July 15, 2024
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‘Daycare seems to be astronomical’: We’re an early 40s working-class couple expecting our first child. How can we manage our finances and raise a child on $110k?

‘Daycare seems to be astronomical’: We’re an early 40s working-class couple expecting our first child. How can we manage our finances and raise a child on 0k?

Hi Money Minder

Hey Money Minder, I need some advice! I’ve been reading all over Reddit that you need a crazy amount of money to raise a kid, and honestly, I’m not sure what to expect. We’ve decided to go with a diaper service because we’re not fans of disposable diapers, and we might cut back on our retirement contributions since daycare costs are through the roof. The good news is we’ve got some help lined up from my wife’s parents who live nearby. Our basement has a spare apartment where they can crash overnight if needed.

Here’s our deal: I’m a bus driver, and my wife works as a database clerk for a nonprofit. Together, we make $110k a year. I’ve got solid benefits and a union job with a pension. I’m 45, and my wife’s 43, and she’s five months pregnant. The doctors say everything looks good so far.

Here are our numbers:


$127k mortgage on our main house

$27k mortgage on a rental property

$4k interest-free loan from the city/county to make our home energy efficient (paid over five years)


401k/Individual Retirement Account balance: $323k

Emergency Fund: $25k

Equity in our main home (around $93k)

Equity in the rental property (around $150k)

Our big regular bills include a $1400/month mortgage plus property tax and insurance. The rental property, which I owned before we got married, is rented out to a friend and it basically pays for itself. We don’t have any car or student loans. They take out roughly $85 a month for that $4k loan.

Any advice on what the major costs will be and how to handle everything financially would be super helpful. I’m kinda panicking right now.


Worried Parent

Response from THE MONEY MINDER:

Certainly! Here is your text in bold:

Hello There,

Thank you for sharing your situation, and first off, congratulations on your growing family! It’s understandable to feel a bit overwhelmed given the financial complexities of raising a child, especially when reading various accounts online. However, it’s important to remember that while children do come with expenses, your current financial standing suggests you are in a strong position compared to many.

Firstly, your combined income of $110k, along with a solid emergency fund of $25k and significant retirement savings, places you above the average for many expecting parents. Additionally, you benefit from a mortgage on the rental property that is self-sufficient and no car or student debt, alleviating some common financial pressures.

Your primary concern is likely daycare, which, as you mentioned, can be quite high. However, with your wife’s parents nearby and an available apartment, you have a valuable support system. This can potentially reduce or even eliminate the need for full-time daycare, saving a substantial amount.

Considering diaper expenses, opting for a diaper service is a practical decision that can offer long-term savings over disposables and is environmentally friendly. Ensure you budget for this fixed expense monthly.

As for other costs, you will need to account for health insurance adjustments to include your child, regular check-ups, and occasional unexpected medical expenses. Given the stable benefits from your union job, review your health plan to ensure it is optimized for family coverage.

It’s encouraging to see you are considering reallocating funds from your retirement contributions temporarily. While it’s important to continue saving for the future, focusing on immediate child-related expenses can provide much-needed flexibility. However, I recommend revisiting your retirement contributions after you’ve adjusted to the new household budget to ensure long-term financial security.

Additionally, keep an eye on your household budget to manage other variable costs, such as food, baby supplies, and clothing. Setting aside a specific amount each month for these can mitigate financial stress.

Lastly, your mortgage and property equity reflect a robust asset base. Your home and rental properties act as a financial safety net. Should unexpected large expenses arise, you have the option of leveraging this equity.

Overall, your proactive approach and existing financial stability suggest you are well-prepared. Taking these measured steps should help in navigating the financial challenges of parenthood effectively.

Best of luck with your new chapter. Remember, careful planning and leveraging your resources will make a significant difference.



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