Planning to afford children's educationHis son is only two-and-a-half years old, but Myron Lo, the 39-year-old vice president for innovation at ZipRealty, already has at least three plans in place to pay for college in 2025. Between the college savings fund he and his wife set up, a startup side business and, as of last week, an investment in a condominium property, he hopes he will be able to send his son Ryan to the college of his choice.

"Otherwise," Lo nervously jokes, "I think I should get him into a sport like archery or badminton." Of course, college is only one of the many looming expenses of having a child. There are the hospital bills, the diapers and childcare, as well as summer camps and lessons. As every parent knows, children aren't cheap.

And the price has never been higher. A middle-income family with a baby born in 2010 will spend an average of $226,920 on the child until he or she is 17 years old, according to a government report released in June. That's a 22% increase from 1960, in dollars adjusted for inflation.

So it's no wonder that, in a recent survey from BabyCenter.com, more than 60% of the mothers who participated said they're worried about not having enough money to raise their children. That's a lot of worried mothers considering that more than 4.1 million children were born in 2009, according to the most recent government statistics.

"If the past is any indication, expenses have continued to increase and we don't foresee a significant decrease [in the future]," says Mark Lino, who is the author of the U.S. Department of Agriculture's annual report on how much American families spend on children. That rising cost means many young families are making financial tradeoffs for their families. Here are some of the common tradeoffs that parents are considering:

Tradeoff #1: Embracing a suburban lifestyle for better schools

Planning where to live and raise a family starts long before the baby is born. David King, 34, an attorney, says he and his wife's decision to live in suburban Davis, Calif., after they finished law school -- rather than a bigger city -- was related to their hopes for a family of three or four children. They settled on the location based on a calculation of affordability, quality of schools and neighborhood type.

"It's a conversation you have before you even conceive," King says, between coughs from the cold he picked up from his 6-month-old daughter. "When you are thinking about number of kids you want, it affects all your decisions, from house to car to [neighborhood]."

Lo and his wife, Sandy, also looked at school ratings before moving to the San Francisco suburb of Orinda, Calif., which has some of the best public schools in the state. Yet the economy and budget cuts have hurt many public-school systems, leaving some parents -- including the Los -- wondering if private school might be yet another expense they will have to shoulder in the next five years.

"It's a decision you have to make," Myron Lo says. "It's stressful."

Tradeoff #2: Working full time to pay for child care

One of major shifts in the last 40 years has been the cost of child care, which increased 15% from 1960 to 2010. And one of the biggest causes is increased demand as a result of many more women in the workforce.

Sandra Nakama, who is pregnant, is one of those women. She and her husband, both in their mid 30s, are expecting their first child at the end of September. Nakama is planning to take six months of maternity leave and then to return to her full-time communications job at a technology company in San Francisco. She knows childcare will be a major expense next year.

"It's not an option to not work," she says. "It is next to impossible to live on one income in Bay Area." The cost of living is especially steep in San Francisco, and preschools can cost north of $16,000 in annual tuition.

Childcare and education account for 17% of the total expenses of raising a child, according to the USDA. The price of full-time care for an infant ranges from $4,560 to $18,773, according to the National Association of Child Care Resource & Referral Agencies.

Tradeoff #3: Giving up splurges to build savings

For many of the parents we interviewed, the economy and their job security is playing a significant role in their decisions to stay at work. Having lived through the dot-com bubble burst 10 years ago, Lo says he is "very conscious that we have enough of a cushion to survive any adversity in our jobs."

Meanwhile, Nakama says she has worked hard to live a life free of credit-card debt. She knows she will have to cut back on splurges like restaurant dinners and nights out on the town after the baby is born. Instead of a vacation this year, she has allocated her income from an employee stock program to baby expenses.

For King, planning for a larger family has him considering his earning potential. "You have to plan ahead," he says. "Will the economy stay the way it is now? Or will I be able to find a better paying job?"

Tradeoff #4: Considering a smaller family

Even as King and his wife continue to discuss how many children they can reasonably afford to have, the real cost of having more than two children is still unclear.

Nathan Thornburgh, 35, a contributing writer for Time magazine and a blogger at Dadwagon, lives in Manhattan with his wife and two young children. They recently considered having a third, but opted against it.

"Finances were one of the big strikes [against having a third child]," he says. "Right around the time you start considering a third kid is when you start paying full-fare airfare on the kids you already have, along with expenses like preschool and childcare."

