The Parents’ Budget

Rebecca Minkoff 'Ava' Zip Wallet | CorporetteLadies, let’s talk BUDGET. Mine has changed after having a kid (and definitely after my second) — how has yours? Do you miss the days of being a DINK? Are you going into debt for childcare (i.e., paying to work)? Is the money coming from savings? Credit cards? If you’ve made cuts for your budgeting, how keenly do you feel them? (Pictured: Rebecca Minkoff ‘Ava’ Zip Wallet, available at Nordstrom for $110; was $165.)

For my $.02: I remember hearing a lot while pregnant about kids and budgets, and to be honest, it was all noise to me. I just didn’t get it — I thought people were talking about diapers or toys or something. (I’ll wait while you catch your breath from laughing so hard.) Obviously, childcare is the tremendous expense I didn’t foresee — but other things add up, like classes (preschool and extracurriculars), food (damn those $1.40-per-pouch babyfoods), and yes, the ever-present need to purchase a seasonally-appropriate wardrobe that fits.

Today we barely miss some of the things that we cut down on or eliminated from our budget (e.g., vacations, dinners out, couples’ massages, etc.) because logistically they’re almost always off the table now in terms of time/energy/research.

Some expenses we self amortize, which helps take the sting out of expensive purchases. I’ve set up special savings accounts in Ally (which has high interest rates for savings, too) with names like “JAG Classes” and “Dental Fun,” and we contribute a set amount each month to those accounts. Then, when we suddenly decide to spend $700 for a karate class, we just move the money over. (Yay, New York!)

Ladies, how about you — how much sting are your budgets feeling during these first years of parenthood? Moms to older kiddos, does it get better? In general, what methods have you found to make the budget easier? Do you take solace in any sayings or words of wisdom (e.g., “the pain is temporary”)?

—————

N.B. These substantive posts are intended to be a source of community comment on a particular topic, which readers can browse through without having to sift out a lot of unrelated comments. And so, although of course we highly value all comments by our readers, we’re going to ask you to please keep your comments on topic; threadjacks will be deleted at our sole discretion and convenience. Thank you for your understanding!

What Can We Help You Find?:
for example:

Comments

  1. Childcare is such an enormous portion of our budget that it dwarfs almost everything else – we live in a vhcol area and pay $3700/month for childcare. Even on a biglaw salary, that is a ton of money. For us, that covers full time preschool for one, full-time daycare for the other, and a twice/week family helper who does the pick-up and helps with the evening ritual. We are sending one child to public kindergarten next year, and I am so excited because it will save us $1300/month. (We will still have to pay for after-care.) I honestly don’t understand how people do it – and I really support the notion of more federal subsidies for childcare because the cost of high-quality care is simply beyond exorbitant. I am happy to pay for it because it’s the best money I spend – but at the same time, it means that we save very little – even on a biglaw salary. I know people will tell me that we’re doing it wrong, but I just wanted to put it out there for others who might also be thinking that this is a nearly impossible situation.

    • +1. Childcare is just dwarfing anything else in our budget. We spend $1400/mo for one kid in daycare, but that’s about to go up to $3200/mo when baby #2 arrives. No, neither of us have a big-law salary, although I’d consider us mid-to-upper middle class for our area. I have no idea how we’ll manage, and I don’t know how non-savers do it at all.

      We were huge savers before, so we have a big cushion, and we live below our means. But baby #1 means we can’t save each month anymore, and baby #2 will mean eating into our savings cushion. It’s scary and I can’t wait til they get older, so we can put them in public school and “only” pay for before/after-school care and summer programs.

    • Insanity says:

      We live in a VHCOL city as well. We pay $2400 for daycare for my toddler, plus an additional $400 a month for a mother’s helper/babysitter. When we put our second child in daycare, we will be paying $5000 a month for two kids. It’s insane. It’s absolutely insane. A nanny would be much cheaper, but I don’t like the idea of having someone in my home all day and of being an employer, so we’ve decided to suck up the exorbitant price in the hopes that eventually the kids will go to public school. I’m in BigLaw and my husband is a CEO of a small start up, cumulative income about $400 K. So while we can afford it, it’s still crazy. Our other biggest expense is our rent ($4500 a month). We’re generally pretty frugal otherwise – don’t spend a lot of money on eating out or clothes.

    • anne-on says:

      Ditto. Our daycare is about $1500/month for one kid, and next year private preschool will be about $16k/year, plus the cost for a mothers helper in the afternoon to fill in the gap when school ends/before I’m off work. We’re aggressively saving for college, and those two are our two biggest line items at this point. We have one kid because I honestly cannot fathom paying $3-$4k a month for childcare until they’re four/five. I also really wish our state had public preschool but that’s another story.

