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Annual Costs of Raising a Preschooler?

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roomtempmayo:
My wife and I have decided that we're going to try to conceive once the pandemic is past.  This would be our first child.  As we look forward to this exciting next phase, we're also trying to get our heads around the finances of it.  I'm aware that the USDA says the national average is $12k/kid/year, but I'm thinking that's likely just going to be our daycare cost.

Below are the categories I'm imagining along with a spitball guesstimate of the cost.  Please add to or correct what I'm projecting.

Housing: We own a 3 bedroom sfh five blocks from the local elementary school.  We expect that we'll stay here for the foreseeable future, and there won't be much of any marginal housing cost.

Health care: My wife has very good health coverage through work.  She's asked colleagues who have recently had children about the out-of-pocket, and all have reported that it's been less than $1000.  I'm not sure what the additional premium for a child is on her plan, but I'll put $50/mo in as a placeholder ($600/year).  My wife also has several months of vacation saved in addition to a short term disability policy.

Daycare: Friends in the area say we need to expect to pay $1000/mo, and I have no reason to doubt them.  So there's $12,000/year.  We have access to a Dependent Care FSA that would partially offset these costs, but I'm not sure about those details.

Transportation: We already own two ordinary cars, and we don't imagine that's going to change.  We'll likely end up driving a bit more, and/or buying a bike trailer.  Call it an extra $500/year.

Food: How much do little kids eat?  Maybe $100/mo, $1200/year?

Clothes: Is $50/mo, $600/year reasonable?

"Stuff": Car seat, crib, diapers, toys ... man, I don't have a clue.

I'm seeing a ballpark budget here of $15-17k/year, which would partly be offset by a child tax credit (something in the $2000-3600 range, depending on future policy and our AGI) and the Dependent Care FSA.

Am I on the right track?  Overlooking any major costs?

innkeeper77:
Daycare can be EXPENSIVE. I would love it if we were only paying $1k a month!

Actual costs will be different for everyone. We spend less than $50 a YEAR on clothes, because kid clothes are EVERYWHERE and getting them used when possible saves a ton of money, and is environmentally friendly. Toys are also cheap and everywhere. Plus, do you have older family? It's very common to get absolutely inundated with toy and clothes gifts from grandparents.

Don't buy a used car seat though, they are like bike helmets. (Hand me downs from trustworthy friends should work just fine though! We gave our first away to friends so they knew it wasn’t in a crash and didn’t spend too long baking in the sun parked- car was garaged and not used for a commute) We made do with a single car seat, because we only use one car the vast majority of the time. We needed an infant seat, and then upgraded to a toddler one. Less than one car seat a year. Other "stuff" is everywhere used. Be careful to make sure your crib is a safe design, but simple safe cribs are still cheap used.

Food, can start at around $0 if you are able to do breastfeeding, and can be HUGE. We have spent way too much on toddler "bars" but it's worth it for us- they are one of the only foods the kid likes that also don't make a mess in the car. If you are very disciplined, you might be able to get the kid to eat what you eat once they are of food-eating-age! We failed, but food is relatively cheap. (I'm not giving a dollar value as we are in a MCOL area where food is significantly more expensive than the same food in other areas we have lived in)

Morning Glory:
This is highly variable. Daycare is the only really big expense, and it varies by region so much we can't really help you there. We chose to go with the SAHP instead of daycare for a variety of reasons, including cost, availability, and working weird hours. If neither of you works a 9-5 then it can be more difficult and expensive to find childcare. The "stuff" doesn't cost much.

Trying to conceive can take a while. I was really surprised about that.

nereo:

--- Quote from: Morning Glory on March 21, 2021, 04:42:05 PM ---
Trying to conceive can take a while. I was really surprised about that.

--- End quote ---

I wish we had appreciated just how true this statement would be for us.  Three years and a lot of anxiety...

I also agree that the “stuff” really doesn’t have to amount to very much.

Personal experience (yours may differ). Daycare is by-far-and-away out greatest expense of raising a toddler, at $210/week.  Nothing else is even worth mentioning, financially speaking.  We didnt’ even have childcare for the first year due to Covid (first it closed, then I was furloughed and it became a non-issue). now we are absolutely THRILLED to be paying that in order to have some of that assistance back.

IIRC our health care premiums went up $23/week - but then my wife’s went down as we elected not to have any more kids, so that wound up almost being a wash.  In our state all wellness checks an vaccines are covered regardless (including Co-Pays), so our one and only additional medical expense has been a single non-network x-ray ($300ish) when we were too stupid to verify network providers otherwise. Ours was breastfed and then a slooooooow transition to food.  I puréed a lot of veggies that we otherwise have in house, but for the first year the food budget is so modest it’s almost negligible. Maybe an additional $1-2 in veggies, if you don’t buy pre-packaged baby food.  Formula can jarred baby food is ridiculously expensive, but that wasn’t us.

