

According to BabyCenter, a nanny can run anywhere between $500 and $700 a week, compared to $300 to $1,000 a month for either day care option.

While the Nokes are able to have Shauna stay home to care for their baby girl, the Bonneys both work to have health insurance and pay off student loans. But they are able to work opposite shifts, allowing David to stay home in the day and Lauren at night with their son.

"As soon as the opportunity comes that I don't have to work full time, I'm quitting that day, but until then I have to do what's right for my family," said Lauren Bonney.

5. New versus old

A tip that both the Bonneys and the Nokes agreed on was that there should be no shame in buying secondhand baby things.

Some friends said, You can get stuff off Craigslist,' and I was thinking that it was going to be a mess, said Ryan Nokes.

He then realized that babies grow so quickly that most items are hardly used. When he began looking at used clothes, cribs and other items he found that they were just as good as the more expensive new stuff they were originally buying.

The Bonneys said that they would check thrift stores to find gently used baby clothes.

6. Quantity verses quality time

Before they had their child, the Nokeses operated a painting franchise called Five Star Painting Columbus that kept Ryan busy from sunup to sundown.

He has since put aside his desire to operate his own business and took a full-time position as an analytics consultant at Chase Banks headquarters in Ohio.

A baby requires more than money, said Ryan Nokes. They require a ton of time. They need to be played with. They want to get out of the house. They need to have someone change their diaper. There are these things that they need like attention all the time.

Plenty of research exists dissecting the debate over quantity verses quality of time spent with children.

"In fact, decades of developmental theory and empirical research suggest that specific kinds of parent-child engagement are strongly correlated with certain outcomes: for example, reading and talking to support cognitive development; helping with homework to support academic achievement; playing to promote behavioral adjustment," wrote Ariel Kalil and Susan Mayer at the Brookings Institute.

Both sides of the issue agree that parents be there for their children.

Although the Nokes family still owns their painting business, they have a lot more stability with Ryan as a Chase Bank employee with regular hours, a consistent paycheck and good benefits.

BabyCenter has collected tips from different working parents on how they squeeze in extra time with their kids.

"In the beginning, I would get up as late as possible, but I found that I wasn't able to spend any time with my daughter before she went to daycare," said one working mother. "Now I get up early, and by the time my daughter is waking up, I've finished getting ready for work and can spend at least an hour with her. It is so worth it."
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