NDSU Extension Service - Ramsey County

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Money Strategies for Young Families

Money Strategies for Young Families

 

          It's no shocker that raising a child is a major financial commitment, but seeing the total cost may leave you stunned. The average cost of raising a child born in 2013 up until age 18 for a middle-income family in the U.S. is approximately $245,340 according to the latest annual "Cost of Raising A Child" report from the U.S. Department of Agriculture. The annual cost can vary based on factors like the child's age, the number of children in the family and the family's income and location.

          Housing is the top expense, accounting for $73,600 or about 30 percent of the total cost of raising a child. The next-biggest expenses are child care and education (18 percent) and food (16 percent). Transportation, health care, clothing and miscellaneous expenses were also considered. And, the cost of college, pregnancy or other expenses after age 18 were not factored in – those would be in addition to the $245,340!

          Managing your finances when you are busy with young children may not seem like a priority but in the long run, taking time to plan will pay off.  Financial priorities for young families include:

          - Live beneath your means. This is hard, and it takes starting — and sticking to — good habits, but it is the best way to make the habit of putting money aside. Don't buy the most expensive house and car you can afford (the big things), and wait for sales, discounts, or coupons on things like clothing and electronics (the little things).

          - Find the financial system that works best for your family. Sticking to a strict budget works well for some, while others operate better on a more flexible system. Some couples survive financially by using separate checking accounts, while others put all the money together. Do what works best for you and your spouse.

          - Teach your children about money. Talk about money in various everyday situations to make children aware of finances. Help your children make saving a habit teaching them that saving should be as automatic as brushing their teeth. It’s important to share with your child your own values about financial and material wealth. Your children will learn by watching how you handle finances.

          - Plan for life without you.  Write a will, buy life insurance and if needed set up a trust so you know how your children will be taken care of if something should happen to you and your spouse. Life insurance and wills don't require a lot of time and money to put into place.. General practice and family attorneys will often produce a simple will for about $300 to $500. You can keep costs down by being well prepared before you visit the lawyer's office, ready to answer questions about guardianship of your children and an executor for your will.

          - Plan Your Meals.  One of the biggest budget busters can be eating out. Planning a menu to include a week’s worth of meals will head off last minute trips to a fast-food restaurant which will cost you more in both dollars and calories.

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