I think we’ve all been feeling the pinch of the economy right now in the US. Everything seems to be costing more from one trip to the grocery store to the next.
This episode comes from a listener who was looking for ideas to save money while raising kids!
Whether you’re a double income family, a single income family where one parent stays home with small children or a single parent family—it behooves all of us to watch our spending.
According to the Urban Institute, more than 64M Americans carry credit card debt. 55 -63% of Americans are likely living paycheck to paycheck. If you’re making $50k or less/yr, that number is about 3 in 4 (75%).
How much does it cost to raise a child?
The estimated cost of raising one child in the US in 2023 is $15,512.52–$17,459.43 per year. This number is based on a report called Expenditures on Children by Families, 2015 . They found that middle-class families with a married couple and two kids spent about $12,350 and $13,900 every year for each child. We’re not even including college.
Obviously, there are lots of variables here…. What’s negotiable and what’s not? You HAVE to have food, clothing, shelter, doctor visits.
What else do we spend on for kids? Age-dependent! Toys, entertainment, vacations, activities (sports, dance, gymnastics, band), school (if not in public school), holidays (birthdays, Christmas, easter…) …. By the time they’re teenagers and into middle & high school, parents can be looking at school photos, yearbooks, field trips, club fees, car insurance for young drivers, BRACES (!!!), dances/prom, tutoring or prep classes. If they’re into sports & happen to have an injury—add dr visits to that tab. If you have a child that’s neuro-divergent or has ADHD, diabetes or some other illness, you may also be paying for pharmaceuticals, OT, PT and other therapies.
Vacation: A baseline Disney vacation runs about $316 per person per night. For a family of four (two adults, plus one child 10 years or older and one child 9 years or younger), that would come out to about $3,793 for a three-day Disney World trip.
Sports: Travel baseball (from fees to uniforms, equipment, etc.) can cost anywhere from $4k – $12k yr depending on how far in you are. (Refer to our KIDS & SPORTS episode).
I’m thinking of the couple who’s expecting their first right now or the family with a young baby listening to this thinking: WHOA.
But hold up.
No one’s saying every family has to sign up for all these things! There’s no way every family COULD. And even IF you could, instead of sailing along on autopilot into debt and busyness, remember that table we always talk about! The one where everything is on it & YOU, parent, can SLIDE THINGS OFF at any point.
What are Some Ways You Can Save Money?
HOUSE & CARS: If you don’t have those two within your budget, no amount of coupon cutting will get you where you want to go. David says no more than 30% of your gross monthly income on your house. If your family’s housing bill is higher than you’d like, you have options. One is to “right-size,” which is a more positive spin on downsizing. When you right-size, you get a home that works for your family but is likely smaller and cheaper than the one you live in now.
You have a few things to consider when right-sizing. One is the number of bedrooms you need. Ask yourself whether your kids really need their own rooms or can comfortably share one. If you live in an area with lots of local parks and recreational areas, ask yourself if you need a large private backyard.
Rule of thumb is for car pricing to not exceed 30% of your gross income. So if you make $150,000 a year you can afford a car no more expensive than $52,000. (25% is $37,500) The average American spends 10% of their income on car payments
CLOTHING: Thrifting, garage sales, consignment sales & hand-me-downs—a little bit of front-end labor for local consignment sales (tagging, cleaning, hanging) gets you in early to the sale itself. You can pick up a season’s worth of clothing at a fraction of retail. Trade with friends/family. You can also go the Goodwill route.
Asking for nice items as a gift from grandparents is a way to get that winter coat or that pair of shoes you’ve been wanting.
SUPPLIES/TOYS: Goodwill & consignment for the win here, too. We recently popped into a children’s consignment store in upstate NY and that place was a goldmine! Everything from books to strollers, high-end equipment and barely-worn winter gear (cause kids grow so fast!!). It’s nuts to pay retail for something they may only wear a couple of times & then outgrow.
**the only thing I wouldn’t buy second hand is a CAR SEAT. Watch for recalls on other sorts of equipment. Also I’m a little finicky about nursing gear…wouldn’t buy a second hand pacifier. But use common sense.
If you have multiples—twins or more—ask for a discount if you’re buying more than one of the same item. Can’t hurt!