      • whitney says:

        Baby #2 is expected any day and and we are looking at $2900/month in childcare costs. We live in a M/LCOL city and both work in higher education/nonprofit so earning potential is never going to be extraordinary. We live modestly and have solid saving but the stress of the situation is starting to wear on me. We remind ourselves that the expense is temporary but it is swaying me to stay in a job I hate and that requires travel just so I don’t feel like we are living with too small a margin. I don’t know how the majority of people do it! Plus, we only have half-day kindergarten so the expenses won’t ease up even when one transitions to public school.

        I like working and want to continue but it gets harder to justify especially when our daycare fees have risen 10% in two years.

  2. ThreeUnderThree says:

    I completely agree! It is crazy to think that we are spending over $30K a year (in after tax dollars) on a nanny and pre-school for our three kids. I don’t understand how people do it, either. I guess I’m starting to understand why people move away to the suburbs – the far away suburbs.

  3. We pay $1500/month ($3,000) total for childcare right now and my oldest will be in public school next year. The costs will go down, but because of our schedules we will likely have to hire a part-time nanny to coordinate drop off and pick ups from kindergarten. The childcare is the biggest expense by far, but it also comes to play when we want to travel anywhere. $400 plane tickets for Thanksgiving to spend it with family would be reasonable for 1-2 adults, but when you have to multiple that by 4 for any trip we take, that easily adds up. I love the idea of 3 kids but I honestly have no idea how we would pay for a third.

    I’d say it will get better but we haven’t even started saving for their colleges yet, so as soon as they are done with the day care years I feel like college savings and other activities will soon take over. I’m glad we saved so aggressively before having kids and that we waited until our student loans were paid off before having them.

    • Spirograph says:

      Ugh, I know what you mean about the plane tickets. Almost all of our family is too far away to drive to… my husband’s family is on the opposite coast, and we’re just not going to see them unless they come to us for a few years; I can’t bear the thought of paying for 4 plane tickets. I’ll buy MIL’s plane ticket instead. My husband and I used to travel internationally a couple times a year, but we can forget about that, too. I’m glad we got so many adventures in pre-kids, because now it’s national parks within driving distance for the win!

      • Yep, that is us too — we don’t really have family within driving distance so it’s either paying that or not. We did take an international trip as a family last August but had to save for about 18 months to do it. I feel fortunate that we could do it at all, but if you told my 25-year-old self this I would have been shocked.

  4. CPA Lady says:

    Y’all need to move to the south! I am realizing more and more what a wonderful place I live in.

    I mean… holy freaking crap. $3700?!?!?!?!!? My jaw actually dropped when I read that. This is why I am so glad I live in a low cost area. Daycare here is $885 per month for one kid, and less once she gets out of the infant room.

    That said, public schools are mostly terrible, so we’ll have to pay for private school K-12. As far as budgeting, the main thing we’re doing is planning to pay off our mortgage by the time she’s in middle school, which is when private school tuition goes from ~$10,000 a year to ~$25,000 (or whatever it will be adjusted for inflation). Since our mortgage payment is currently about the same cost as daycare/private elementary school, it won’t feel any different to just pay mortgage + elementary tuition vs. no mortgage + high school tuition. And yes, the thought of paying that much for middle and high school makes me want to throw up.

    The high cost of private school is one of the reasons we decided to have one child. If we change our mind on that, we’ll move to one of the two good school districts in town… and pay a lot more for a house. I honestly do not understand how people afford to send multiple children to private school. But to be honest, I don’t understand how anyone can afford $3700 a month for daycare, while being able to afford a home or meet any other financial goals. I was upset at having to spend $885 a month, but I’m just gobsmacked at $3700. That is seriously the worst ever.

    • mascot says:

      Agreed. Lived in big -city in SE and paid under $1000/month infant care in private daycare. Moved to smaller city and paid $125/week for a toddler. Now we are paying private school tuition (schools here are weak) plus summer camp fees, so let’s ballpark it at $14k for the year. Tuition will increase towards high-school. Post-kid, we go out less and travel a bit less. And with consignment stores and sales shopping, I am pretty frugal about buying kids clothes. We ultimately decided to just have one child and financial realities played a big part of it. Being in a low cost of living area and a small city helps too. It’s not so much in the housing and food costs, but in the “splurges” like social/sports club dues, school costs, etc.

    • Meg Murry says:

      We also live in a (relatively) low cost of living area, so our daycare is in the range of $500-$800 per kid depending on age, but for some perspective, our mortgage is also only $800 a month – so while its much cheaper than in HCOL areas, its still a huge chunk of our budget, and no biglaw salaries here. When we had 2 kids in daycare and (and one was only part time) during a downturn in the economy when I took a pay cut, it was easily 20%-25% of our pre-tax income.

