![]() ![]() Do you plan to pay your child’s way through college? Do you need to save to contribute to their wedding? You can always enlist help from a financial professional if you need. If you do want children, this will help you draft a future budget. But it is crucial to take into account your financial situation and the costs of raising a child. Typically, the choice of whether to have a child is not a purely financial decision. The early investment allows for decades of compounding interest and offers tax benefits for when they reach their golden years. If you can afford it, you may even want to consider opening a Roth IRA on your child’s behalf. You can also set up custodial accounts like Uniform Gift to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) to help your child (or another minor) pay for future education or other expenses. When the time comes to pay for tuition, books and more, you and your child can make tax-free withdrawals. Look into tax-advantaged 529 college savings plans, which allow you to save toward your child’s education costs. That way your investments will have more time to grow and result in bigger earnings. It may seem crazy, but you’ll also want to start investing for their future as soon as possible. If you qualify, don’t leave that free money on the table! Unlike a deduction, tax credits are a dollar-for-dollar reduction on your total tax bill. Under Trump’s new tax plan, the credit increased from $1,000 to $2,000 in 2018. ![]() ![]() Make sure you take advantage of child tax credits, which exist to help parents and guardians offset the expensive costs of raising a child. You may also be able to capitalize on work perks for childcare and healthcare. You can also reach out to friends and family for their advice.Īs your children grow, you can sell certain expensive items once they’ve grown out of them. It helps to check out the specific costs of services and supplies in your area. You’ll definitely have new expenses to tackle, but you may spend less on dining out and entertainment. To start saving for a child, assess how having one will affect your budget. No matter how you run the numbers, we can all agree that kids are expensive. Note that “rural areas” includes any town or municipality with a population of fewer than 2,500 people. The following chart can help you get a better idea of how much raising a child costs across the country. Single parents usually spend less than married ones. Lower-income families are expected to spend around $174,690 on their child, while the average higher-income family spends about $372,210. In reality, families throughout America include a wide range of family types and household incomes. It’s an average for middle-income, married couples with two children. Of course, the USDA average doesn’t reflect what everyone will pay. Meanwhile, students and parents at private non-profit four-year colleges pay an average of $46,950. That figure jumps to $36,420 for out-of-state students. CollegeBoard reports that public, four-year institutions in America cost each in-state student $20,770 for tuition and room and board. That $284,570 average doesn’t include the cost of college education, arguably one of the biggest expenses a parent will face. There’s something important to note about counting costs until your child reaches 17, though. Plus, a bigger family means parents can buy food in more economical qualities. You can thank shared bedrooms, hand-me-downs and free babysitting for that. Interestingly, each additional child poses less of a financial burden than the last. Parents spend between 9% and 22% of their total income on childcare. The USDA estimates that childcare costs an average of $37,378 per child. Food and child care take up the next biggest part of the budget. Housing makes up the biggest expense, accounting for about a third of the total cost of raising a child. How could such small people cost so much? This average includes everything from housing, food and transportation to healthcare, education and childcare to clothing, personal care items and entertainment. Since that’s based on 2015 numbers, we can expect the cost will be even higher babies born since then. Incorporating inflation costs, it will be more like $284,570. If that made your heart skip a beat, take a deep breath before you read on. Department of Agriculture, the average cost of raising a child from birth through age 17 is $233,610. ![]()
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