Lazy Man and Money

It’s (Going to Be) Another Boy!

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It wasn’t long ago that I became a dad (father just seems to formal). It’s happening all over again. It’s not exactly the standard definition of Irish twins, but they are close enough… and happen to have enough Irish in them from both my wife and I.

Let’s get to the money though shall we? This isn’t Lazy Man and Parenting. The USDA has a good Cost of raising a Child Calculator and the cost of raising Little Man was going to be about $29,250 per year. According to the calculator, having two kids is going to push it to $46,800 per year. While the calculator

The big components of that is child care and housing. Let me cover each and compare our situation with the averages:

Housing (Calculator estimate of $17,200)

We don’t intend to buy a bigger house. As they are both boys, they can share a room for a while. In fact, I think my brother and I shared a room until he went to college. At some point, we’ll sacrifice the guest room.

That’s not to say that we won’t buy a bigger house at some point. We all know plans change and 1800 square feet might be a little small for two big boys when we can afford a bigger place. However, if we did buy a bigger house, that isn’t exactly money down the drain. There’s value in the equity of the house. It might even lead to making us money if we downsize later on in life.

What I’m intentionally leaving out here is the wear and tear on a home with two boys.

Child Care and Education (Calculator estimate of $12,560)

The calculator’s child care costs are almost exactly what we’d pay in the first year. This is surprising because in comparing it with friends using our military status is a huge savings. When I looked into it in Silicon Valley, which didn’t have the military savings, it was closer to $22,000 per year per child. Maybe the USDA calculator assumes an early high cost with it decreasing when they get to school age. If that’s the case, it makes sense as we’ll be see those same reduced costs bringing our annual average cost down.

Transportation (Calculator estimate of $5,120)

This is going to be an interesting one for us. We’ll need to get a bigger car bring the kids around. We bought a Subaru Forrester when the first kid arrived. We have a small SUV with 125,000 miles on it. We were getting ready to move on from it anyway, so it could almost be looked at as a marginal increased cost… just buying a different type of car. Of course that bigger car will cost us more money in gas, which fits under the transportation umbrella.

Now what that car might be is a whole different article.

Food (Calculator estimate of $4,040)

Not much to say about the cost of food. We can save a little money on formula buying through the military commissary, Wal-Mart, or stacking CVS coupons (a game my wife likes to play). We’ll also breast-feed, but that transfers the food costs to what my wife eats (darn law of law of conservation of energy).

The Savings is in Sharing

Having another boy, especially one so close in age, seems like it is going to save us some money. The first thought is that we’ll be able to recycle all the clothes from Little Man. That’s an immediate savings. The cloth diapers that we invested in with Little Man really start to pay off on the second baby, so that’s a bonus.

For some time, we’ll be able to reuse the same toys. Even better, we’ll avoid buying all that American Girl Crap. I’m sure at some point, they’ll develop their own tastes. Until then, it’s going to be a savings to have them share the same Thomas the Tank Engine toys.

Just like when Little Man arrived, there’s going to be a lot of changes. I’d be lying if I said that I know how it’s all going to play out. Like most things, you anticipate the best you can and then make the appropriate adjustments as new information comes in.

The Cost of Raising a Child in U.S.

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The following is a collaborative effort with financial writer Marc Brown.

Nowadays many future parents are under a lot of financial stress due to the increasing cost of raising a child in U.S. The cost of raising a child is on steady rise. From the moment your child is born, there is a new expense. It maybe new shoes, new books, or a new bike. As a parent, you want to give the little one the best of everything.

A survey conducted by The United States Department of Agriculture has stated that the expenses for child care, education, and health care has multiplied. For an average income family the range is from $11,650 to $13,530 a year depending on the age of the child. Fortunately, they provide a handy Cost of raising a Child Calculator. (Who would expect it from the Department of Agriculture?) In the calculator, you enter your region, income, the number of children and it spits out the the annual expenses of raising your child. The calculator gives you a nifty graphical representation stating the Overall Estimated Annual costs of various things like housing, food, transportation, clothing, health-care, education and other miscellaneous expenses.

Knowing how much it is likely to cost is one thing. It isn’t going to make junior any cheaper. So, here are some quick tips you can consider to reduce your expenses:

  • Use cloth diapers with snappy (replacing safety pins) instead of disposable diapers.
  • Buying branded-name things for kids may give you the satisfaction that you are giving your child the best. However, you can save a lot of money by sticking to brands only with foods, but with clothes you can try out some generics.
  • Reuse the products, clothes or toys of your first baby for the other ones. Buying another crib just for safety purpose is not a great idea as it takes up both your money and the space at home.
  • Try and make food at home for your kids rather than going out for dinner every other day. This will reduce the cost and you can also spend some time with your family at home.
  • Do not spoil the kids. You may want to give them everything even if you have to go without food. However, this may lead to a lack of understanding of the value of a dollar. Praise them and gift them valuables whenever they excel in something.

Take note that the expenses differ from city to city and area to area. The South tends to have the lowest child raising cost. Urban families incur a high expense in comparison to the rural ones. If you have more than one children the cost of raising the other child decreases, naturally.

If you plan your finances well, you can provide your kid with all the happiness and none of the financial burden.