Nakama, who will give birth in the fall, says she and her husband are starting with one child for now. She is more focused on enjoying the moments of her impending motherhood -- shopping for the nursery, picking out a stroller -- than on financial planning. "I have heard about [a] college fund and will probably set up my own savings account in my name," she says, but her planning hasn't gone much further than that.

Her weekly guilty pleasure -- a lotto ticket - is from her entertainment budget, she says. "One ticket is [the] same numbers [every week] and one is quick pick. You never know."


Also See: 10 Financial-Planning Tips for New Parents

Catherine New is a staff writer for DailyFinance. You can reach her at catherine.new@huffingtonpost.com.

Increase your money and finance knowledge from home

What is Inflation?

Why do prices go up?

View Course »

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Add a Comment

*0 / 3000 Character Maximum

30 Comments

Filter by:
twitkowski8

People---Go to Yahoo finance. It is much better now than AOL

August 05 2011 at 12:53 PM Report abuse rate up rate down Reply
twitkowski8

Put the finance page or format back the way it was. This new format sucks ,worst ever It used to be the best.It does not give earnings actual and estimates,it does not give live after hour quotes,it does not have anything a stock trader needs Put it back Motely Fool totally sucks. What rocket scientist thought this would be better. WRONG

August 05 2011 at 12:51 PM Report abuse rate up rate down Reply
Christine

The cost of childcare needs to be mandated in some way. How does a daycare center justify charging $250+ a week for a newborn? Or in my case, $180/week for a school ager? Aside from my mortgage, daycare is my #1 expense. Costs more than anything else, including what my car payment was. I literally work to pay for daycare, and not working isn't an option b/c we cannot live on my husband's salary alone.

August 05 2011 at 10:02 AM Report abuse rate up rate down Reply
1 reply to Christine's comment
clsanchez77

Christine. No, no more government mandates! The reason daycare centers are so expensive is because of government mandates. What you are asking for now is government oversight of government oversight. Egads! Seriously, when you looked at daycares, did you interview the director? Did you ask the director what she does. I can tell you she does not work with kids. My son's preschool has three directors, they only deal with state accreditors and auditors, paperwork, teacher certifications, paperwork, medical certifications, paperwork, building inspections, paperwork, etc. All employees have college degrees, most of them two, educational certifications and minimal medical certifications. Each of these items makes the teachers and staff more valuable and translates to more money in labor. The maintenance of all these certifications is a business expense. This stuff adds up.

Yes, daycare costs are out of hand. We will spend $7000 on my son in New Orleans this year along, plus another $1800 for summer camp. My wife works, her salary far exceeds the day care costs so we accept it.

On the plus side, my son is three and has a heads up on the Alphabet, reading, numbers, shapes, colors, spanish, gets in three hours a day of outside play and spends no time (except for rainy days) in front of a TV. And quite franklly, this is only for the first few years of his life anyway. In the end its well worth it.

August 05 2011 at 1:02 PM Report abuse rate up rate down Reply
pittsbhurg sucks

So...working full time is a trade-off?....Liberals...This is just an article by the liberal community that thinks our world is overpopulated and wants to scare us out of having kids....but when your all alone most of your life and at your death bed don't complain

August 05 2011 at 8:32 AM Report abuse rate up rate down Reply
1 reply to pittsbhurg sucks's comment
clsanchez77

Your screen name could not be more fitting for your post. Do not have kids, or at least anymore, my friend. We will deal with all the headaches so you do not have to. The article discusses real life decisions about balancing finances and family. Now if you live on a farm and your kids will be home schooled and you will provide for all the healthcare, then by all means, go out and multiply. Keep your panic shelter fully stocked and do not forget to stock up on guns and ammo before the liberals take it all away.

August 05 2011 at 1:05 PM Report abuse rate up rate down Reply
Sonja Dunbar

I find this discussion disgusting. All you think about is the money kids are going to cost if/when you have them? If that's the only thing you think about in having children, then you shouldn't have them. Money is more important to you! My kids are in their 30's and we didn't think about how much they would cost when we chose to have them. Of course, anything worth having is going to be a sacrifice and children certainly should be if they are being raised correctly and loved. I stayed home taking care of my children even though I have a masters degree, because I felt that was the most important job I could have. We lived frugally in every way, but we had what we needed, as did the children. Young people today have expectations that are far too high, so, of course, they think children cost too much and take away from their selfish wants. If these people, who could well afford to have children, don't have children we, as a country, are going to go right down the tubes because it will be the underclasses that will take over - they are the ones having all of the children!!

