This guest post from Mark is part of the “reader stories” feature at Get Rich Slowly. This seems like a natural follow-up to Friday's reader question about when to start a family. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Mark shares stories of his family life at The Number Field. All photos in this post are from his Flickr feed.
The results were conclusive: we were pregnant again. It was December of last year; we had just put up a Christmas tree. We had discussed having another child, but didn't expect things to happen quite so quickly. Having a baby can be expensive, but we did a good job managing the expenses with our first child and have tried to apply those lessons again during this pregnancy. My wife heads up our efforts while I play a supporting role. What we're doing is nothing more than applying basic principles of frugality and conscious spending, so that our bundle of joy doesn't end up costing a bundle of money.
Insurance: The Elephant in the Room
Going by the sticker price, the medical aspects of prenatal and maternity care have a steep price tag — easily into the tens of thousands of dollars. With our first child the only insurance plan available to us was good but not great, and the amount we paid was very close to the yearly maximum out-of-pocket allowance of $2000. To us this seemed like (and was) a lot of money, even though it was only about 10% of the sticker price. But because we knew the maximum in advance we were able to prepare financially. Also, even if there had been complications we would have paid about the same amount. The cost itself wasn't the only painful part; understanding and keeping track of all the different bills and payments was another huge hassle because the hospital and each doctor bill separately, but we managed to pay everything on time.
My current employer offers a variety of insurance options. During open enrollment we weren't sure that we would have a baby this year, but it was something we had discussed as a real possibility and we chose a plan that had excellent maternity and prenatal care at a low cost. That was our main litmus test, because we don't have any other complications. Thus far we've paid only about $50 out of pocket for care, and expect our portion of the bill to amount to a few hundred dollars, including the hospital stay for labor and delivery. With so much covered by the plan, I expect that resolving the bills will also be much simpler.
For those who are thinking about having a baby, getting group insurance coverage of some kind should be a top priority. Freelancers or others who buy on the individual market would do well to find even part-time work with benefits; by many accounts, private insurance maternity coverage is a joke. There are ways to reduce the costs of pregnancy, e.g. by working with a midwife and giving birth at home or in a birthing center, but those options are still not cheap. If money is really tight, it's worth looking into programs like CHIP. After all, having healthy infants and mothers is in society's best interest.
The Baby Industrial Complex
Selling stuff to expectant parents is huge business. We're a captive and easily frightened audience: a baby is definitely on the way, and it's so easy to buy anything that might reduce the uncertainty. We don't want to do anything wrong or neglectful, or somehow fail to provide for the child. If allaying that fear is as easy as trading money for stuff, sign us up!
The truth is that infants don't need much beyond love, nourishment, clothing and a safe place to sleep. Keeping that in mind makes it easier to resist the baby industrial complex and satisfy our newborn's needs within the constraints of our budget. When we want to buy something, we ask ourselves several questions — which are no different than the questions we ask whenever we're working to be frugal:
Do we really need it? Do we need it right now?
One thing we discovered with our first child was that everyone has a different opinion about what is essential, and we didn't need to rush out to buy anything until we felt the need for it firsthand. There are some things that we've gone without entirely. For instance, we use my waist-high dresser as a changing table. With a blanket and an inexpensive waterproof changing pad on top, it works well and the blanket and pad are very easy to clean.
We waited to get a baby monitor until our daughter was almost six months old. Living in a small two bedroom apartment, no matter where she was we always knew when there was even a hint of trouble or distress. We bought the monitor when we were on summer vacation, staying with family in separate rooms of a much larger house.
Although we have two cars, we've chosen to have only one car seat for our daughter. She rides in one of the cars most of the time, and in the rare cases where she needs to ride in the other car, we plan ahead and switch the car seat without a problem. Obviously this won't work in many situations, for instance if both parents work, one drops the child off at day care and the other picks her up, but it does work for us, and we'll use the same strategy with our new baby.
Is there a way to get this cheap or for free?
For things that we really do need, we try to plan ahead and acquire opportunistically. My wife has an ‘always buy' price for diapers, about 60% off the regular price. She works the sales, coupons, and store offers pretty hard to get her price on a consistent basis. As a result, we always have a stockpile and never run out in the middle of the night. It's an ongoing, small expense, but she's saved us hundreds if not thousands of dollars this way. Right now we have a two month supply of diapers for the new baby sitting in the back corner of our closet, and they don't even take up very much space.