FOOD: Pray over your grocery list and budget. Make your own baby food. It’s cheaper and you can guarantee what’s in it. It takes a bit of extra time, but once you’ve pureed a batch of carrots or peas or bananas, then you can freeze it in ice cube trays for easy use. Make & store it in small batches. (It won’t keep as long as jarred food with preservatives.) I’d literally “puree” & portion lasagna or stews or whatever it was we were eating as a family and freeze it this way.
A jar of baby food costs about a dollar, but you can make portions for cents on the dollar.
Breastfeeding is WAY cheaper than formula if you can go that route.
Eat seasonally b/c those fruits and veggies are usually cheaper.
Restaurants: Especially when they’re little, they can have some of what’s on your own plate instead of ordering a separate kids’ meal that they may not touch or finish. Look for the “kids eat free” nights at some of your local places. You’re weighing nutrition here, too…. They may be eating free at the local fast food joint, but WHAT are they eating?
The average American household spends about $3,600 a year dining out, according to the Bureau of Labor Statistics. Are you thinking there’s no way you could spend that much?
It’s easy to spend at least $50 if you go out to dinner two or three times a week, and that’s on the LOW end of restaurants. And yes, if you order takeout or from a food delivery app, this still counts as “dining out.” Think about adding delivery minimums and tips to those deliveries too.
The average commercially-prepared meal costs around $13. Even if you rarely spend this much money at one time when you eat out (but I bet you’re spending more!!), consider frequency. Two lower-end meals for $6.50 will add up to the same price.
By contrast, a meal prepared at home can cost around $4 for groceries – that’s a $9 savings per person per meal. (Renee—your cooking classes for easy meals with few ingredients)
To put it another way, a $13 restaurant meal is about 325% more expensive than a $4 meal you prepare yourself. You’ll save even more if you make extras at one time, and use leftovers. The actual numbers will depend on the cost of groceries where you live. But an area with pricier groceries almost always has pricier-than-usual restaurants as well, even at fast food chains. Percentage-wise you’ll still save by eating at home.
No kids meals, let them eat what you eat. (This helps on food flexibility too)
Emma and Thomas had a spreadsheet in their early years of marriage. Two columns “money is no object column” (what you’d order if you just got what you wanted and the price) and the “we want to eat here but what is the most economical way to do it” (also look at the menu and write down that order). Also, they marked the nights they had specials: combo deals or kids meal specials etc. So, if Thomas was out and needed to pick up dinner unexpectedly, he could do it economically.
Maybe you’re not ready to learn how to stop eating out altogether. Don’t worry. You don’t have to quit ordering out completely to save major cash. If you’re eating out four times a week and make just two of these meals at home instead, you can save almost $1,000 a year. This extra money could be a big jump in your savings for long-term or short-term goals. Even if you only skip one restaurant meal a week in favor of cooking or leftovers, that’s about a $500 annual savings.
Instead of looking at things like this as “going without” or “cutting things out,” think instead: WHAT ARE YOU SAYING YES TO???
SUBSCRIPTIONS: Netflix, Disney+, HBO, Spotify, Audible, OwlCrate: It’s easy to let the number of subscriptions and subscription boxes your family has multiply. While one or two subscription services won’t break the bank, costs start to add up as you add more.
Have a family meeting and talk about your subscriptions. Do you really need to subscribe to every streaming service? Are you using Spotify enough to justify the paid version, or can you survive with the ad-supported free one? Do you need that monthly book club, or can you head to the library once per month instead?
Negotiate With Your Service Providers: When’s the last time you looked at your cable, Internet, or cellphone bill? If it’s been a while since you signed up for service, there are probably more affordable options out there.
You could get a better deal by calling your service provider and asking if they have any discounts available. Or you could try switching providers to save money.
Also consider whether you’re making full use of the features and services you’re paying for. If you have a lot of streaming subscriptions, do you need to pay for cable TV? Does your family need the fastest Internet speed available, or would you survive on something a bit slower (and cheaper)?
The same is true of your cellphone bill. If you’re paying for unlimited data, review your statement to see how much data you really use.
It could be a lot less than you think, especially if you have access to Wi-Fi or usually go online with a computer. If you aren’t using lots of data monthly, switch to a lower-priced plan that limits your data use.
Hold a Swap: If you’ve got kids, you probably know other families with children. And those families are likely looking to start saving money too. You can all make your saving efforts a little more community-focused by holding a clothing or stuff swap.
The rules of a swap are simple. Nothing is for sale, and everyone has to bring something. They can take home what they need.
