You ask our Advisors questions, they give you the Answer!
Today we are featuring 2 Questions to Cape Cod Mom Advisor: Gary DellaPosta, CPA. If you have questions for Gary or ANY of our Cape Cod Mom Advisors, please e-mail them to: firstname.lastname@example.org and we will get them answered.
"Gary, How Much Will It Cost Me to Raise a Child?" ~ CC Mom - Orleans
We can't tell you exactly what your child will cost, but we can provide you with estimates. Knowing what to expect will allow you to plan for the future. Here is a breakdown of the items you'll need, and an estimate of their costs.
Note: These estimates are for a first child. Bear in mind that second or third children will cost less than the first, since you will already have purchased many of the items you need.
Government estimates say that a family with an income of $115,400 will spend a total of $298,680 to raise a child to age 17. If you include the cost of college, that cost goes up to $450,000. If your child requires orthodontia, add another $10,000. If you buy your child a car, add that in, too. For an only child, add 25% to the cost.
About a third of the amount spent in the government estimates goes to cover the portion of your rent or mortgage allocated to the new member of your household. It also includes the extra cost you'll incur in making sure you have enough room now that your family is bigger.
"We are expecting our first child at the end of the summer, what costs can we expect during the first year?" ~ CC Mom - Dennis
Here are the costs you can expect up to birth and during the first year.
Hospital Costs. An uneventful delivery costs about $8,000-$10,000, and a Cesarean section $12,000-$14,000. Depending on your coverage, you'll pay anywhere from zero percent to 30% of this cost.
Layette. Before you bring the baby home, you'll buy a crib, a changing table and a swing or other rocking device. The moderately priced versions of these three things will cost you about $1,200. You'll also need two strollers: a collapsible one at about $150 and a full-size one at about $300. A full-size infant car seat will cost you about $100, and a full-size high chair will cost $150. You'll also need an infant seat, at about $50. Finally, you will spend about $300 on washcloths, sheets, blankets, towels, undershirts and other baby clothes.
Formula and Feeding Gear. A year's worth of formula concentrate costs about $1,200. If you buy the ready-to-serve type of formula, the cost is even more. You'll also need a year's supply of bottles, at about $30, and you'll have to add another $20 to replace the nipples at least twice in a year. Nursing mothers will have to invest in nursing bras and nursing pads (about $30). Most nursing mothers will need to invest in a breast pump and its accoutrements, at about $200. Note: Breastpumps can now be deducted as a medical expense.
Diaper Genies and the Like. Disposable diapers for the first year cost about $800, and a diaper genie costs about $30. If you invest in cloth diapers, you will still have a cost via the intial purchase and the water/electric.
Child Care. Child care in a day care center costs much less than a live-in nanny. A mid-priced day care center charges $200-$250 per week for your infant's care, or about $10,000-$12,000 per year.
Health Care. Your infant will visit the doctor about six times during his or her first year, including well-baby check-ups as well as the inevitable colds and fevers of infancy. How much you will spend for doctor visits during the first year depends on your health insurance. If you are in an HMO, you will pay only the $5 or $10 or even $20 co-payment. But if you are covered by traditional indemnity insurance, well-baby visits may not be covered at all, or only a percentage may be covered. This means (assuming a doctor's visit costs $60) you will pay $45 to $60 per visit for uncovered visits, and $45 per visits for medically necessary visits. You will also need to pay for prescriptions.
Toys and Clothes. You'll spend about $500 on toys and clothing during the first year.
Total For The First Year. Your total expenses for the first year run about $15,000-$18,000. The biggest variables are child care and health care.
If you have further questions, please contact our office at 508-540-3683 or visit us on the web at www.dellapostacpa.com
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