Clothes?  Ha!  Our social network kicked into overdrive without us even realizing it.  Young kids stay in clothes for so little time (sometimes just 2 months!) that 3-5 kids can wear the same pair of pants (serially).  I remember going through an entire laundry basket of kids clothes and realizing we hadn’t bought one single item in there.   THe one exception (for us) has been shoes, and we’ve found some on consignment and a couple pairs we’ve bought ourselves, but at most we’ve paid $100/year in clothes so far.  I have no doubt that will go way up once they are school-aged.

We bought one car seat to match a hand-me-down (shhh... some people swear one should never get a hand-me-down car seat.  Whatever), and we bought a baby carrier (Tula) on consignment which was the best $30 we’ve spent thus far.

A final “big” expense for us has been setting up and funding a 529.  This is another deeply personal decision, but we want to provide at least 80% of her college expenses. I did some rough modeling and determined if you can squirrel away $4k/year for the first 8 years you can be done saving for college permanently, so that’s what we are doing. Compound interest is a wonderful thing when it’s working for you.

What else....  I honestly can’t even think of any major costs the first two years. She slept in a ‘baby-box’ (free) for the first 3-4 months before we transitioned her to a basic crib I built (I’m an amateur woodworker).  We bought her a balance bike (consignment) and made a chalkboard in her room with some chalkboard paint.  Toys and books just seem to arrive constantly from friends and family, and they pile up everywhere to the point where we’ve implemented a “one in, one out” policy where our daughter gets to help pick what to give away and to whom (a practice she’s become oddly enthusiastic about).

Wolfpack Mustachian:
Kids can be as expensive or (up to a point) as cheap as you make it. Daycare is an expense that is hard to reduce, as you mentioned. I'll address the rest below:


--- Quote from: caleb on March 21, 2021, 03:56:54 PM ---My wife and I have decided that we're going to try to conceive once the pandemic is past.  This would be our first child.  As we look forward to this exciting next phase, we're also trying to get our heads around the finances of it.  I'm aware that the USDA says the national average is $12k/kid/year, but I'm thinking that's likely just going to be our daycare cost.

Below are the categories I'm imagining along with a spitball guesstimate of the cost.  Please add to or correct what I'm projecting.

Housing: We own a 3 bedroom sfh five blocks from the local elementary school.  We expect that we'll stay here for the foreseeable future, and there won't be much of any marginal housing cost.

Absolutely. You don't need any more house for awhile, even if you have another child and still want a guest room (they can share and it can even work better that way).

Health care: My wife has very good health coverage through work.  She's asked colleagues who have recently had children about the out-of-pocket, and all have reported that it's been less than $1000.  I'm not sure what the additional premium for a child is on her plan, but I'll put $50/mo in as a placeholder ($600/year).  My wife also has several months of vacation saved in addition to a short term disability policy. This is optimistic. It can be this - just a little for additional premium. It can be a lot more depending on your insurance. Even if you have a good insurance with small premium increases, expect a surprise urgent care visit or three randomly pushing this up.

Daycare: Friends in the area say we need to expect to pay $1000/mo, and I have no reason to doubt them.  So there's $12,000/year.  We have access to a Dependent Care FSA that would partially offset these costs, but I'm not sure about those details. Yep, totally dependent on area.

Transportation: We already own two ordinary cars, and we don't imagine that's going to change.  We'll likely end up driving a bit more, and/or buying a bike trailer.  Call it an extra $500/year. Yep. Buying a minivan for the first kid is a huge waste of money IMO.

Food: How much do little kids eat?  Maybe $100/mo, $1200/year?

Breastfeed, and it won't be much to begin with. Formula is expensive. It's been awhile, but I believe it could be more than $100 a month if it's fully that. Past that, if you get them to eat what you eat, the increase is minimal.

Clothes: Is $50/mo, $600/year reasonable?

If you're willing to do Goodwill, that is much more than enough. Even throwing in some cheap Walmart stuff here and there, you'd probably be fine.

"Stuff": Car seat, crib, diapers, toys ... man, I don't have a clue.

Car seats are a fairly expensive one-time expenses, as are cribs. I haven't priced them in a while. If you don't do cloth, diapers will probably be pretty expensive - maybe $50 a month? It's been a while. Toys can be as expensive as you like.

I'm seeing a ballpark budget here of $15-17k/year, which would partly be offset by a child tax credit (something in the $2000-3600 range, depending on future policy and our AGI) and the Dependent Care FSA.

Am I on the right track?  Overlooking any major costs?

That's a good summary of expenses, I believe.


--- End quote ---

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