Studies say this is how much money you really need to have a baby
Having a baby seems like a pretty natural choice, right? Unfortunately, natural doesn’t necessarily mean “easy,” or especially “inexpensive.” In fact, new studies show that the amount of money it costs to raise a baby is bigger than many realize.
In a world where baby fever is very real, many of us want a little one to giggle for us. They just make us all that little bit happier. From trying to choose baby names, to looking at their cute chubby faces, the idea of having a child seems fun to many people.
But, according to a survey of people planning to have kids within the next three years, the truth is actually way more costly than most imagine.
Give us the stats. We’re prepared for anything now.
Budget gurus at Nerdwallet ran the study, and the results are surprising:
54% of those polled believed the first year of a baby’s life would cost less than $5000. Which, when you stop and think about it, is a little insane. Presumably you’re having this baby in a hospital, after all, and we all know that going into an ER with a sprained ankle can cost more than five grand.
But what’s really surprising is that only 11% of those surveyed thought it would cost more than $15,000 to raise a baby for a year.
Turns out they were right.
As Nerdwallet analyzed, families making $40,000 per year will spend about $21,000 in the baby’s first year of life. Higher income families, such as those making $200,000, will typically spend more than double that amount, with an average of $52,000.
So where does the money go?
The thing about a baby is that the cost starts right away. First, the delivery isn’t exactly cheap: median charges for childbirth are about $17,000 alone.
While the study found that people actually overestimate on costs like diapers, which average between $700-$800 per year, they also seriously underestimate child care costs. Now that many families have both parents working, full-time childcare is becoming more and more common. Child care costs for infants can quickly rack up into the five-figure range.
Moral of the story
This pretty scary study suggests that many people are nowhere near financially prepared for having a kid. However, with increased education about the actual costs, hopefully young families can start saving earlier and get a better idea of how to allocate funds. Planning is everything!
(H/T to Nerdwallet)