The Real Cost of Raising Kids

Jill Schlesinger: In the midst of an economic upheaval, should you delay starting a family? Author Stacey Bradford in her newly released "Financial Guidebook for New Parents" offers smart tips for planning for your little bundle of joy. Stacey, thanks for joining us. Stacey Bradford: Thank you. Jill Schlesinger: So, how much does it really cost to have a baby now? Stacey Bradford: Well, the official estimate is $11,000 to $16,000 a year for the average family, but I have to tell you that if both parents go back to work and you have to shell out money for child care, you could end up spending double that amount. Jill Schlesinger: Per year? Stacey Bradford: Per year. Jill Schlesinger: So, hundreds of thousands of dollars and this is not an extravagant lifestyle, correct? This is an average lifestyle. Stacey Bradford: This is a very average lifestyle. There had been people who have added up what it will cost if you are buying expensive strollers and private schools. You could end up spending over a million dollars just on one child. Jill Schlesinger: Unbelievable. So, given those numbers obviously people are trying to figure out can we afford to have one parent stay home. What's the best way that parents can really crunch those numbers? Stacey Bradford: The only way you can do it is as you said to actually crunch the numbers. Sit down and write down how much are you going to spend if you have to pay for childcare. How much are you going to spend commuting to the office versus if one person stays home, what happens if you lose that paycheck and what happens if you're no longer contributing money to a 401(k)? Can you still afford to save for retirement just on one salary? Jill Schlesinger: That actually brings up an interesting question because we talk about long term planning all the time and you say look at your retirement, but then you have this baby and you got to think about college, how do you balance saving for our retirement with sending the baby to school eventually? Stacey Bradford: I think the most important thing that any parent has to do is take care of themselves first. Make sure that they are saving for retirement and that's more important than ever since so many of us have watched our 401(k) just dropped so much in this market. Now, if you have anything left over, by all means, start putting some money away for college because no one knows what's happening to college funding and anything you can save will help. So, even if it's just a hundred dollars a month it will make a difference. Jill Schlesinger: And you like the 529 plans or custodial accounts or do you not really care. Is it just do it? Stacey Bradford: You know, actually I feel very strongly that people should look into 529 plan. And the reason I like them is they have some tax benefits, but also when you are saving money in the 529 plan that is money that is actually in a parent's name even though it's for the child. So, further down the line when you are applying for financial aid, it's going to be looked upon much more favorably and families will get more money. Jill Schlesinger: And that is what it's about when it comes to college planning. Stacey Bradford, thank you so much for joining us. Stacey Bradford: Thank you so much. Jill Schlesinger: For more on Stacey and her blog Family Finance go to MoneyWatch.com.

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