Car seats and cribs should be purchased new, but almost everything else can be acquired secondhand. Since infants grow so quickly, used items usually haven't been used very much. Clothes are a particularly good example — many outfits only get worn once or twice before they're outgrown. We've had success shopping at yard sales and thrift stores, and keep in the know about consignment sales in our area — we've found that parenting groups usually put them on semi-annually.
Free is even better than cheap. Our friendship with families that have slightly older children has brought us lots of great lightly-worn clothes and still-good toys. We never openly asked for these things, but when the subject comes up we let people know that we're open to hand-me-downs. Some of our daughter's favorite outfits have come to us this way.
What are prospects for reuse?
Even before our daughter was born, we knew that we wanted to have more than one child. When possible, we chose gender-neutral color schemes for big-ticket items like her crib, stroller, and car seat. When pulling the infant's car seat out of storage, I confirmed that it will look just as good with our boy in it as it did with our girl.
When we found out that this child was a boy, my wife went through the clothes she had saved based on the possibility of another girl, keeping only her favorites and preparing the rest for a consignment sale. She volunteered at the consignment sale in return for the opportunity to attend the sneak peek hour and get a first chance at everything else. When all was said and done, a significant number of our items sold so we came out in the black, even though she purchased a Pack-n-Play and several baby boy outfits.
We don't always sell our used items; we also give freely to those who need what has outlived its usefulness in our family. We want to help others the way others have helped us. Not only do we feel good doing this, but we don't have the room or the desire to keep stuff we no longer need. If we can't think of anyone we know personally who needs what we're ready to pass on, we frequently turn to freecycle. It always feels good to get a thank-you note from someone who took our freecycle offer.
The Baby's Not the Only One
Our frugal baby preparations have one more key component. Life won't stop when the baby comes — we'll just have less time to take care of the rest of our needs while we're in the break-in period for the new addition. We certainly won't have as much time to worry about cooking our meals, and don't want to increase our food budget with lots of expensive store-prepared meals, takeout, or restaurant visits. By preparing a little bit at a time, we've managed to stock our cupboard and store almost a month's worth of dinners in our freezer without going over our grocery budget.
When we had enchiladas, my wife made a triple recipe and froze most of them. She looked up recipes that were known to freeze well, including black bean burgers. We tried them out, liked them, and froze a bunch. As a result, our grocery budget will probably be lower this month than it normally is, and when we do need something we'll just go pick it up at the nearest store, knowing that we've already saved enough money this month to be able to fit in some full price purchases.
The Bottom Line
Having a new baby doesn't mean the end of the world financially; it's just one more element to add to the mental money dance that we all do, whether consciously or not. There are lots of parents with more experience than I have who will hopefully share their thoughts in the comments, but my top recommendations are:
- Get group insurance, because it's worth it.
- Buy stuff you actually need or want, not stuff that you think you need or want.
- Participate in the second-hand market, both paid and free.
- Prepare as much as possible in advance, especially food, because the first few weeks after baby's arrival are sure to be full of surprises and devoid of sleep.
Our boy was born in August, one week past his due date but happy and healthy and loved by his parents and big sister alike. We've had success in sticking to the principles I laid out in this post. Our medical bills were a little bit higher than I had thought, because he needed to have a minor procedure done to fix a tongue tie which kept him from eating normally. Our total out-of-pocket expenses were still well under $500.
We've experienced what lots of people told us: that every infant is different, and it's impossible to know what they'll need in advance. Our daughter was always a good sleeper and enjoyed being in her bassinet and crib from an early age. This has not been the case with our son — at first he would only fall asleep when we swung him in his car seat. After a few days of that, our arms were pretty tired so we found a baby swing at a yard sale.
Our boy is almost three months old now, and he is beginning to laugh and smile and be aware of the world around him, starting with his own hands and feet. It's an amazing thing to watch the first weeks and months of a new life, but having kids is tough and having two of them is more than twice as hard as having just one. There's no reason to let money make it even tougher — with good, realistic planning, it's possible to satisfy their needs on almost any budget.