In Pricing the Priceless Child: The Changing Social Value of Children, Princeton University Sociologist Viviana A. Zelizer characterizes modern children as “economically worthless but emotionally priceless.” In other words, kids are no longer expected to help run the family farm or go to work in a factory to contribute to the family’s bottom line. Instead, parenting is an emotionally rewarding but expensive activity. Parents pour their financial and emotional resources into their children, hoping to raise happy and healthy adults who will maintain close relationships with the family.
Whether you are already expecting your first child, or simply getting ready for that stage of life, it’s important to understand the financial reality of today’s parenting landscape—just as important, we’d argue, as learning about sleep training and when to introduce solid foods. As Bucks County’s oldest community bank, we care about families. We created this guide to help you prepare for one of the most momentous occasions of your life: the birth of a child. Our friendly employees are always available to answer your questions about any of the financial advice you read in this article.
How much does it cost to give birth in PA?
Prenatal care and childbirth will be your first big expenses as a parent-to-be. Unfortunately, finding out how much it will cost isn’t as easy as comparison shopping car seat prices. Here are the most important factors to consider:
Your insurance policy
If you’ve been relatively healthy in life, you probably haven’t given a lot of thought to the specifics of your insurance coverage, such as co-pays, deductibles, or co-insurance. Now is the time to call your insurer and ask how your policy will impact the amount you pay for prenatal care. While insurers can’t give you a concrete answer as to the final cost, they can give you a sense of how much of the bill you’ll be expected to foot. Pregnant women who are uninsured or underinsured may be eligible for Medical Assistance through PA’s Department of Human Services.
Your OB-GYN practice
Most doctors use a global billing code, i.e. one set fee, for all of your prenatal care appointments. You can expect your OB-GYN to tell you how much you’ll owe toward the beginning of your pregnancy. Then, they will usually ask you to pay in installments or one lump sum by a certain point in your pregnancy. Again, your portion of the prenatal care charge depends on your healthcare coverage, but you can expect to pay anywhere from $1,000-$3,500.
What happens during childbirth
This is the one factor you can’t really control for. Most babies are delivered in a hospital, and here in Bucks County we have two of the best hospitals in the state. The less complicated your childbirth is, the less expensive it will be. According to a recent Money article, $6,850 is the average negotiated rate (what your insurer agrees to pay the hospital for childbirth) for a vaginal birth in Pennsylvania. If you end up needing to have a Cesarean section, the average rate rises to $10,266. Of course, you will only pay a percentage of this. For example, if you have a 20 percent co-insurance fee after your deductible has been met, you would pay about $1,370 or $2,053.
Lab work and other “extras”
During the course of your pregnancy or delivery, you may need lab testing. This will be a separate bill, again depending on your insurance plan. There are plenty of other extra costs that can arise during childbirth and recovery in a hospital. How long you stay, whether or not you get an epidural, any special care that your baby needs – these are all things you can’t really predict or price in advance. You’ll receive medical bills after the fact, but at least most hospitals are willing to setup a payment plan. You may even be able to pay less than the bill if you offer to give them one lump sum right away.
Many pregnant women are able to continue working up until their due dates, but there is always a chance that you will need to miss work, especially if you have complications that require you to go on “bed rest” until the baby comes. Also, some women suffer from hyperemesis gravidarum (Kate Middleton is probably the most famous sufferer of this severe nausea and vomiting condition) for the first few months of pregnancy. Now is the time to check with HR about medical leave policies, short-term disability, and how many vacation and PTO days you have left for the year.
In summary, you can’t predict every cost associated with giving birth, but it helps to have money (think of it in terms of a high-mileage used car or international vacation) set aside for this purpose. Consider opening a Certificate of Deposit or Special Purpose Club Savings account when you start trying to get pregnant or find out a baby is on the way. If you’re particularly worried about the cost of prenatal care and childbirth, Bucks County has two free-standing birth centers that you can visit. While birth centers can’t handle every type of pregnancy, they tend to have lower fixed costs and you go home within 12 hours of delivery, eliminating hospital bills associated with a longer stay.
The Cost of Your Baby’s First Year
It has been said that once your baby is born and placed in your arms for the first time, you forget all about the pain of labor. Similarly, the “priceless” rewards of loving and caring for a new baby make it easy to forget the expense involved. If you ask your own parents how they managed after you were born, they will probably say they don’t remember. Still, the financial costs of your baby’s first year are very real. Preparing for both the unexpected and expected expenses will make your experience smoother. Here are the most common choices you’ll make as well as their financial impact.
Under The Family and Medical Leave Act (FMLA), certain employees are entitled to take up to 12 weeks of unpaid, job-protected leave per year after the birth or adoption of a child, during which their health insurance coverage is also protected. Some employers also offer paid parental leave for a certain period of time. Talk to HR about your maternity leave options, including the ability to use vacation days and PTO to extend your leave.
