The Ultimate Money Pit: Having a Baby

Stay-at-home mothers just got a little more ammunition against their working counterparts in the mommy wars. It seems that if homemakers were ever paid for the myriad jobs they perform—from chef to chauffeur to psychologist—they'd command a whopping $138,095 annually, several times what most working mothers earn in the workplace. This according to a new survey from, which based its calculation on a 92-hour workweek and the median national wage for the assorted jobs that mothers must perform each day. Sure, the validation is purely symbolic, but it may come as some solace at a time when stay-at-home moms are being taken to task in the new book "The Feminine Mistake" for giving up the financial independence their ERA-era mothers fought so hard to win.

To work or not to work, that is the question—for many affluent parents, at least. The answer often hinges on a cold, hard fact: having a baby is the ultimate money pit, albeit one most people wouldn't trade for the world. Diapers. Dolls. Day care. It all adds up, and the costs are rising every day. The average middle-class child costs his or her parents $32,000 by the time he or she turns 2, according to a study by the U.S. Department of Agriculture (add in $24,000 for each additional child). To raise a kid to 18 costs $191,000. Throw in lost wages for a stay-at-home mom or dad, plus the cost of college, and by adulthood the little bundle of joy really will be a million-dollar baby. A $1.6 million baby, to be exact, according to the USDA. "It's the classic Bermuda Triangle of personal finance. Your income goes down and your expenses go up," says Alan Fields, consumer advocate and coauthor of the book "Baby Bargains," now in its seventh edition. "In terms of unexpected expenses, I think everyone is pretty much shocked at the beginning."

"Expect the unexpected" is a truism when it comes to the costs of having a baby. In the 11 months since her son, Brayden, was born, Michele Benesch of Miami has learned the hard way. It started out with little things—inexpensive diapers gave him rashes, prompting an upgrade. Brayden couldn't tolerate standard $3.99 baby wipes, either, and now his mom stocks up on an alcohol-free, hypoallergenic brand at $10 a pack. Last week the potential financial unknowns really hit home: Brayden had an allergic reaction to some formula and had to be rushed to the emergency room. It turns out he's especially allergy-prone, and the doctors informed Michele and her husband, Scott, a financial analyst, that it could be years—and potentially many more costly hospital visits—before they get a handle on all the things that could trigger their son's condition. "These are the things you don't think about when you have a baby," she says. "And they can really add up."

Medical costs are a wild card when it comes to having a kid. First off, there's the matter of getting pregnant. As couples wait longer to marry and have children, the likelihood increases for expensive fertility treatments or adoption costs. Fertility treatments alone can run $40,000. Then there's the birth: the average hospital delivery costs about $7,000, and a Caesarean is about $11,000. Insurance often has a 20 percent deductible, amounting to $1,400 to $2,200 out of pocket. When Mom and Dad get ready to take Junior home, they'll need a car seat, which means $100 or more.

Have the preconception financial jitters yet? Try to convince yourself of this: restraint and planning are the New Sexy. Moira and Dan Steinberg, proud parents of 8-week-old Gabrielle, have been trying to do just that. Worried that Moira, 39, might run into fertility problems that could cost a bundle, the Alexandria, Va., couple decided to start trying to have a baby soon after they married two years ago. "The timing was really dictated by the fact that we were a little older," says Dan, 35. For six months before his daughter was born, Dan, a legal consultant, pored through spreadsheets tracking every penny the couple spent. It turns out that, except for dining out too much (a nonissue now that the baby is here), they both lived pretty frugally. "We haven't done meticulous planning, but we've done a lot of research," says Dan. He started looking into long-term care and disability insurance for the first time in his life. He set up a dependent-care account where he can deposit up to $1,000 annually, pretax, to cover Gabrielle's child-care expenses, potentially saving the family hundreds of dollars a year. The Steinbergs, who have only $10,000 set aside in an emergency savings account, have finally begun paying attention to investments that go beyond their basic retirement plans.

The couple has also been bushwhacking through what Dan calls "the baby-industrial complex"—the $7.3 billion kids' products industry, whose sales increased 8 percent in 2005. That's a lot of unnecessary $900 Bugaboo strollers (currently in vogue), says author Fields, whose Web site features a "Bugaboo Smackdown" page where parents can review the comparative virtues of less-expensive models. The Steinbergs took a pass on a $35 "wipe warmer" despite the hard sell (cold wipes equal an angry, crying baby; warm wipes, a comfortable, quiet baby).

Day care is a big-ticket item just around the corner for the Steinbergs. Moira will go back to her job creating online courses for the U.S. Department of the Interior next month, but only part time, reducing her income by 20 percent. She's arranged to work from home two days a week. Yet day care for Gabrielle will still cost $500 a month. That's a bargain if you consider that nannies cost upward of $10,000 a year. (Nationally, the average annual cost of child care for a 3- to 5-year-old is $1,970.)

One of the most expensive surprises many new parents face is the incredible shrinking house. In the two months since they've been a family of three, it's become painfully clear to the Steinbergs that their two-bedroom, 900-square-foot condominium is way too small. They're looking for "a modest two- or three-bedroom, for around $500,000," a feasible option, thanks only to a recent raise Dan received. The pay increase is good news, says Celia Ray Hayhoe, a specialist in family budgeting, but it would have been even better had the couple been able to invest in a home three years ago, instead of their condo. "Planning ahead makes a difference. If you're thinking about having a family, buy a house with enough room to last you at least five years," Hayhoe says.

Brady and Erika Fox are also scrambling to upsize. When firstborn Teigue [pronounced Teeg] came home 15 months ago, their two-bedroom house in San Diego suited them fine. But Erika is pregnant again. So they borrowed $25,000 against their home's equity to add another bedroom, which Brady estimates will allow them to stay put for 10 years. To afford parenthood, the couple, both 31, have rearranged their lives. Erika used to teach preschool but says she happily decided to stay home with Teigue rather than "working just to pay for day care." Brady, meanwhile, changed to a higher-paying sales job with Oracle. To help save money, Erika has canceled things they don't use as much anymore, like gym memberships. If baby No. 2 is a boy, Erika figures they could save lots of money on clothes and toys.

Looming in the background is the expense most parents never plan for adequately: education. The Foxes plan to send their kids to private school, a daunting prospect when you consider that tuition averages $10,000 nationally (and as much as $30,000 at the toniest schools in New York and Los Angeles). They've started squirreling away $100 a month into a tax-deferred college fund, an amount they expect to increase to about $300 a month by the time the new baby comes. New parents, however, should be watchful of well-intentioned efforts to fund their kids' higher education, particularly those that are in the child's name, says Hayhoe. "Some savings accounts could be a double-edged sword because when the time for college comes, parents' assets often get taxed at a lower percentage than kids' assets," she cautions. Either way, anything is better than nothing, she says.

Parents shouldn't beat themselves up for not having a crystal ball, however. Having a kid is little like remodeling a house: no matter how carefully you plan, it costs more than what you expect. For about six months after his son was born, "I found myself stressing out about money," Brady Fox says. "It was a long-term, heavy feeling that we've brought this child into the world and, especially as the only earner, I didn't have any room to mess up." Erika has talked him down. "Brady and I were pretty poor growing up and we didn't want that for the kids. I could see it in his eyes that he was worried," sherecalls. "I said, 'Stop. You're just stressing out to stress out. It will all be OK'." Ultimately, the couple learned one of parenting's greatest lessons: take a deep breath, and relax.