7 Essential Tips For Keep Expenses Under Control in the Child-Rearing Years

Starting a family is a lifelong dream for many and brings with it the joys and thrills of parenthood, as well as significant financial responsibility. In fact, a recent report by BabyCenter finds that 61 percent of moms worry about having enough money to raise their kids, with 74 percent more worried about money now than before having children. Two-thirds of moms said that paying for school and college was their top financial concern, followed by housing and then childcare.

While this news may be daunting for couples who have embarked on the parenthood journey, Citi has long been committed to providing strategies and tools to help women simplify their families’ financial lives. For 11 years, Citi’s Women & Co., a leading provider of financial insights and resources for women, has provided a variety of solutions that add value for moms and fit seamlessly into their lifestyles.  Citi has teamed up with BabyCenter to sponsor the 2011 Cost of Raising a Child Report and BabyCenter has created an interactive online module, BabyCenter.com’s Cost Calculator, that helps moms evaluate their families’ specific financial variables.

To help get families started on putting together a financial plan, President and CEO of Citi’s Women & Co., Linda Descano, CFA®, offers the following tips:

1.      Realign your budget.  The essentials of a baby’s first year alone – like diapers, formula, and furniture – can be costly. Childcare and medical expenses can increase that figure significantly. Now is the time to assess the big ticket purchases that come along with motherhood. Consider: your car, for example. Is it baby safe or an “old junker” that will require you to upgrade to a safer option? Do you need to do any renovations to prepare for the baby, such as building a nursery? Do you need to baby-proof your home? Speak to a few experts before the baby arrives so you can plan accordingly.

2.      Review your health insurance. Now is the time to review whether your current plan covers all the family’s needs, for both parents and children, completely and economically.

3.      Evaluate childcare options.  Consider what works for you and your family. The average monthly tab for childcare is $755, according to BabyCenter’s report.  An alternative to group day care or an individual nanny is nanny-sharing.  It would require coordination with another family but may be worth considering for its social and economic benefits.

4.      Take advantage of government programs.  Some programs are designed to help ease the financial burdens of parenthood. For up-to-date information, check with the IRS. Look for information on the Dependent Care Tax Credit, and any other present day tax laws that award parents a tax credit for children under the age of 17. As always, consult with a financial advisor or your accountant to see if this or a flexible spending account (which allows you to use pretax dollars from your paycheck to pay childcare expenses) make better economic sense for your situation.

5.      Check family documents. Any change in family headcount calls for a review of life insurance policies, wills and retirement plans. Also consider realigning your savings goals to include education costs, as well as a college fund and other big-ticket expenses like summer camp.

6.      Buy in bulk.  Consider joining a warehouse club.  You have to be careful not to overbuy, but with the right planning, you can stock up on the items you use and rely on the most, thus saving you money and time.

7.      Capture the memories. Of course, you will want to document baby’s every move as well as all the amazing features of this new person you are bringing into the world, and you’ll want to share everything with friends and family. Now is a great time to check your camera, computer, and video equipment.  Again, if you need to make any upgrades, now is the time to plan for those purchases.

The good news is that the majority of moms, 70 percent, say it doesn’t take a lot of money to raise happy children.  But prudent financial planning will go a long way toward easing your mind.  For more help on saving strategies, visit womenandco.com and Women & Co.’s award-winning blog, Insights & Outlooks.