How to Keep Your Baby From Making You Go Broke

Amy Jo Jones

MoneyNo one told me that when the stork delivered my sweet little baby that I would need him to come back with a big bag of cash!

It costs nearly $222,360 to raise a child. When you consider diapers, formula, clothing, furniture, books, food, living expenses, day care, and (gulp) college, it's not hard to believe.  

So what can you do? I know the economy is not the greatest, but new parents should start thinking about money. Right now. Here are 4 things you can do to help you (or baby) from going broke.

1. Don't forget to adjust your taxes once your baby is born. Adjust your withholdings accordingly to account for your new dependant. Don't pay extra taxes up front that you don't need to.

2. Think about life insurance for yourself and your partner. No one, especially parents in their 20s, wants to think about why you might need it, but for a small monthly premium, you can have peace of mind that your baby will be provided for financially if something should happen. (But it totally won't. Let's not even go there.)

3. Put money away. It's never too early to start saving for your baby. Consider asking relatives and friends to contribute at the holidays or birthdays instead of giving gifts. There is not much that your baby needs that you haven't already provided.

4. Set up a 529 college savings plan. Contributing even a small amount every month to the tax-advantaged account will really add up by the time it's time to tour college campuses. You can also check with your state on the availability of pre-paid tuition plans, which generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board.   

Do you have a savings plan set up for your baby? Do you feel like you're saving as much as you'd like to or as much as you should?


Image via stopnlook/Flickr

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