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3 Ways to Save Money When Starting a Family

I remember staring at the ultrasound monitor before my son was born, excited for the pitter-patter of little feet. I also remember the endless sensation of sticker shock as we went out to buy the items we were told were needed. Preparing for a baby can be a financially daunting prospect but it isn’t one to forgo because children are expensive.

Many baby-related expenses can be controlled. While the cost to raise a child to age 18 is estimated at $253,947, many parents do just fine with much less. Consider these three ways we’ve used to save money when starting a family.

Question baby essentials

It’s easy for first-time parents to get overwhelmed with all of the essential products recommended for babies. Advertisements prey on fear and uncertainty. While no one can blame a parent for wanting to give their child the best, it’s inevitable that some of these purchases will go unused.

Babies have been safely raised for generations without the need for the pricey conveniences offered today. They need milk, diapers, some basic clothing, and a place to sleep. A car seat is also required if you drive; the hospital won’t let you leave without one.

Everything else—from strollers and carriers to bouncers and monitors—is discretionary and can be bought after the baby is born. Not convinced? Since 1938, Finland has been providing expectant mothers with a box filled with actual necessities. The box includes some clothes and also doubles as a bed for the baby to sleep in. Thanks to the maternity package, which costs roughly $575, Finland has one of the lowest infant mortality rates in the world.

Cloth diapers

Newborns need to have their diapers changed up to 12 times a day in the first month. Babies can go through thousands of disposable diapers in a year, which can cost upwards of $2,000 annually until potty trained. The cost multiplies with each additional child.

Cloth diapers are a cheaper alternative but there are higher upfront costs. Cloth diapers have evolved from linens held together by safety pins to high-tech fabrics with snap closures. They consist of a shell and a liner and can grow with the baby until they’re ready to go on their own. A full set of 10 shells and 30 liners costs around $720, including taxes. Even factoring in utility costs to wash them, cloth diapers comes out ahead—especially if you have more than one child.

Plan for future costs

Saving for future costs can be tricky and thankfully parents don’t have to do this on their own. There are several tools that can be used to accelerate savings.

A high-interest savings account is a good place to park a contingency fund in case of the unexpected. A little money put aside can keep stress and anxiety in check in the event of job loss or medical emergencies.

Parents should also take advantage of RESPs. The federal government adds 20% on top of contributions up to $2,500, adding a maximum of $500 each year (up to a lifetime maximum of $7,200). If you invest in index funds or ETFs, it’s possible to cover the full cost of a child’s post-secondary education. Don’t forget to consider other investment options like GICs that can play a part in a balanced portfolio.

The last word

Starting a family doesn’t have to be as expensive as it might seem. Babies don’t need much, cloth diapers can cut costs significantly and a little saving can go a long way. While I can’t promise the experience won’t come with some sticker shock, I can say that the trouble is well worth the effort.

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