What a kid costs in 2020
These expenses are almost all after tax which really stings.
Most day cares will not accept children under one year of age. So there is a potential gap to bridge there. An in home nanny is going to be very expensive and hard to find. A nanny is considered a household employee, which means you have to file payroll taxes. There are payroll service companies out there but they will charge a monthly fee. Consider that your cost for the nanny will be about 15% above what their hourly wage is after adding in all the payroll taxes and fees. Also keep in mind, it is up to you to activate your payroll account, and deactivate it after you are done with the nanny. We did not know to deactivate our account and were assessed a fine by the state because we failed to file the next quarter's report (which would have been all zeros). We appealed and got the fine waived, but it was another HUGE pain in the butt to deal with. Daycare is much easier in terms of paperwork. But daycare has its downsides. Our daughter came home with all kinds of nasty viruses. In the first several months she was home about 25% of the time with fevers, loose stools or other infectious diseases like pink eye and hand foot and mouth where we had to wait for her to recover and get a doctor's note before she was allowed to return. Those viruses also got both parents sick, which made for a difficult winter.
In the USA we do get a child tax credit of $2000 (check this and provide link). We also get a larger deduction with the extra child, called a dependent. The tax benefits combined work out to less than 15% of the cost of a regular child (check this). So the government is helping, but not much.
If you are lucky enough to have it, three months of paid maternity leave helps but works out to a small percentage of the overall cost. Having an employer who provides this is a very nice perk to have. For mothers it should be at least one year off while they breast feed and care for the new born baby. That would go a long way and eliminate the need for a nanny in the first year which is about 10% of the total cost right there!
Birth Medical Bills 5000
Furnishing Nursery / Baby Supplies 2500
Vehicle - Upgrade to a boring but safe wagon or SUV 15000
Formula or Breast Pump + Parts + Effort 200
Nanny (1st year) 2500
Furnishing Bedroom 2000
Aftercare K-5 3600
College Savings 175
Tutoring / Activities 200
Health Insurance / Co-pays 200
Child Tax Credit 2000
Standard deduction effective "bonus", depends on tax bracket 1000
Paid maternity leave 10000
Wealth Meta Admin
Dec. 6, 2019, 5:35 p.m.
Nov. 20, 2019, 5:47 p.m.