Video: Budgeting for the Cost of Raising a Child
Video Transcript: Budgeting for the Cost of Raising a Child
Are you raising a family or planning one? Hi, I’m Elsa M from Quicken with information to help you handle the expenses.
A middle-income couple can expect to spend $15,440 a year on an 11-year-old child, and more than $320,000 on a child through college.
Makes you wonder how families can afford children. There are lots of old money-saving tricks, like clipping coupons, but there are new twists, also.
For small children, take advantage of childcare subsidies: Employers may offset childcare costs with on-site facilities or flexible spending accounts that use pre-tax dollars for childcare. At tax time, childcare tax deductions and credits can put thousands of dollars back in your pocket.
Start paying college costs early. Dedicate a portion of your income to a tuition savings program, such as a 529 college savings plan or a Coverdell Education Savings Account (CESA), which lets you set aside up to $2,000 a year for college bills. Both options are paid for with after-tax dollars, but all earnings are federal tax-free as long as they go toward education.
A number of state institutions offer prepaid tuition plans that lock in future tuition at today’s levels. Nearly 300 private colleges allow you to prepay tuition at a discount off current prices. A word of caution: prepayments may not cover room and board, and schools do not have to accept your child.
For more information about budgeting for child-related expenses, visit Quicken.com.