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A Simple Strategy: Budgeting For Children The Right Way

A Simple Strategy: Budgeting For Children The Right Way

There’s no way around it: Kids are expensive. Assuming you’re going to foot the bill for raising your child until they reach adulthood — we’re talking about large sums of money over an extended horizon.

This may sound scary and leave you wondering how you will be able to afford to have the family you’re dreaming of. Let us assure you — it’s totally doable!

You just need to plan properly. By understanding your cash flow, financial goals, and so on, you should be able to find ways to make it work.

Let’s explore this concept of family budgeting some more. We’ll keep it as straightforward as possible so that you can start taking action right away.


Common Expenses to Save For

The average middle-class family can expect to spend over $310,000 to raise each child from birth through the age of 17. This sum includes just the basics (e.g., food, housing, clothing, healthcare). But, you may also want to squirrel money away for recreation and entertainment, vacations, gifts and extras, education, etc.

  • Daily Necessities. These are common line items that will change to some degree over time. In the beginning, it’ll include diapers, formula, and day care. Later on, it’ll encompass school supplies everyday things a growing kid needs. Food, clothing, housing, and other fundamental living expenses (not in the categories below) are in this bucket.
  • Everyday Extras. These are the nice-to-haves — they enrich your child’s life but aren’t strictly must-haves. Hobbies (e.g., painting), frequent recreational activities (e.g., soccer league), and memberships (e.g., book-of-the-month club) are examples. 
  • Health & Personal Care. Basic medical care, insurance premiums and copays, braces, glasses, prescriptions and over-the-counter medications, therapy, and the like fall into this classification. Personal hygiene and self-care products and services would also fit in this group.
  • Special Occasions. We’re talking gifts, holidays, vacations, summer camp — anything that’s not part of ordinary day-to-day life. These are often things you’d save up for or that only occur once in a while.
  • Education. Many parents wish to provide funding for their child’s college education ($$$!).
  • Miscellaneous. This could include a weekly allowance or that inevitable unforeseen event. Or it could be getting that new car or buying that more spacious house that’ll accommodate your expanding family.


how to make a family budget

When Should You Start to Save?

The obvious answers are: The sooner, the better. and It’s never too late.

There are many up-front and early-on costs associated with having a baby. According to some estimates, you might be in for upwards of $20,000 in baby’s first year alone!

You’ll need to set up a nursery and outfit your home and vehicle to be safe environments for your young one. And all that kiddie gear can really be expensive! Most people also take a significant portion of time off of work for parental leave. Tabulating these expenses and reduced income in advance — so you have time to offset them by saving — is incredibly helpful.

Additionally, along the way, you’re going to encounter repeat or large expenses that you’ll want to tackle over a longer term. Think sweet-16 car or tuition for out-of-state university. For sizable expenses like these, you may want or need to save up over the course of years.

The key is thinking ahead and being intentional and consistent with your budgeting actions.


budgeting for children

How to Make a Family Budget You Can Live With

Fortunately, there are tons of tools, tips, and savings and investment instruments to help you.

Financial Tools to Facilitate Budgeting

We have numerous financial planning resources available for you to use. Here’s just a sampling:

Valley Credit Union also offers a full complement of online, mobile, and text banking options.

Possible Savings & Investment Options

Once you have an idea of how much you want to save and when, you can investigate the many available savings and investment alternatives. These include:

And, if you need to borrow cash to bridge a gap, you can look into:

These can really help — when leveraged sensibly — for those larger or unexpected expenses.

Budgeting Tips that’re Actionable & Realistic

Tried-and-true suggestions and insights can help you tie it all together into a neat package — aka a family budget that actually works for you. A budget that enables you to have the family experience you want. A plan that reduces stress and strain now and into the future.

While not an exhaustive list, these gems are worth sharing (and paying attention to!).

  1. Set goals and priorities and align your budget to them. Your budget’s only going to be achievable if it gels with your values. Understanding what’s important to you — maybe it’s only working part-time or getting a massage every month — and why will enable you to make sure you have room in your budget for those things. And it’ll make it easier to let go of the things that aren’t as critical — like that fourth streaming media subscription or eating lunch out daily.
  2. Cashflows are key. Sometimes, how much money you have coming in or going out isn’t as critical as to when it’s moving to and from your coffers. When planning your finances, take the schedule of credits and debits into account. This will help you avoid nasty things like overdrafts, insufficient funds notices, etc.
  3. Find ways to maximize income and minimize expenses. You work hard for your money so it makes sense to make the most of it. Look for discounts, coupons, and deals when buying stuff or hiring services. Consider getting second-hand items instead of new (especially for baby clothes and toys that the kids will grow out of in a flash!). See if there are ways to boost your cash inflow — like getting a side hustle going or selling unneeded possessions.
  4. Don’t forget about retirement. Parents are often selfless, more than happy to sacrifice for their kids. But, it’s important to set yourselves — and therefore your whole family — up for success by remembering to still fund your retirement. Even if it means not contributing to your child’s college fund. (Your kid has time to pay off student loans, however your capacity to keep working becomes more and more limited.)
  5. Feed your emergency fund. Family or no, this is just smart planning. Stashing away even a small amount each week, month, or pay period will be so meaningful if/when something unexpected (like a job loss) happens. And with kids in the picture, it’ll just give you an extra sense of security.
  6. Streamline and automate where possible. You’re going to be chasing a child around. Don yourself a favor and make your budgeting and meeting financial obligations as easy as possible. Set up notifications, use online tools, schedule recurring payments and transfers — whatever removes hassle and complexity for you and keeps your finances in order.
  7. Review and adjust your budget regularly. Budgets tend to capture a moment in time, i.e., your income and expenses at the time you’re putting your budget together. But, as we all know, your situation is bound to evolve over time. More kids, relocation, a bump in salary — they all mean potential changes to your circumstances. Periodically re-evaluating and updating your budget will ensure it keeps pace with your life.
  8. Say “Yes!” to youth banking. This is a great way to help teach your child about the value of money — and responsibilities that go with it — at an early age.
  9. Establish a support network. We all face rough patches or difficult decisions. Having a caring group of family, friends, and professionals to help you through can make all the difference. They can give information, advice, and moral support to make sticking to (or revising) your budget easier.


budgeting for children

Let VCU Help You Save for Your Family’s Future!

As a member of Valley Credit Union, you’re part of our family. And we love to take good care of our own!

That’s why we provide members with so many benefits — ones that’ll come in handy as you embark upon family budgeting. To name a few, we have excellent savings and checking accounts, investment options like CDs, home and auto loans, financial planning resources, and more.

Plus, like a wise relative, we’re here to give you the expert guidance and support you might need as you’re preparing for or raising your family. Simply come in or reach out to us today!

About the Author

 Katie Clark, Director of Administrative Services

Katie Clark has been at Valley Credit Union since 2011. She serves as the Board Secretary and oversees Human Resources, Marketing and Facilities for the credit union, some even call her the credit union mom. As a CUNA and GoWest HR council member she stays connected with the latest industry happenings. When she’s not in the office she enjoys weekends with family & drinking wine at the Oregon coast.

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