- The Washington Times - Sunday, June 30, 2002

Jack Kelly shocked his parents.

Actually, it wasn't Jack, now 1, who shocked them but the expenses surrounding his arrival.

His mother, Linda Sinoway, says she and husband Doug Kelly simply did not realize the extent of the cash outlays involved in having children.

"Before Jack was born, we were in shock at what it cost to create a place for this baby coming into your life," says Ms. Sinoway, who lives with her family on Capitol Hill. "Then after his arrival, having never been around babies before, we were shocked at how quickly he grew and changed and the cost associated with all that."

For many couples, the plunge into parenthood is as much an economic as an emotional consideration, endlessly debated, calculated and analyzed. The evolving priorities inherent in parenting require evolving financial decisions, including spending and saving adjustments.

Economist Mark Lino and his colleagues at the Agriculture Department have crunched the costs of raising a child in the United States. Their estimate for the "middle-income group," he says, taken from the Expenditures on Children by Families 2001 Report, is $9,030 for one year for housing, food, transportation, clothing, health care, child care and education, and miscellaneous expenses.

The Agriculture Department breaks down the total: 37 percent for shelter and furniture, such as baby cribs; 12 percent for food; 13 percent for transportation, including car seats; 5 percent for clothing, including diapers; 7 percent for health care; 15 percent for child care; and 11 percent for miscellaneous expenses.

How do these numbers compare to what the government gives welfare parents to raise a child?

The average monthly amount (for fiscal 2001) spent on cash assistance to welfare recipients adult or child nationally is $153.21, says Steve Barbour, spokesman for the Administration for Children and Families, an agency of the Department of Health and Human Services. The actual cash amount awarded D.C. residents is $129.01. Maryland residents receive $135.02. Virginia residents receive $114.07. The national monthly average allotment multiplied by 12 equals $1,838.52.

The previous numbers, however, do not reflect assistance and subsidies for housing, medical, child care, transportation, education or other benefits.

"Welfare is not just cash assistance," Mr. Barbour says. "It's always going to be different because welfare is about personalized needs."

The Agriculture Department numbers suggest that once baby arrives, the focus on retrofitting the bathroom, cocktails out and fancy vacations switches to diapers, formula and day care. Although family financiers say there is no distinct "right" time to start a family, they agree that couples can do themselves a favor by setting financial goals and spending wisely.

"If you're waiting for a magic signal that it's a perfect time to have a baby, there's no perfect time," says Ann Douglas, author of "Family Finance" and other parenting books. She is the mother of four children, ages 4 to 14.

"A lot of dads think they're terribly irresponsible unless they've saved for college already," she says, "and people think that if they're going to be 'good' parents, they have to buy the best of everything. That's just not true you can spend as much or as little on your family as necessary. Another thing: Sometimes people think your life won't change that dramatically it will be kind of like your old life but with a cute little baby. As we know, it changes everything."

Robert Weagley, chairman of the Department of Consumer and Family Economics at the University of Missouri in Columbia, takes another tack.

"Couples are ready [to have a child] when they are managing their finances in such a way as to support the goals that they have deemed to be most important," he says. That includes standard financial management, such as emergency funds, adequate insurances in place and having a retirement-savings plan started.

"I call it the sort of mental and goal-setting plan to your life, rather than a cow-path method of following the cow in front of you," says Mr. Weagley, who doubles as a financial planner and registered investment adviser.

Where does it all go?

Jack was in the plan for Ms. Sinoway and Mr. Kelly. The couple were homeowners, established in their careers, purveyors of savings plans and retirement and life-insurance policies. They had an eye on a budget.

"We were both in our mid-30s and knew that we wanted to start a family and that we shouldn't put it off much longer," Ms. Sinoway says. "We had all our ducks in a row."

The initial outlay included buying a crib and a glider, she says.

"Someone loaned us a changing table, and people were very generous, throwing us several baby showers," Ms. Sinoway says. "We received a good portion of the things we needed as gifts, but we still had to go back and spend hundreds of dollars getting the rest of the stuff that we needed. We did splurge on a high-end car seat for Jack, based on safety ratings, but as far as the initial costs, it really was the little things that added up for us: items from crib and bassinet sheets to safety equipment, to sleepers and clothes, to age-appropriate toys and books for Jack."

Ms. Sinoway worked full-time as a public-affairs consultant. Once the baby was born, however, Ms. Sinoway decided to cut back to part-time, resulting in a "dramatic decrease in salary," she says.

"Although we both made decent incomes, we planned our mortgage and car expenses based on our two salaries combined," Ms. Sinoway says. Her husband is a technology director for the Democratic National Committee.

"Plus, like many other middle-class families, we need to save our own money for our retirement and life expenses and for our children's education," she says. "There's no trust fund or huge inheritance waiting in the wings, anywhere. Before I left my full-time job, our budget motto at home was, 'It's not what you spend, it's what you save.' But that motto quickly changed with the loss of our second income, and the loss was heightened even further with increases in expenses, such as increased life insurance and the costs of raising a child."

