Friday, December 30, 2011

The cost of a baby

Financial concerns are some of the scariest things soon-to-be parents or anyone contemplating having a child in the future must consider. For our entire 5.5 year marriage thus far the cost of babies and children has been at the forefront of all the financial decisions Matt and I have made (so much so that you may recall my financial spreadsheet I made several years ago titled "Can we ever afford kids?", the answer being yes).

You've probably heard stories similar to this one on the Today Show about the lifetime costs associated with raising a child. As this story points out, the average American family spends $250,000 per child over of the course of its financially dependent lifetime. This figure excludes the costs associated with college, and let's be serious, by the time our daughter will be entering college a four-year institution will probably cost $250,000 on its own.



So, as I like to do, I've conducted a little experiment. I decided to save every receipt for every purchase related to bringing a baby into the world. I've also kept an elaborate spreadsheet that I've updated every time we brought something baby-related into the house. Here's the breakdown of what I found.

As of this writing, $8,348.97 has been spent on unborn Baby Awesomerod. The actual full-retail price total that has been spent is $9,436.94. This number includes only the lowest possible health care costs ($175), which, if we didn't have such amazing insurance, would add at least $10,825 to the bill, bringing the total to at least $20,261.94.

Matt and I have personally only spent $2,365.97. So, this number would be significantly higher if 1) we didn't have great health insurance, 2) we didn't have incredibly generous friends and family, and 3) I hadn't been using coupons, comparison shopping, accepting hand-me-downs and being as generally savvy as possible.

Now let me say, before I go any further, that a baby does not need $8,348.97 spent on it before it's born. In fact, a newborn baby needs very little in terms of the true necessities of life. Here is a post from Pregnant Chicken that highlights the few items a baby would actually need. Her items listed come to a total of $257, but she excludes a car seat, which I would add in at roughly $150, bringing her total [before borrowing anything from friends] to around $400. She excludes a stroller as well. She also assumes breastfeeding will work (and not involve any special care items for mom to help with breastfeeding), and therefore doesn't include the costs of formula either. Finally, her plan is that after the first pack of disposable diapers the parents will switch to cloth diapering. So, she really takes the term "necessities" about as far as it can be stretched, which is probably not realistic for most people.

I fully admit that Matt and I are not normal, that we do not live in the real world of people who survive paycheck to paycheck and worry about how they'll pay bills or get food on the table. We live an upper-middle class existence, and though we are not in the top 1% in terms of the Occupy movements (we are solidly part of the 99%), we are no doubt in the top 1% worldwide, just like no doubt most of my readers are as well.

All this said, the financial world our baby is about to enter is "normal" in the circles in which we orbit, so this post is directed toward that audience just to give you an idea of our experience as you may or may not anticipate your own.

How did I arrive at our baby cost figures? There were five areas I tracked: health care, nursery, maternity clothes, gifts, and baby clothes/gear we bought to fill in gaps after we received gifts.

Health care
Our total spending: $175 
Actual value: At least $11,000

Breakdown of expenses:
$50 for progesterone supplements co-pay during the first trimester
$100 for hospital delivery co-pay
$25 for private room preference at hospital

I am very aware of the fact that we are exceptionally fortunate to have outstanding health care. Not to get too political, but it is devastating to think about all the people out there who do not have health care and therefore have to pay for routine health care and urgent care costs out-of-pocket. According to this article from WebMD prenatal care can cost approximately $2,000 without insurance, and the hospital bill for an uncomplicated vaginal delivery costs approximately $9,000 without insurance (and $15,000 for an uncomplicated cesarean section without insurance).

The article does point out that another important prenatal health care expense is for prenatal vitamins, which I've been taking for so long I forgot to even include in my baby spending spreadsheet. If you're looking for the best deal on prenatal vitamins, not surprisingly your grocery store's generic brand is just as good as any expensive brand on the market (One a Day as an example of an expensive brands comes to mind). Although I took generics for a couple years, I wanted a vitamin containing DHA and started taking the Nature Made Prenatal Multi + DHA vitamins that Costco sells at $19.99 for 150 softgels. (This blows the Amazon price of $14.79 for 30 softgels out of the water.)

Nursery
Our total spending: $1,067.32
Actual value: $1670.90

I feel like I've written plenty about the nursery, but just to give you a sense of the quick budget breakdown...

Several items came to us as gifts. One major item, the dresser/changing table, thanks to its solid wood construction would have cost hundreds of dollars if we'd bought it new, but Matt snagged it for $40 on Craigslist and gave it lots of TLC. And, of course, I bought a lot of supplies on sale or using coupons.

Paint and paint supplies
Our total spending: $80.12
Actual value: $80.12

Dresser/changing table project
Our total spending: $93.78 ($40 for dresser; $53.78 for supplies to refinish dresser)
Actual value: $311.28

DIY curtains
Our actual spending: $129.11
Actual value: $250.95

The major price difference here happened thanks to the fact that I stumbled upon this fabric when it was 60% off, so I spent $100.74 on 6 yards of fabric instead of a whopping $215.