August 04 2011 at 7:41 PM Report abuse rate up rate down Reply
1 reply to Sonja Dunbar's comment
clsanchez77

Sonja, you are getting lost in the article. Nothing in this article says that money is more important than kids. Its just discussing the financial impacts having kids has on you as an adult. I love my kids and would not give any of them up for having more money to myself. However, the fact that I have one child and just had twins, and know what I spend on them in food, education, health, entertaining them, etc., my wife and I have decided to not have anymore. Sure we can fit more kids in our suburban house. We can send them to underperforming public schools and save some money there. But we want a better life for our kids then we had. It would be nice to take them to see the country, and of course Disneyland. We drive Toyotas and like them. Sure there not luxury vehicles, but we can afford new reliable vehicles that have so far lasted us 11 years and 6 years. So yes, my wife can stay home and we can live more fugal, but its not what we want.

Your last statement blows me away in ignorance. Any one who does not want children, regardless of the reason , should not have children. How much money they have is irelevant. We already have too many unwanted children in this country. The underclass is not taking over because our wealthy do not have children. You my friend win the ignorant paranoid statement of the day award.

August 05 2011 at 1:11 PM Report abuse rate up rate down Reply
blueyeagle1

I am not telling you people anything new. The facts are in front of us. It is up to us to do what is best for THIS country so the economic problems of other countries will not impact our success in the future. We must fix our budget problems, take care of our aging population, bring our jobs BACK to this country so we can put people back to work making things we USE AND BUY every day. The only way our economy can be sustainable is if WE manufacture things we use and buy every day. This way as the population grows so does the job base. China can take care of their own problems. We fix the employment problem and everyone in the world will loan us money....if we need it...we might not!! We need to educate our children and retrain our workers if it is needed FOR THE WORK WE ARE ACTUALLY GOING TO DO! We need to use our technology to our best advantage. Pay yourself FIRST America!! I am sure I have not thought of everything and you could add to this.

August 04 2011 at 4:19 PM Report abuse rate up rate down Reply
blueyeagle1

I am not telling you people anything new. The facts are in front of us. It is up to us to do what is best for THIS country so the economic problems of other countries will not impact our success in the future. We must fix our budget problems, take care of our aging population, bring our jobs BACK to this country so we can put people back to work making things we USE AND BUY every day. The only way our economy can be sustainable is if WE manufacture things we use and buy every day. This way as the population grows so does the job base. China can take care of their own problems. We fix the employment problem and everyone in the world will loan us money....if we need it...we might not!! We need to educate our children and retrain our workers if it is needed FOR THE WORK WE ARE ACTUALLY GOING TO DO! We need to use our technology to our best advantage. Pay yourself FIRST America!! I am sure I have not thought of everything and you could add to this.

August 04 2011 at 4:18 PM Report abuse rate up rate down Reply
blueyeagle1

When you find out you are going in the wrong direction you turn around and go back to where you made the wrong turn and start out again on the right road. We gave all the so called 'simple jobs' away thinking it didn't matter. Then we gave away some manufacturing jobs because SOMBODY thought that was a good idea and it would not impact our economy. Then the trickle of jobs leaving turned into a flood!! These companies that outsourced valuable American jobs bring these products back into this country selling them at approx. a 12 to 15 dollar per hour wage level price when they paid approx. 10 dollars a day in wages to get them made. How do you like that America?? Where are the Republicans and the Tea Party on this?? Nowhere...because they are being paid to keep their mouths shut in a variety of ways!!

August 04 2011 at 3:06 PM Report abuse rate up rate down Reply
Stock Turd

"a baby born in 2010 will spend an average of $226,920 on the child until he or she is 17 years old,"

Well then how do all the illegal Mexicans that come here have several kids starting off with a anchor baby? If they have four thats over 1 million dollars in 17 years? They would have to make 58K+ a year JUST TO PAY FOR THE KIDS. This is not minimum wage. Who is paying for this? Anybody know?

August 04 2011 at 12:58 PM Report abuse +2 rate up rate down Reply
1 reply to Stock Turd's comment
J's Damsel

You don't have to worry about illegals. They have their children paid for by our welfare system and free education and health care.

August 05 2011 at 9:18 AM Report abuse rate up rate down Reply
uber-goober

Although this is not anything new, people continue to have kids. Why is just beyond me, and the only thing I can think of is ignorance and stupidity...

August 04 2011 at 12:40 PM Report abuse rate up rate down Reply