You can focus the swap on kids’ items only, such as back-to-school supplies or toys. Or you can open it up and let parents swap stuff they want too, such as adult clothing, kitchen and dining necessities, and home decor.
PLAN FOR THE HOLIDAYS NOW: Shopping immediately after the holidays is one of the smartest ways to save money on holiday gifts for the upcoming year. And that doesn’t just apply to winter gift-giving holidays. Do the same for celebrations like Mother’s Day, Father’s Day, and birthdays.
While you don’t have to go to extremes, it can make sense to start planning and budgeting for holiday spending early in the year. Make gift lists and keep an eye out for presents on the list throughout the year so you can buy when they’re on sale or available at their lowest price.
PLAN AHEAD ON PARTIES/CELEBRATIONS TOO: Along with planning for gifts, it also helps to set a budget to avoid overspending on decorations, holiday-related incidentals, and party costs. You can go the DIY route when it comes to decorations to help cut costs and give your family’s holiday and birthday decor a more personal touch.
You can also think one-size-fits-all when it comes to decor. A reusable red tablecloth can dress the picnic table at a Fourth of July party, a spooky black-and-red-themed Halloween gathering, and a festive family Christmas dinner. White dinnerware works at holiday parties all year.
Another way to keep party costs down is to hold potluck celebrations. You can provide the main course but ask guests to bring sides, appetizers, and desserts. Or you can slash your costs by asking people to bring their own drinks.
If you’re hosting a kids birthday party, save money by visiting the dollar store for party favors, serving snacks instead of a full meal, and holding the party at home instead of at an entertainment center.
ACTIVITIES: Speaking from experience—my own as a kid and from having my own kids—entertainment can most always be free. JUST GO OUTSIDE. Go to the park, the playground, a local creek or greenway, fool around on a community tennis court, take a walk. In the summer, we’d use water outside: play in the pool or sprinklers, use a wet sponge or paintbrush and “paint the house” (or clean the siding!); “wash” their little ride-in vehicles at a makeshift car wash. Have a movie night or picnic dinner outside. Go get an Icee. Camp in a tent in the backyard or at a park. Have a firepit smores night and count the stars.
Play hardware: get some wood scraps, extra garage materials, and let them “make something”. Go to the weekend Home Depot workshops and get a birdhouse out of it!
Go to the library or bookstore for story times & picking out books of all levels. (free)
It’s not all about the vacations abroad or the fancy theme parks. In fact, those are a LOT of money with typically a lot of frustration and whining.
Kids are mostly happy doing whatever you’re doing. If you’ve TAUGHT THEM EARLY ON that they have to be entertained, then you’ve set expectations. Let them have lots & lots of boredom without screens.
BIRTHDAYS/CHRISTMAS: We talked in our “reinventing Christmas” episode just recently about families who start out their Christmas traditions with a 4 gift rule—something to read, something spiritual, something they want, and something to wear. Set expectations early & let Christmas be about the fun (free) activities around the holidays & spending time with family.
Birthdays can be similar. Bring back the games in the backyard bday parties! And limit gifts to 1-2 with a choice of bday dessert. (not everyone loves cake…this year our son picked a single cinnamon roll with a candle in it.)
529 College Savings Plan
If you can manage to invest $250/month—have that automatically taken out—at 18, your child will have around $120k. With scholarships, grants, and their contributions from working, this will cover their in-state school and will set them on their way without school debt.
If you’re struggling financially, here are some things to think about. It’s really all about LONG TERM thinking. It’s very easy to want to have the latest & greatest cars, home décor, baby gear, clothes, etc… Don’t spend on stuff that depreciates.
If you cut back by $100-$500/month (using some of these ideas we’ve mentioned), that’s $1200-$6000/yr. That’s $50k-$275k over the next 20 years.
Be careful of saying “this won’t hurt.” It’s the $5, $10 and $20 hits that add up and make a dent in your budget.
It’s 100x easier to build wealth for your kids than for you because they have more time to compound. Even $100/month in a growing account for them helps! If grandparents want to give extravagant gifts at bdays or Christmas, THIS is a much better and long term suggestion that they’ll appreciate long after they’re gone! (a lasting legacy)
Final Words
Here’s what my husband says his best clients do. (And they aren’t his richest clients)
Pay God and themselves first (Give and Save before they do anything else)
Making and living by a budget
On the same page regarding money
They talk about it
Budget doesn’t change when their income changes: stay in the same home, keep their cars etc