The Unheard-of Financial Plan Every Would-Be Parent Needs to Hear About
NEW YORK ( TheStreet) -- Child care is one of the largest expenses related to raising a child today. Parents needing day care can expect to pay about $4,600 per year in Mississippi to nearly $15,000 per year in Massachusetts.
Most expectant parents, however, don't have a clear idea when it comes to planning for child care. Unlike a 529 plan, where money is set aside for future college costs, a solid child-care plan is largely unheard of.
Although no tax-advantaged plan has yet been designed to encourage saving for future day care or nanny costs, would-be parents should be able to create a good child-care plan on their own in three steps:
Step 1: Decide early what type of care the child will receive.Joseph Clark, managing partner at the Financial Enhancement Group, believes it's important to answer these questions well in advance: Will the child be put in a day-care center or a family child-care home? Will the child need a nanny? "Would-be parents should figure out their monthly child-care costs and put that in a savings account or reduce their spending by that amount to see if they can absorb the financial pressure," says Clark. A recent report from Child Care Aware of America breaks down the costs of full-time child care in every state. It includes average fees for both child-care centers and family child-care homes. In New York, for example, the average cost for infant care in a day-care center is about $14,000 per year or $1,167 per month. In this case, Clark says, the couple should set aside an amount to cover the first six months of care, or around $7,000.
If would-be parents choose to have their child cared for by a nanny, they should be prepared to shell out an average of $831 per week in New York City, according to data from the 2012 International Nanny Association Salary and Benefits Survey.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV