Your 5-Minute Guide to Raising Kids

By MSN Money Staff

Are the expenses of parenting taking up a big chunk of your budget? Here are two dozen tips for keeping costs under control.

It's not just finances. It's philosophy. Do you need the big house? The minivan? Children grew up quite nicely before either of these caught on.

Other things -- food, clothing, child care -- are plain old necessities. Still, there are ways to cut costs without rinsing and reusing baggies. Here are the basics and how you can control their costs.

They never stop eating

Kids eat and eat -- to the tune of $225 to $350 a month. Each.

To save money, consider these tips:

  • Brown-bag lunches, and don't succumb to fast-food temptations. If your kids know Happy Meals are an option, you'll get no peace.

  • Do the grocery shopping alone and after eating. With hands free and stomach full, you'll have more time and energy to do comparison shopping, and you'll make fewer impulse buys.

  • Shop for a week's worth of groceries at a time.

  • Buy snacks in bulk, then repackage them in plastic bags.

  • Grow some of your own food, even if you grow it in containers. You'll save a bit, and a garden gives children an interest in what they eat.

And kids never stop growing

As children grow, their clothes get more expensive, averaging $50 to $75 a month by the time they are 18.

  • When they're young, shop at discount stores, thrift shops and resale or consignment stores. Then sell the outgrown clothes at the resale shop and use that money toward the next size up.

  • Buy a season ahead. Most stores mark down prices to make room for the next season, and many resale stores put seasonal clothes on the half-price or dollar racks.

  • For teens and preteens, labels are important. Buy the basics at discount stores. Then teach your children to shop around and buy on sale. If they insist on $120 jeans, offer to pay a portion and let them use their allowance for the rest.

  • Shop online so it's easier to make comparisons.

How to make child care affordable

Probably the biggest immediate expense you'll incur is for child care, which is especially expensive for infants. Depending on where you live, care can cost from $300 to $1,250 a month. Home day care is generally cheaper than a day-care center or preschool, but it's typically less structured and more of a baby-sitting environment.

  • Use the child- and dependent-care credit, which provides a tax credit of 20% to 35% for care for dependents 12 or younger (that's a dollar-for-dollar reduction of a large portion of your expense). You must have earned income, and the care provided must enable you to work or look for work.

  • Save on taxes by paying child-care costs with pretax dollars through an employer-provided flexible-spending account.

  • Telecommute, job-share or work flexible hours to reduce time away from home. Arrange your schedule so that you or a relative can be with your child.

  • If your school district offers a free half-day prekindergarten program for 4-year-olds or a free full-day kindergarten, enroll your child. It can reduce child-care costs to after-school or half-day rates.

The $225,000 question: What about college?

This is the biggest single expense and the one that worries parents the most. There are a number of ways to save for college, and many have tax advantages. You might not be able to save much at all, but that doesn't mean you can't help.

Start early, whichever option you choose. In 2020, you'll need nearly $225,000 for a private college or $105,000 for an in-state public university.

  • When your children are in high school, check whether a nearby college will let them take classes to get ahead.

  • Have your children attend a community college, where they can earn core credits, gain independence and dabble in subjects. They can transfer to a university for the final two years.

  • Look into scholarships and work programs before taking out a home-equity loan to fund college.

  • Start early to help your children appreciate the gift of an education. They'll be more willing to participate in funding it.

What to do about health care

Over the long term, health care can average $50 to $90 per month per child.

If you have more than one option of health plans at work, choose one that will cost the least without throwing you for a loop if a medical emergency crops up.

Playtime doesn't have to be costly

There's no law of averages here; the recreation you arrange for your kids depends on your principles and pocketbook.

  • Look for free entertainment and events. Parks and libraries are filled with free activities, and some companies offer free how-to or crafts classes.

  • Take advantage of after-school enrichment programs, which are slightly less expensive than offsite programs. In most areas, after-school programs run $30 to $50 a month.

  • Make a decision which extracurricular activities your child will be involved in. Scouting runs year-round and has monthly dues. Sports programs run seasonally, and all have costs. Limit your child to only one organized sport at a time.

  • Ride bikes and walk to save money and to gain time with your children.

  • Limit TV watching to cut down on the "I wants."

Some expenses you can't anticipate

No matter how well you plan, costs will creep up on you, averaging $100 or more a month.

  • Put unexpected money, such as rebates or bonuses, into an emergency account for unanticipated bills, whether they're for an orthodontist or a once-in-a-lifetime trip.

  • Share used beds with family and friends because children quickly outgrow them. However, don't cheap out on a child car seat ($60 to $300).

  • Involve your children in certain money discussions so that they understand its value. Impress on them the difference between wants and needs by demonstrating it in your own life.

Reproduced with permission of MSN, from Your 5-Minute Guide to Raising Kids, MSN Money Staff, 2008; permission conveyed through Copyright Clearance Center, Inc.

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