      I never calculated daycare costs before my 1st was born, and I’m kind of glad I didn’t – because being the type A person I was I would have kept waiting until we could “afford” it – and that never would have happened. But once the kid is here, you figure out a way – even though that meant dipping into our home equity line some months to make ends meet. We’re now back to a place where the budget isn’t negative anymore, but that’s also because we have family to help out with childcare for Spring Break and summers – one summer of camps for a 7 year old can be almost as much as a year of daycare!

    • Anon&on says:

      I also live in a big SE city and thought I was getting a deal on day care. Some people in town pay $1,500 / kid, and my kid’s school ranges from about $1150-$1350 per kid, depending on age. Obviously I am living in the wrong big SE city….

  5. Spirograph says:

    We currently have amazingly cheap daycare for our area at only $1200 a month. When baby #2 starts in a couple months, that will go up to $2750, a little more than what we were paying for a nanny when baby #1 was an infant… so not uncharted budget territory, but it’s still depressing that daycare will again be more than our mortgage. We still max out our retirement contributions, but this will nearly wipe out non-retirement savings. We’ve been saving aggressively for the last year to compensate for unpaid parental leave, and will still have a healthy emergency fund once we’re both back at work, but I hate that it won’t get much bigger for a while. My son is just now getting old enough for “activities,” so I really need to sit down and look at the 2-kid budget soon and make a line item for that.

    Our combined income is comfortably middle class (ha! two six figure salaries= middle class), so like Kat said, we haven’t had to consciously cut back beyond the vacations and dinners out we’re naturally skipping for non-budgetary reasons. But even aside from daycare, I was shocked at how other expenses like “+family” insurance plans, extra life insurance added up. Plus we moved to a better public school district and now need a second car… Diapers are the least of my problems, although I am really looking forward to my son being potty trained sometime this year!

  6. Being a DINK was the best….(sigh)

  7. Midwest In-House says:

    Wow, I have a toddler in daycare and I totally forgot that, even once she is in public school, we’ll still have to pay for some sort of summer care. How in the world did I not realize that before?!?! So much for having a bunch of extra money in 4-6 years:)

    We pay $1800 a month for one child (suburbs of a big city) – We are starting to talk about having a second child, but ~$3500 a month in childcare is going to be a stretch for us without having to cut back on our retirement savings. Right now, we max out our 401ks and pay an additional $2k a month for a whole life insurance policy. This probably won’t be a surprise to many of you who are wiser than I was when we bought the policy, but I honestly regret it (we also have tons of term insurance). When we bought it, we thought if it as a way to save for retirement – we bought the policy 3 years ago and have another 4 until we break even. So, if we had an emergency (job loss, sick kid) and had to stop paying the policy, we’d lose a ton of the money we already contributed. We have savings of course, but that would only last about 4-6 months.

    I agree with Kat that some of the smaller expenses related to kids (clothing, diapers, etc.) have been offset by the fact that expensive dinners out, days spent at the mall, and spa days are a thing of the past (no time or energy, even if we had the money).

  8. I live on the rural edge of southern suburban sprawl and thought that daycare would be very inexpensive in my town, so I was very surprised by the $1300/month price tag for infant care! Still inexpensive compared to more urban areas, but definitely not as cheap as I’d anticipated. Interestingly, 15 minutes away, across the county line (in the truly rural area), daycare would have been about $800/month. I thought DH was a little nuts to leave big law to rejoin the military, but one of the (few) awesome perks has been a daycare subsidy that reduces our bill by half. Because we’re able to live well below our means in our low COLA, our budget hasn’t been affected by the kid…but I’m sure that will change when we relocate to a more urban area.

  9. Daycare is 1440 a month for infant care and that amount will double if we put our second child in daycare too. It just isn’t in our budget though so we are hoping in-home care or a nanny for something like 2,000 a month instead. I wish someone had mentioned how expensive childcare would be because I should have started saving for this 15 years ago!

  10. Midwestern says:

    I am going home tonight to see how much it will cost to keep our nany from leaving. I’m wondering how much others pay their full-time nannies and how they do PTO for nannies. We left a center (which was substantially cheaper than the nanny) and love, love, LOVE having a nanny in our home. We’re having a hard time getting good candidates, and I’m wondering if we have to pay more/decrease our retirement contributions (le sigh). Also, love this community, but can anyone tell me what DH mean? I keep reading designated hitter to myself.

    • DH = Dear Husband :)

      How much do you pay your nanny by the way? I would prefer one but I think the cost will probably be too high if we still want to be able to eat and pay our mortgage.

