Parenting: Bring Your Pocketbook

Stuffed but far-from-cheap, floppy toys around the crib hint at what every experienced parent knows: Parenthood, which can provide deep joys, also entails extraordinary responsibilities and costs. It involves not just normal nurturing and caring for a child, but also meeting numerous, often unanticipated, expenses.

Little wonder financial planners stress that raising children - while never merely an economic proposition - must be entered into with as much planning as possible. "Unfortunately, most Americans are terrible savers," says Debbie Pierce, a spokeswoman for Young Americans Bank, in Denver, which was founded in 1987 to promote greater economic awareness among young people.

A family earning $55,000 annually spends more than $190,000 to raise a child to adulthood in the United States, according to the US Department of Agriculture, which tracks childbearing expenses. At lower income levels, the cost declines, but still is more than $100,000. These numbers are just from the child's birth through age 18. Include college costs, and you can easily add another $20,000 to $100,000 or more, depending on the school.

One solution: Many couples earmark one spouse's income for the childraising stage, setting it aside in a special account.

Experts offer several other tips on dealing with the costs of raising a child:

The birth stage. Young couples should check out all details of company health-insurance plans. Will the insurance pay for home birth as well as hospitalization? Will it pay for possible complications? In addition, the parent or parents must provide all the normal accessories for a young child, from cribs to strollers. Of course, friends and family often provide valuable assistance and support. Costs in the period around the birth alone can easily run up to $10,000, depending on how high medical costs go and whether they are covered by your insurance.

Long-range savings for college. Many banks now offer special long-range savings programs for college expenses. The US Savings Bond program provides special tax breaks if the bonds are used for college. "Parents should start saving as much as possible," says a spokeswoman for the American Bankers Association.

The Consumer Federation of America provides an excellent free booklet: "66 Ways to Save Money" (Consumer Federation of America, Suite 604, Washington, DC 20036). Send a self-addressed, stamped envelope with your request.

Insurance and wills. Life insurance should be increased with the addition of children, experts agree. Lower-cost term insurance is usually more economical than full life, which has a savings component. The primary breadwinner should have disability insurance. The two parents should try to avoid duplicate health-insurance coverage, thus holding down costs. A will is necessary not just to convey benefits to children, but to establish lines of guardianship.

Access to cash and credit. Experts generally recommend that both spouses have bank and credit-card accounts in their own names, or jointly held, so that if something were to happen to one spouse, the other could still make necessary purchases, while also seeking bank credit.