LYNN PHILLIPS: Children are blessings, but they’re expensive

By Lynn Phillips

How can such a tiny person require so much cash? According to the U.S. Department of Agriculture, the cost of raising a child from birth to age 17 surged 25 percent during the past 10 years, largely because of rising costs for medical care and groceries. The truth is most parents-to-be are unprepared for just how much a child is going to cost.
If you wait until you can afford to have children, you never will have children. But there are things you can do to ease the transition into parenthood.
Children affect nearly every decision you will make – from where you live to what you drive and where you eat. You may not be able to sustain your current lifestyle, but then again, you may not want to.
Start planning for parenthood as early as possible. Find out if your employer offers maternity benefits and maternity leave. Be honest with your employer about how long you intend to take off. Err on the side of caution because you will find that the time with your newborn flies by.
Resist the urge to buy a bigger house and better car because of your impending addition. Take your time. Don’t over-obligate yourself with payments; you may change your mind about returning to work after the baby arrives.
Financially, the first plan of attack is to pay off credit cards. Now is the time to build your cash reserves, because unexpected expenses are inevitable. Factor in added medical costs (both in health insurance and for emergencies) and, if you plan to return to work, child care expenses.
So what can you do now? Practice what your financial situation will be like. If both spouses are working now but one plans to stay home after the baby comes, try living on one income and banking the other. Look at your lifestyle and cut where you can. Trade haircuts with a friend. Entertain at home instead of eating out. Search for how-to videos on YouTube and handle simple repairs yourself.
These are short-term solutions, but what about long-term? As soon as possible, begin saving for college. According to College Board reports, the average annual cost of a four-year college for in-state residents (tuition, fees, room and board) climbed 6 percent for the 2011-2012 academic year, averaging $17,131.
But before you jump into a college savings plan, save for your own future – there are no scholarships or loans for retirement. Never skimp on saving for retirement because your expenses are just now beginning. If you can’t afford to save now, you never will. Continue contributing to your 401(k) or other retirement plan – cut somewhere else.
As your child grows, manage your money and their expectations. Spending on children without constraint can only lead to heartache. You, not your kids, decide how to spend it. Teach your child the rewards of self-discipline. Love lavishly. Splurge on time well spent together.
Children are a blessing, albeit an expensive blessing. No doubt, there will be trade-offs. But remember, you’re making a huge investment for the future, and you will reap the benefits all along the way.
Lynn Phillips-Gaines is a financial adviser based in Starkville. Her opinion is not necessarily those of RJFS or Raymond James. Contact Lynn Phillips-Gaines at (662) 324-2889.

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