Soon, the basics became a big deal, Ms. Sinoway says.

"One thing I think that has been incredibly shocking was when I had to introduce formula and jars of baby food," Ms. Sinoway says. "That was mind-bogglingly expensive. We'd go to Costco and buy it in bulk. I'd buy three large things of formula, costing $75, and that would last five weeks or so. And I'd go to Safeway with my coupons and come out with 30 jars of food, but then I'd be running back to the store in five days after all those breakfasts, lunches and dinners."

That, however, is not even counting the diapers. Jack probably goes through 50 to 60 a week, she estimates.

Now that her son is 1, says Ms. Sinoway, "I'm a much wiser parent as to the ever-changing needs of raising a child. We don't buy too many items in one size, as we know he will outgrow it. He now drinks milk and eats whatever we eat, so we don't have to purchase formula or jars of baby food anymore, and we make sure that when family wants gift ideas for Jack, we suggest toy and clothing items for future age and size levels. This makes sure we don't have too many 12-month-age level toys or clothes around that he would be growing out of too soon."

Babies: A booming business

A discussion about baby toys, clothing or other products compels Alan Fields, co-author of "Baby Bargains," now in its fourth edition, to mention the words "grandma bait." This, he says, is the industry term for products that specifically have been designed to incite grandparents to buy them the adorable outfit costing $100 or the fancy shampoos, for example.

People generally are spending more on children than ever before, Mr. Fields says.

"The juvenile-products industry has tripled its size in terms of dollars," he says. "It's a $6 billion-a-year business. You can see that when you walk into a baby store. It overwhelms and frustrates new parents."

Mr. Fields says the past 10 years in the industry have seen an influx of foreign-made products. Strollers imported from New Zealand cost $300 to $400; a Graco stroller made in Mexico still goes for about $50. An inexpensive domestic crib starts at about $100; an imported wrought-iron canopy crib sells for $1,300. (Bear in mind that children only use cribs until age 2 or 3.) In the car-seat department: A standard model costing $50 or so can be trumped by one manufactured by a European racing company, full of adjustments and super padding, for $350.

It's a hard sell, and a successful one, he says.

"The baby-products business preys on emotions," Mr. Fields says. "It says, 'Don't you want the very best for your baby?'"

Jeffrey Feinstein, owner of the baby superstore Buy Buy Baby, sees the boom in products as a positive, not a negative.

"Parents are excited about the new products out there," he says. Each of his stores, one of which is in Rockville, contains about 20,000 products, he estimates.

"Having a kid is very overwhelming. When you can walk into one store and there's so many items that can help you with a problem or help make the job of parenthood easier one, you don't feel alone, and two, you're happy to have a selection of items to try and see which one works for you, because all babies are different and all parents have different preferences."

To avoid breaking the bank, new parents need to determine what products are masquerading as necessities and what their babies really need, says Ms. Douglas, the parenting author.

"Most of us learn how to live without baby-wipe warmers," she says. "What you want to do is get some advice from parents in the trenches they can tell you what you really need and what is a total waste of money. Poll your friends, especially those who've had babies in the last couple of years, because they're using the latest and greatest products."

For many young families, cost-cutting efforts are reflected in lifestyle as well as in consumerism.

Julie and John Fox of Chevy Chase must keep a sharp eye on their expenses, says Mrs. Fox, a former kindergarten teacher, so the family can live comfortably on Mr. Fox's income as a self-employed computer programmer.

That means occasionally asking Mr. Fox's mother, who lives nearby, to baby-sit 3-year-old Caitlin and 5-month-old Emily, thereby saving the expense of paying a teen-ager; taking the children to dinner at a Chinese restaurant rather than the old haunts in Annapolis; inviting friends over on a Saturday night for a glass of wine and adult conversation while all the children play together.

"Before we had kids, we'd go to dinner, walk around, spend time out with friends, talking, and come home at midnight," Mrs. Fox says, "but once you're really involved in the upkeep of the house and different things of the kids, it just seems to go along. You realize that cutting back on going out and buying things for yourself it doesn't really seem to be a big change. As you're more involved in staying home and taking care of your child, it cuts out a lot of expenses, like clothes."

Mr. Fox says he hasn't been surprised about the expenses of raising a family.

"A lot of your costs are your costs whether you have kids or not," he says. "The only additional ones have been food and diapers. While they're not cheap, they're nothing like your biggest expenses the mortgage or family health insurance."

Mr. Fox says, however, that being self-employed "adds a little more stress, so you have to be concerned more with the stability and long-term employment. It makes you be more stable in all aspects of your life, like not wasting money going out all the time."

Still, says Mrs. Fox, it would be nice to go out a little more often.

"But to be able to be home and be with the kids that's part of our life, and we enjoy that new part," she says.

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