Reduced Family Income vs. Childcare
The biggest financial decision you’ll make in your baby’s first year is who the primary caregiver will be. According to a “Status of Women in the States” report, there is a 23.5 percentage point gap between fathers’ and mothers’ workforce participation. That would suggest that mothers are more likely to stop working or reduce their working hours after a child is born. However, in some families Dad is the stay-at-home parent. Other couples create a “passing ships” schedule in which one parent works during the day and one at night, so that childcare costs are minimized. The lucky few have a nearby relative willing to provide free childcare. Overall, most new parents have to choose between reducing their family income or paying for childcare after Mom goes back to work. How much is full-time daycare? A recent Patch article cites a study from the Economic Policy Institute showing that $10,640/year or $887/month is the average cost of infant daycare in Pennsylvania. If you hire a part-time or full-time nanny, you can expect to pay $15/hour and up, plus cover the employer’s half of your nanny’s payroll taxes.
Cloth vs. Disposable Diapers
Whereas cloth diapering was once the only option, modern parents choose it for environmental and economic reasons. According to The Nesting House, a popular cloth diaper store with three locations in Philadelphia, “Using disposable diapers during one child’s diapering years will cost between $2,000 and $3,500 dollars…At a cost of between $3.00 and $24.00 per diaper, the cost of cloth diapers for one child would range from $150 and up.” Still, cloth diapers aren’t practical for every family, especially if your baby goes to daycare.
Infant vs. Convertible car seat
There are plenty of car seat make and models to choose from. You can spend a modest amount or a handsome sum, depending on the safety features and other bells and whistles. One way to save money in this category is to buy a convertible seat that you can use from your child’s infancy until they are ready for a booster seat. Infant “bucket” seats are popular because they can be easily taken out of the car and put in strollers, but your child will outgrow an infant seat by the end of the first year.
Clothing and other Gear
Experts recommend purchasing a new car seat as opposed to used seats because the quality can break down over time, and you want to be sure the seat wasn’t in an accident. But when it comes to everything else you need for your baby during the first year, the amount you spend is largely within your control. You can save a lot of money by buying used items. Because baby clothing and gear has such a limited useful life, it’s easy to find someone looking to clear out their basement or attic. Look for a nearby children’s consignment shop or on Craigslist, Facebook Marketplace, and similar platforms.
Health Insurance and Medical Care
Once your child’s birth certificate and social security card arrive in the mail, you can add them to your health insurance coverage. The amount deducted from your paycheck for health insurance premiums is sure to go up, though how much depends on your employer. Your child’s well visits don’t require a co-pay, but if your baby has to go to the pediatrician or ER for an illness, you’ll have to pay a certain amount of the cost.
You may be able to obtain life insurance for your child through your employer. Private options are also available. In the event of your child’s death, life insurance would shield you from expensive funeral costs.
Personal Finance Checklist for New Parents
Now that you have a sense of the primary expenses associated with pregnancy, childbirth, and the first year of parenting, you may feel a little faint. Yes, the whole “life-changing” part of having a baby does extend to your finances. But it doesn’t have to wreck them. With a little bit of planning and organization, you can follow these steps to prepare your finances for new parenthood.
Update your budget to account for your newborn
You can line item each expense or simply create a new “baby” category in your monthly budget. To make it balance, you’ll probably have to take money out of discretionary categories like clothing, entertainment, or eating out. This is a natural shift anyway, as weekend brunches give way to family strolls in the park.
Adjust your will
This may be the least fun task for new parents, but it’s a crucial one. Once you have children, you need to think not only about the assets you will pass on, but also about who your child’s legal guardian will be in the event that both parents pass away before the child’s 18th birthday. While The First doesn’t create wills, our Estate Administration team may be able to help you find a local attorney to help with your will.
Create or expand an emergency savings account
As you can see, there are many unknowns when it comes to parenting and family life. Start saving for emergencies today, or bolster your existing emergency fund. The First offers a full menu of savings accounts.
Open a savings account in your child’s name
Every time your child receives a monetary gift on birthdays and holidays, you could deposit these gifts into a savings account with your child’s name on it. When he or she is older, they will have a small balance to motivate them to continue saving with money they earn from chores or jobs.
It’s never too early to start saving for your child’s education
Open an Education Savings Account for your child and begin putting money away for college (funds from these accounts can also be used to pay private school tuition).
Your Local Financial Partner Since 1864
They say it takes a village to raise a child. Partner with The First for all of your banking and financial services needs as your family grows. We’ve been a member of your Bucks County community for 150 years, helping generations of Bucks families thrive. If you’re new to the area, we want to welcome you and offer up our relocation guide as a helpful resource. Contact us today to learn more about our banking services. There’s nothing we love more than meeting a customer’s new baby and watching them grow into a wonderful child and young adult!