Baby dollars and sense

NEA Today, May 1999 by Rowland, Mary

The high cost of raising kids.

an you afford to have a baby? That's a loaded question. I have two children aged 9 and 13. My husband and I certainly didn't get out our calculators when we were planning to have them.

So let's agree that children cost a lot of money, and that there is never really the perfect time to have a child.

Yet we go ahead and have children anyway for all the pleasures and challenges and wonder and opportunities and growth they bring to our lives.

That said, there is a good reason to focus on the financial responsibilities in advance because taking this step can help prepare you for the transition to parenthood.

For those who like numbers, there are plenty available. The U.S. Department of Agriculture surveys 5,000 households four times a year to find out how much money these Americans spend to raise their children.

Those who earn more than $60,000 spend about $223,860 to raise a child to age 17. These figures are based on a dual-parent family with two children. Couples with just one child spend more, those with more children spend less per child.

The College Board puts the cost of four years of private college at around $85,000 in today's dollars. A public college is around $45,000.

The costs seem staggering, yet many parents say they are seriously understated. Consider, for example, that the survey found that child care and education cost $1,671 per year for a young child. This would include day care, summer camps, and so forth.

In truth, child care in a large city can run to $20,000 per year. But half the families in the survey reported no child care or education costs, according to Janet Bamford, one reporter who dug into the numbers.

But if you are a young person contemplating your first child, put first things first. Get health care in place. Figure out who will take care of the baby. Also think about how having a baby will impact your earning power. Should one spouse cut back or work part time?

The Web offers lots of helpful material in this area, including a calculator to help determine what you gain-and lose-with a second income. Go to www.moneycentral.com, then into the family area, where you'll find the calculator as well as articles on the cost of raising children.

Check, too, at www.kiplingers.com, where you'll find a child-cost calculator that allows you to plug in your own numbers. Also on this site is one of my favorite columnists on kids and money, Dr. Tightwad. a.k.a. Janet Bodnar. Resources Your decision to start a family may not depend solely on your bank account, but it always helps to have a little something tucked away.

Years ago, a regular passbook savings account may have been enough. Not today. We have other options available now that pay more interest yet keep our funds accessible.

One example: the NEA-Sponsored FDIC-Insured Money Market Account. With above average interest rates that are adjusted weekly, the NEA money market account offers the security of FDIC insurance (up to $100,000 per account), with the flexibility of easy access to your funds.

This account carries no penalty or advance notice for withdrawal. And interest is compounded daily.

For more information on how to open an account or current rates. call NEA Financial Services, toll-free, at 800/348-4632.