In 2017, the United States experienced the lowest recorded number of births in the last 30 years. Fewer and fewer millennials are choosing to get married and, in turn, they’re choosing not to become parents as well.
According to Pew Research, one of the top reasons this group is opting out of marriage and parenthood is that they are “not financially prepared.” With the heavy burden of student loans, credit card debt and frightening estimates of how much it costs to raise a child, it’s no wonder 20- and 30-somethings are saying “no” to parenthood.
As a parent who dedicates his spare time to promoting family financial empowerment, I do realize the realities of our country’s financial state. I’m not denying the averages or the statistics. I just think we need to look at alternate ways to take back control of our finances and not fall into the “lifestyle inflation” trap that force us into thinking parenthood is not an option if we do desire to raise children.
To promote financial responsibility and to help people discover the lifelong joys of parenthood, here are five ways to decrease the costs of raising a child.
Don’t Buy More Home Than You Can Afford
The USDA estimates that 29% of the total cost of raising a child comes from housing. Mortgages, property taxes, utilities and furniture are added into this estimate.
When we upgrade our home as our family grows and we truly can’t afford it, this can cause decades of hardship on our relationships and unneeded financial stress.
Here are some quick stress-reducing thoughts to consider:
- Keep your mortgage payment to less than 25% of your income
- Avoid private mortgage insurance
- Factor in the cost of home upgrades, furniture and repairs before moving
Just because you have two young kids doesn’t mean they each need their own bedroom. Having your kids sleep in the same room and going “bunk bed style” just may help them sleep better and develop a lifelong bond with their sibling. This small choice may help you realize that you don’t need to get that bigger house after all.
Save Restaurants for Special Occasions
With 18% of the total cost of raising a child going toward food, getting inventive here can save us all quite a bit of dough.
While dining out at restaurants can be fun and relaxing, the costs can add up quickly. The average millennial between ages 25-34 is spending $3,416 per year on food away from home, while the average Gen X-er between ages 35-44 is spending $4,249 per year.
As thrifty parents, let’s not be average! Here are some options to help us get below the average spending and save on food for our kids:
- Pack lunches (adults and kids)
- Find restaurants with free or discounted kid’s meals
- Cook as a family at home
Special occasions like birthdays and anniversaries are great reasons to go out to a restaurant. When we go out too often, though, we can dilute the importance of the occasion.
Drive a Safe and Gently Used Car
According to CarFax, new cars lose 60% of their value within the first 5 years. 60%! That means your new $30,000 vehicle will only be worth $12,000 in 5 short years. Talk about a depreciating asset!
Given that 15% of the total cost of raising a child goes to transportation, buying (and sticking with) a gently used car can be a smart way to save money. My wife and I are both driving 10-year old sedans with 100,000 miles on each of them. The cars are safe, reliable and our two kids are comfortable inside.
We thought about leasing an SUV when the kids were born, but the monthly payment was way too much for us. Instead, we reexamined what we had and realized our vehicles were just fine. 6 years later, they’re still getting us to where we need to go and the kids are happy jamming out to Disney songs in the backseat.
Practice and Model Minimalism
Toys, games and clothes can become a major line item on our budgets when we have kids. The endless barrage of “Daddy, I want this” or “Mommy, I want that” can leave us penniless and our homes over-cluttered.
Minimalism can be a path to financial, personal and mental freedom. By reducing the overall amount of stuff our families need, we’re stepping out of the consumerism trap and showing our kids how relieving it can be.
Here are some suggestions on how to take control:
- With your kids, go through all their toys and clothes and donate unused items
- Have a “one in, one out” policy going forward. For every new clothing item or toy you bring home, you must sell, donate or throw out one.
- Use a service like Decluttr to sell your unused goods and put a little cash back in your pocket
When it comes to buying clothes and toys, try to reuse as much as possible. Hand-me-down clothes and toys from family, friends and neighbors can be an excellent route to save.
Reduce Daycare Costs
In-home child care, pre-school and out-of-home daycare costs can be maddening. 15% of the total cost of raising a child come from these types of costs.
While working parents need this type of support to function in their careers, here are some alternatives to consider that could help bring childcare expenses down.
- With two kids in daycare, you may be able to receive a sibling discount
- Ask a grandparent or friend for support on certain days of the week
- Develop a part-time work arrangement with your employer if it’s financially doable
Does the cost of daycare overpower your annual salary? You and your partner may find it makes more sense for one of you to stay at home with the child.
Additionally, you could consider freelance work that allows you to stay at home with your children. An arrangement like this takes care of the income and the daycare expense. I know dozens of parents who do this. It’s not easy, but being a parent is so important to them that they make it work.
Is the cost of raising children holding you back from being a parent? If you’re already a parent, how are you keeping costs in control? Please let us know in the comments section below.
The post 5 Ways to Decrease the Cost of Raising a Child appeared first on ZING Blog by Quicken Loans.
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