Jennifer Rescigno, a 35-year-old recruiter in Sussex, N.J., is thinking about having a baby. But she worries about affording the home, food, and healthcare that she knows her family would need. "I would just prefer that we have certain things in place—a certain amount of money in the bank, a home of our own, a job with benefits and good family leave," Rescigno says. She and her husband, Lance,are still paying off around $3,000 in credit card debt and renting an apartment.
Couples considering having kids increasingly find themselves financially squeezed on two ends: The cost of having children is escalating while the economy is tightening. The Agriculture Department estimates that middle-income married couples spend around $11,000 a year on each child, an increase of around $2,500 since 1997. Meanwhile, rising gas and food prices have added to the pressure. Rescigno spends about $90 commuting to work every week and says her job prospects have weakened because recruiting has slowed.
"Wages have stagnated over the past decade or so, and fixed costs have gone up. People are paying more for healthcare, college tuition, housing, and the expenses associated with having a child," says Nan Mooney, author of (Not) Keeping Up W ith Our Parents. That stress, she says, leads many professionals to delay having children until their late 30s or choose not to have them altogether. (The average age of first-time motherhood is 25, about four years higher than in 1970.)
More frequent job changes also contribute to not feeling "ready," says Pamela Paul, author of Parenting, Inc. "You don't necessarily feel financially stable until your early to mid-30s," she says. Research by the Network on Transitions to Adulthood, an academic group, has found that Americans increasingly take into their late 20s to early 30s to reach adulthood, as defined by the completion of school, entry into the workforce, and leaving parents' homes. Child-care costs can be particularly intimidating, with day-care centers costing an average of $12,000 a year, according to TheNestBaby.com. When you add in other expenses, such as healthcare and lost wages from maternity leave, the first year of a baby's life can easily cost $30,000, says Carley Roney, editor of TheNestBaby.com and mother of a newborn herself. "Being emotionally ready is one thing, but if you don't have the finances, it can completely ruin it for you," she says.
Subtle cultural shifts—women have more control over their fertility than previous generations, for example—are also at play. "Women of the 1950s often expected that having a child was a way to grow up," says Stephanie Coontz, director of research for the Council on Contemporary Families. "Most women today see having a child as something you do once you already feel grown-up."
Some costs can be controlled, and others just need to be prepared for in advance. Here are some creative ways to get ready for an addition to the family:
•Spend wisely. A new baby need not mean a new house, says Paul, whose 18-month-old son and 3-year-old daughter share a room. "You don't need a three-bedroom house if you have two kids," she adds. Relying on secondhand clothes and toys can also reduce daily expenditures. Lynne Ticknor, a certified parenting consultant in the Washington, D.C., area, recommends buying outfits at consignment stores, especially since young children grow out of clothes so quickly.
• Wait until after the birth to start spending. While parents-to-be often want to buy mountains of baby gear in advance of the big day, Roney recommends borrowing things from friends until parents know what suits their baby's temperament, size, and the weather. Robin Elise Weiss, a childbirth educator and author of baby-related books, says parents often buy too much stuff for their newborns. "Car seats are a must, and so are cribs, but some of the luxury items, like a $700 stroller, are not," she says, although she adds that some big purchases, such as a $300 breast pump, may be worth the investment.
•Check on benefits. People are afraid to ask about workplace policies because they fear it's not appropriate, says Roney, and then are often surprised to learn that taking maternity or paternity leave to care for a newborn comes with a pay reduction or no pay at all.
Weiss suggests checking up on health insurance coverage, particularly when it comes to well-baby checkups, which can cost over $100 per visit. She also recommends researching long-term-disability and life insurance options, some of which can be relatively inexpensive when added to existing health insurance plans. Financial advisers say parents need life insurance that will provide for their families in the event of their death; usually that means a policy worth at least 10 times their current income.
•Make trade-offs. Paul Golden, 34, a spokesman for the National Endowment for Financial Education in Denver and father of two young sons, says that after child-care costs, he and his wife were netting less than $10,000 a year. They decided to reduce their retirement savings and delay putting money away for their kids' college tuition until their child-care costs go down as their sons get older. Retirement savings have to take priority over college funds because his sons could take out loans for college and pay them back later, Golden explains. "They have a longer time to overcome the burden of savings," he adds.
•Plan ahead. When Golden and his wife were buying a home, they were approved for a much larger mortgage than the one they finally took because they knew child-care costs would strain their budget. "If we had [taken the larger mortgage], once we had kids and put them in day care, we would have been swimming," he says. He recommends that parents-to-be live below their means in advance of having kids so expanding the family doesn't cause a big financial shock.
Starting a "baby fund" ahead of time can also make the transition to parenthood easier, recommends Roney. She suggests putting away between $5,000 and $10,000 before giving birth.
•Practice budgeting. To encourage couples to consider the costs of parenthood, Ticknor suggests that they try living on $550 less each month or, if one person plans to stop working, to try living entirely on the other person's income before the baby arrives. "Doing this for nine months will help them experience just how significantly their lifestyle will change once the baby arrives," she says.
•Think creatively. Mooney, who has a 5-month-old, chose to move back home with her parents when she decided to become a single mom. "I wasn't financially ready [to have a baby]," she says, adding that biologically, in her late 30s, she couldn't wait much longer. In addition to saving on rent and food, Mooney gets free child care; her mother takes care of her son while she works.
•Take the plunge. "Don't wait until you can afford kids because it will never happen," says Being Frugal blogger Lynnae McCoy, 36, mother to a 10-year-old daughter and 5-year-old son. She makes ends meet by passing hand-me-down clothes among friends, volunteering at the YMCA in exchange for a free membership, and swapping baby-sitting duties with friends. "I knew I wanted to be a stay-at-home mom," she says. "To make it happen, you have to set priorities."
As for Rescigno, she and her husband have decided to let nature play a role in their decision over whether or not to have a baby. "We won't actively pursue it, but we also aren't actively avoiding it."
Trying to decide if you're ready to have a baby? Take this quiz to help figure it out.