Beating Broke

Raising a Child Does Not Cost as Much as the USDA Estimates

July 30, 2023 By MelissaB 12 Comments

According to the USDA’s 2010 report, raising a child costs at least $220,000. This cost is the average cost a middle-class family pays for shelter, food, health care, clothing, transportation, child care, education and other expenses. They further break down the average cost per child per year as $11,800 to $13,880. Yikes! If you are on the fence about having kids, this report will certainly sway you in the direction of remaining childless.

However, as a mom to three kids, I can attest (as many other parents including Beating Broke can), that it doesn’t have to be this way. My husband and I have three kids, which, according to the report, should run us a minimum of $35,400 a year, not including our other expenses. My husband is just completing his Ph.D. and starting his career. While we count on him being able to make a large salary in the future, right now between his job and my part-time work from home, we are making a little less than $40,000. We are most definitely not spending $35,400 a year on our kids. Here is how we cut corners:

–Shop for clothes at garage sales. Babies and little kids don’t really care about their clothes; you can find fashionable, barely worn clothing at garage sales for less than $1 per piece or outfit. Save money this way. I know it is tempting to buy those adorable, brand new baby clothes, but babies outgrow outfits in weeks. Let someone else spend their money buying those clothes so you can snatch them up for pennies at a garage sale. If you don’t go to garage sales, check out Craigslist or eBay.

–Breastfeed if possible. Not every woman is able or willing to breastfeed, but if you are, breastfeeding can save nearly $1,000 that would have to be spent on formula for the first year of the child’s life.

–Use cloth diapers. Cloth diapers do require a large financial investment upfront, but they will last for the two to three years your child is in diapers, and they may even last for use by your next child. If cloth diapers make you squeamish, make sure to never pay retail for disposable diapers. By finding deals and using coupons, you should be able to reduce your diaper cost significantly.

–Accept all hand-me-downs. If you are the lucky recipient of hand-me-downs, please take them. Honestly, for a newborn, the only thing you need to buy brand new is a crib mattress and a car seat, for safety reasons. Everything else such as strollers, toys, cribs, clothes, etc. can be given as a hand-me-down or bought second hand.

There are some costs that you can’t save money on such as day care and health care. In all the other areas, there are ways to cut corners. Get in the practice of cutting corners when children are small and save the difference. Forgo the brand new outfits and large ticket items like a crib and instead go secondhand and save the difference. Bigger expenses loom ahead such as college. As Beating Broke stated in an earlier post, Stop Adding Up the Cost of Raising Children. It is possible to raise them for significantly less than the government suggests.

What are your suggestions for saving money when raising children?

photo credit: Sukanto Debnath

3 Benefits of Budgeting One Month Ahead

July 10, 2023 By MelissaB Leave a Comment

For years, I’ve tried to get one month ahead of my budget. This is based on the You Need a Budget rule number four: age your money. The idea is that you spend the money you earned last month this month. Finally, this past January, my husband and I were able to do this, and in the last few months, we’ve realized several benefits of budgeting one month ahead.

However, I want to recognize that putting together enough money to budget one month ahead is tough! We needed years to do this because our money was always so tight. However, we feel relieved now that we’ve finally reached this step.

3 Benefits of Budgeting One Month Ahead

Here are three times budgeting one month ahead protects your finances:

When Pay Day Falls Later in the Month

My husband is the primary breadwinner; his check comes every other week. That means that some months, his check will come at the end of the month, which makes paying bills at the beginning of the following month easy. However, sometimes, his check won’t come until the 8^th or 9^th of the month. If we’re not ahead in our budget, we’re short money to pay bills at the beginning of the month.

However, budgeting one month in advance took care of this problem. Now, I can pay our bills on time, in full, because when we start the month of July, for instance, all the money I need is in the budget. After all, I used June’s paychecks to fund July. This is freeing!

When Paychecks Are Delayed

I work as a freelancer and make about 20 percent of our household income. However, my money is allocated to pay for groceries and a few other budget categories. Recently, not one but two of my employers were delayed in paying me. Had we not been one month ahead in the budget, we would have had to shuffle some money around to have money for groceries.

However, I didn’t have to worry because I had budgeted ahead. I got both paychecks about two weeks late, but it wasn’t a big deal. I simply took the money when I received it and budgeted it for the upcoming month.

Defacto Emergency Fund

When you budget one month ahead, that money counts as part of your emergency fund. If anything happens, such as job loss, a reduction in hours, or, as in my case, delayed payments, you have next month covered so you have a financial cushion.

In addition, if you’re tempted by money sitting in an emergency fund, budgeting it one month ahead tends to reduce the temptation because you’ve already allocated how the money can be used next month.

Final Thoughts

We’ve realized several benefits of budgeting one month ahead in the few months since we’ve been able to do it. Who knows? Now we may try to work our way up to budgeting two months ahead. Then, we’ll be one step closer to a six-month emergency fund.

Why You Need a Budget If You’re Broke

Yes, Incremental Budgeting Is A Thing

How Getting Ahead Saves Me Time, Money, and Mental Energy

June 19, 2023 By MelissaB 2 Comments

Since the pandemic, I’ve been working on getting ahead in my pantry and finances. It’s taken me a few years, but I’m finally able to reap the rewards of my hard work.

How Getting Ahead Saves Me Time, Money, and Mental Energy

The two most significant ways I got ahead were having a well-stocked pantry and using this month’s income to pay next month’s bills. Here’s how each saves me time, money, and mental energy.

Pantry

I have two large shelving units in our basement that hold canned and boxed goods. I’ve grown this pantry in the last nine months since we’ve moved. Now, when I go to the grocery store, the only items I “need” are fresh fruits and vegetables. The rest of what I buy is to restock the pantry when needed.

In addition to dry goods, I have two deep freezers full of dairy-free cheese (I only buy this when it’s on sale), meats, fish, and freezer meals I’ve made in advance.

A well-stocked pantry and freezer save me money and time because I don’t have to run to the store for one or two items. If I run out of an ingredient when cooking, I get another one downstairs. I call it “shopping in the basement.”

Using This Month’s Income to Pay Next Month’s Bills

Getting ahead financially has been my goal for some time, but it was only over the last year that we’ve been able to do so. Having all the money I need to pay this month’s bills at the start of the month saves me mental energy, time, and money.

What I Used to Do

When I didn’t have extra money, I would assign each paycheck to specific bills I had to pay. Since my husband is paid every two weeks, this could get tricky. Our house payment is due on the first, but sometimes, depending on how the paychecks fell, I wouldn’t have the money to pay that bill until the very end of the month, which stressed me out. I had to keep an eye on all my bills to avoid missing any due dates.

What I Do Now

Now, I’m one month ahead on all bills in my budget. So, when June 1^st hit, I had all the money I needed to pay June’s bills. I can pay my house payment anytime during the month because the money is waiting for me to make the payment. Also, on June 1^st, I have the entire amount of grocery money for the month at my disposal, so I can buy groceries whenever I want or need to, rather than waiting on my husband’s paycheck to come.

When my husband was paid on June 1^st, I went to July’s budget and added his paycheck to those expenses. I can’t express the comfort I get from having all the money for this month’s bills ready as soon as I start the new month. It also saves me time because I can sit down to pay my bills at once without waiting for more paychecks to come in.

Final Thoughts

If you’re financially able, I highly recommend getting ahead on your pantry and your budget. You may find, as I do, that getting ahead saves time, money, and mental energy.

Read More

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