Last Monday I wrote a response to an article claiming that the first year cost of having a baby was $12,000. The overriding point of my response was fairly straightforward: $12,000 is simply an average across US households and really doesn’t reflect your personal situation. I used a few examples from my own household to show how you might actually end up spending much less than that. But the main point is that you shouldn’t let news reports or national averages dictate how you live your life. There are many people raising incredibly well-adjusted children on much less than $12,000.
But there were two commenters who brought up important points that I had either missed or miscalculated. In both cases, the points they raised could easily add to the cost of having a child, and potentially push it well beyond $12,000. These points are important for anyone thinking about having a baby to consider, so I wanted to discuss them in more depth today.
The cost of pre-natal care, labor and delivery
Holly Johnson brought up a great point about the cost of medical care associated with childbirth. According to WebMD, the average cost for pre-natal care is about $2,000. For a regular uncomplicated birth it’s $9,600, and for an uncomplicated cesarean section it’s $15,800. Just as with the $12,000 above, these are simply averages and your actual costs may be more or less than this. But these numbers are helpful simply in that they demonstrate that the medical part of having a baby is expensive.
Depending on your health insurance, you may be on the hook for some, none or all of this. You can check with your hospital to get a sense from them what the expected labor and delivery costs will be, and you should definitely check with your insurer to understand what they will and will not cover and what you may have to pay. Depending on your coverage, even a totally healthy, uncomplicated birth could set you back $10,000 or more right from the start.
It’s also important to keep in mind that your birth may have some complications. Anything that deviates from the norm will likely cost more money. Whether that actually costs you personally more money again depends on your insurance plan, but whether or not there are complications is completely out of your control. If you might be on the hook for these costs, you should have a plan for handling them.
The inevitable cost of daycare
Another big point I missed, and the one that pushes our actual costs well over $12,000, is the cost of daycare. I did address daycare in the article, explaining that it accounts for almost $4,000 of the total average cost, but that it’s an expense we’ve avoided by having my wife stay home. I argued that bypassing this cost significantly lowered out first-year expenses.
But my friend Mrs. PoP asked an important question in the comments:
Did your wife work more before she stayed home with your little one? Do you consider lost wages as a childcare cost in that manner even if you guys don’t pay daycare?
This is a great point, and one I had totally overlooked. See, we had considered the fact that she was losing income, but only in the context of comparing the cost of daycare to the lost wages. In that comparison, things came out pretty even, especially considering the part-time work she’s able to do now. But that’s not the real question here.
The real question when considering the full cost of having a baby, is how much more income we would have if we didn’t have a baby and my wife was therefore still working full time. When we look at it that way, our first-year costs are MUCH higher than $12,000. By deciding to have a baby and have my wife stay home, we sacrificed a significant amount of income. That’s a real cost that has to be considered.
The same thing is true when looking at maternity leave, another point that Holly brought up. She was only paid half her salary during her 6-week maternity leave, which again is a real cost in the form of lost income that should be counted.
Unless one of the parents had no income before the baby is born, or unless you’re somehow able to handle the daily childcare yourself without sacrificing income (yeah right!), you are paying for daycare one way or the other. Either both parents are working and you’re directly paying to send your child to daycare, or one of the parents stays home and you’re paying in the form of lost income. Failing to consider this, as I did, can lead you to dramatically underestimate the financial cost of a baby.
The spirit of my original article was meant to be optimistic. I didn’t want people to be scared off by big numbers and think that parenthood wasn’t attainable for them. I also didn’t want them to think that they had to spend a certain amount of money to be a good parent. I wanted to point out real examples of people raising children on less, to show that it was possible to be different and still give your children everything they needed.
I still agree wholeheartedly with all of that. But there’s also a reality to face that raising a child can be expensive and that reality shouldn’t be taken lightly. Bringing a child into the world means you suddenly have someone who is 100% reliant upon you to take care of them. You don’t need to be Warren Buffet before tackling this challenge, but understanding the responsibilities and crafting a plan for financial security will certainly give you a head start towards building a happy, opportunity-filled life for your family.
Photo courtesy of andrewmalone