Furniture and other decor
Our actual spending: $748.93
Actual value: $953.93

Here's what fell into this category: crib, crib mattress, crib skirt materials (for DIY project), chair, ottoman, bookcase, trash can/diaper pail, decal, and framed art work. The major price difference here is again thanks to receiving a few nursery items as gifts.

Storage solutions
Our actual spending: $15.38
Actual value: $74.62

We paid for the iron-on patches; the rest of the items we got through our Container Store gift card.


Maternity clothes
Our total spending: $586.08
Actual value: $769.87

I've written several times about trying to minimize my maternity clothes spending. I think I succeeded. I received several items as gifts and one item as a hand-me-down. I also bought most of the shirts I purchased on sale (though I never seem to find pants of sale normally, and this again applied when shopping for maternity clothes). My obvious maternity splurge was my expensive jeans for $200, but at 39 weeks and 6 days pregnant I stand by that purchase and the fact that they have gotten me through my pregnancy and they will continue to get me through the postpartum period as well (news flash: you're about 6 months pregnant looking after you deliver, and it doesn't go away over night).


I've posted this before here in my ultimate baby to-do list, but I thought for convenience I'd repost below everything that went into the maternity spending category:
  • BeBand 
  • bra extender 
  • three pairs of work pants (black, gray and khaki) -- my favorite pair of work pants wound up being the $30 gray pants I got at Motherhood Maternity
  • one pair of nice jeans (Citizens of Humanity Dita Petite Secret Fit Belly Maternity Boot Cut Jeans)
  • two pairs of maternity leggings (black and gray)
  • two maternity dresses
  • one jean skirt (specifically this one from Old Navy that I highly recommend, but remember to order it one or two sizes smaller than your normal size because it runs large)
  • one nicer skirt
  • four long-sleeve maternity shirts
  • eight short-sleeve maternity shirts (tip: scour the sale rack of Target's maternity section as well as Gap Maternity [located inside some Baby Gap stores])
  • one nursing bra
  • one nursing tank
I will add that I am fortunate that 1) as a teacher the expectations regarding how fancy I look at work are pretty low, so I didn't need to buy anything particularly formal such as a suit and 2) this has been a really mild fall and winter, so I got away with not needing to buy particularly heavy winter clothing, which is typically more expensive than summer clothes.

Gifts
Our total spending: $0
Actual value: $5983

OK, so this is the one category where the actual value is an estimate, but I think it's a pretty darn accurate estimate. A lot of the gifts we received came from our registry, so that is easy to track, and a lot of other items, such as books and clothes, are fairly easy to track. Specifically, our baby's wardrobe is keeping Carter's in business, so maybe it's worth it to invest in some Carter's stock.

The baby gifts fell into the following categories:
Registry purchases: $2,433.85 -- This includes a lot of the big-ticket baby items such as our car seat, stroller, high chair, Ergo baby carrier, baby monitor, Pack n' Play, exersaucer, infant gym, safety gate, diaper bag, bouncer seat and lots of cloth diapers.
Clothes: $1,107.91 -- We also received several sets of clothing on loan, and the value of those are not included because they do not belong to us
Other (off-registry toys, books, gift cards, cash, etc.): $2,441.24 -- We received several baby gear items as hand-me-downs that we'll be keeping, so I did include the retail value of the infant tub, Bumbo seat, infant swing, and Snap N Go stroller frame in this total. We even got some of our friends' leftover infant disposable diapers since their son has already outgrown them.

As you can see, when I wrote about all the showers (part 1 and 2) thrown in Baby Awesomerod's honor, I was not using hyperbole when I said we are truly wowed and grateful for all the generosity that's been shown our family.

Baby clothes/gear we purchased
Our total spending: $537.57
Actual value: $838.17

This is the category in which I really went bargain hunting and cashed in on sales, clearances, online shopping, and lots of coupons and store credits.

All along I've wanted to purchase clothing for our daughter myself, so I've picked up 22 clothing items, all but two of which I found on sale during trips to Target or Old Navy or bought at TJMaxx, which tends to have great infant clothes selection at highly discounted prices.

The other items that fell into this category I primarily purchased after my first shower. Several of my friends who've already had babies told me that after their main shower they received few if any gifts off their registries. This proved true for us as well. So, there were a number of items no one bought us that I'd consider necessities (such as infant nail clippers or a few baby bottles) and a number of registry items that aren't necessities but I knew I wanted for the future (such as the Stokke Tripp Trapp infant rail or more of the aden + anais muslin burpy bibs). You'll notice that items such as the ones listed above I got entirely through Amazon. A lot of the prices have changed since I made the purchases, another interesting aspect of dealing with Amazon -- if you see a really low price, act fast because that price could change in a matter of hours.

In addition to clothing and registry completion items, this category of spending covers a bunch of small baby purchases such as our first packs of baby wipes and Vaseline. It even covers the five cloth diapers I bought recently at a discount.

Now that so much spending has taken place our daughter will not need much to get her through many months ahead, so we're looking forward to going back to some more normal spending habits.

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