    • We pay 17$/hr for nanny share for two infants in big Midwest city

    • Chi Squared says:

      We pay $14/hr for 1 child, suburb of Chicago

  11. I count my lucky stars that my husband is with a branch of the military, and that we qualify for on-base childcare. Because of that, we pay an extremely low $145/week for infant care. When she is older, we will likely be trying to get her into a charter public shcool that is basically a Waldorf school, or just using normal public schools. If she is gifted or needs specialized education for another reason, we will pay for that when the time comes.

    Once she is in school, I will either need to adjust my hours to be home with her after school, or will need to leave work to bring her to base for after-school care. I’m also lucky that my job is very flexible and allows me to work from home or work less than FT hours as needed. I’m an hourly employee, so I only get paid for the time I’m actually working.

  12. Mrs. Jones says:

    We’re in a large southern city and pay a little more than $1100/month for all-day preschool. I feel like we could not afford a second child, even though husband and I are both full-time working professionals. I look forward to public school some day!!

  13. Nonny says:

    HCOL area in Canada. We pay $1,300 per month for daycare – our second largest expense after our mortgage. Since we are lucky to have a basement suite that we rent out to a lovely family, basically our rental income pays for daycare. But before baby, that monthly rental income went straight into savings. Now, basically nothing is going into savings. I find that even though we aren’t going out as much as we used to, we are spending way more on groceries (because of buying pre-prepared food, which I never did before), so I don’t think we are experiencing any savings in that area either. A nanny is not an option because that would set us back about $2,200 per month – it becomes cost-effective only with 2 or more children.

    The Canadian government pays families a child care benefit of $100 per month, per child. I find that indescribably ludicrous.

    For reference, our joint income before taxes is about $230k.

  14. We have a nanny for 35 hours a week ($700 a week for 3.5 yr old and infant) plus private preschool for toddler at $10k a year. So yeah I guess that’s around $4k a month. Yay.

  15. Daycare for an 18 month old @ 1800/month. Will be $3300/month when we have a second. For $3500/mo we can probably get a nanny and put the older one in 2-3 day/week preschool/nursery. We make a combined ~300k after bonuses, $260 before. That has only been our income for the past year or so; before that we were in and out of grad schools and working our way up. We are moving a little further out into the burbs of Boston than I would like to ensure we can afford 2-3 kids if we decide we want them.

  16. I spend $2k a month on childcare for my newborn and 2 year old. My mother lives 45 minutes away, and since I had the baby she takes my 2 year old for a couple nights a week (he adores her and vice versa) and she has contracted with a day care in her town so that she gets a break during the day. Ladies – this daycare is an incredible place – with airtight security, a huge playground and large “tent and tunnel room” for bad weather, nutritious meals (breakfast, snacks and lunch), thorough curriculum (6 activities a day – 2 gross motor skills, 2 creativity, 2 ‘real life’ skills – like learning how to call for help and dial 911)… and it costs $660 a MONTH. It’s like the Holy Grail of child care. If I lived closer to my parents, I would switch. Small towns – gotta love them.

  17. This thread has helped me to stop bitching and moaning. We are in a small, rural area (State College, PA) where daycare for one infant is $800, and with two (infant + toddler) I’ll be paying $1425 at the end of this year. I cried and couldn’t breath when I came to the realization of how much this will cost. Thankfully, though, we live in a top-rated school district in our state, and so public K-12 is a great option here, with tons of opportunities, much like the schools that my husband and I attended. If we were in an area with a school district that didn’t fit my requirements, I wouldn’t think twice about putting my kids in private schools for K-12.

    I also feel “normal” now knowing that others with small kids have had to put their savings plans on hold for the time being. I used to be a savings queen. After selling my first home, we put a large-ish (well, large to me) chunk of money away as our emergency fund, primarily because we watched too many Suzie Orman shows. I’m glad we did, though, because in the last 2 years we haven’t saved any extra money. I’d normally be freaking out by our lack of savings, but at the very least I know that we have some money there if needed. We don’t touch it – not for vacations or cars or anything. It’s my way of feeling as though we have some control over our finances while we’re raising 2 small children.

  18. Burgher says:

    In our LCOL area, we pay around $800/month for one child and will soon be paying $1,400 for two. We will most likely have to cut back on all “extras” and reduce or eliminate contributions to savings, aside from 401k &529s. I am on the fence about an eventual 3rd child, but I don’t see how we could afford it… at least not if we ever want to retire or help pay for even a portion of college.

  19. whitney says:

    I commented above and realize this thread may be dead, but how do we make this work? Costs are exorbitant and rising. None of us want to compromise on quality of care. When is it worth it to stay home? To find creative arrangements? I’m really struggling with these questions.

    For frame of reference our gross household income is $170k and our mortgage + childcare (an infant and 4 yo) alone will be $4250. It just doesn’t seem doable. We have a 15 yr mortgage but I wonder if we refinance? Do I stick with the job I hate?

Speak Your Mind