David and Lauren Weliver are a budget-savvy couple. They review their spending regularly. They stash away an emergency fund. They anticipate “big ticket” items and they avoid credit card debt.
But they had no idea how much becoming parents would cost.
The Welivers lived in a small condominium outside of Portland, Maine. It was “technically a two bedroom,” David said, “but each bedroom was tiny.” Their condo was cramped but sufficient for a young couple, but unrealistic for a family.
David placed an offer on a larger home on the same day his wife went into labor. Overnight, he found himself with a new baby, new mortgage, new bills.
The couple enjoyed a few months of bliss following their daughter’s arrival into their lives. But soon it was time for Lauren to return to work, and with that came a $1,400 monthly expenditure for infant daycare.
“That’s a mortgage payment for most people,” David said.
They consider themselves lucky to have found a daycare that accepts infants. Many daycares only admit kids age one and older. In different circumstances, “you might be forced to hire a nanny,” David said. That would be far pricier.
They didn’t accept a two-parent working household as a given. They ran a spreadsheet with a half-dozen scenarios comparing their income against the cost of putting their daughter in daycare. Each scenario showed different assumptions for income and expenses, allowing the couple to compute best-case, worst-case and middle-case scenarios.
“I’m a spreadsheet nerd,” David said.
David and Lauren both earn more than $1,400 per month after taxes and ‘the cost of working,’ which includes commuting costs and daycare. In other words, they walk away with a ‘net gain.’
(But money isn’t the only reason they choose to work; there are many non-financial benefits, as well. David and Lauren put their hard-earned degrees to use, contribute to society outside the home, and get a break from the demands of parenting.)
The couple quickly realized that they needed a different car. David planned on driving his five-year-old pickup truck for decades, but he hadn’t factored for one important detail: he can’t put a car seat in a pickup truck. He bought an SUV, incurring a hefty sales tax bill along with the added expense.
The couple dropped $350 on a stroller and another $100 on a smaller, travel-sized stroller. They opened their wallets for high chairs, car seats, cribs and diapers. They started spending $60 - $75 per month on generic baby formula.
“The brand name (formula) is twice as much,” David said.
Their health insurance premium also shot up by hundreds with the addition of a new person on their policy. They were fortunate, David said, to have no out-of-pocket expenses from the pregnancy and delivery.
The Welivers needed to cut costs in order to afford their baby bills. The couple has stopped traveling. They used to take jaunts down the New England coast, but these days they stay firmly planted in Maine. They’ve also stopped dining out.
“When you have a newborn you [don’t have time to] go to dinner as much,” David said, “so that happened automatically.”
It’s not all sacrifice and toil, though. Although the couple goes out half as often, their date nights are now twice as good.
“We tend to put more thought into what we’re going to do,” David said.
Read more about David and Lauren’s baby-raising budget at www.moneyunder30.com