Starting and raising a family is not cheap. In fact, the 2021 estimate for the cost to raise one child per year is $14,846.
We’ll let the shock wear off for a second…
Common factors that impact the costs of raising a family include housing, food, childcare and education, transportation, health care, clothing, and miscellaneous expenses.
Check out a few of the not-so-obvious expenses that could be adding unnecessary financial strain to your family’s budget.
5 sneaky expenses that are eating up your family’s budget
- Subscription services and apps: From meal kits and personal hygiene boxes to cloud storage and streaming services, Americans spend an average of $273 per month on a variety of subscription services or in-app purchases. That’s more than $3,000 for things that may not be getting used as much as they could be. It can be easy to get lured into a low monthly cost, such as $17 a month for a streaming service, but if you only use it twice a month, is it really worth it? Take time to review all your monthly subscription services to see if there is any duplication or extra expenses that could be trimmed.
- Birthday parties: Whether it’s for your relative’s one-year-old or your child’s best friend from school, attending birthday parties can get pricey! From the gift to expenses the day of (especially for parties celebrated outside someone’s home), the cost of celebrating a child’s birthday can add up. Consider setting a three-friend rule for the number of parties your child can attend, or alternatively, skip gifts and give cash instead to reduce the amount you spend. For celebrating your own child(ren)’s birthdays, keep it simple. Invite family and a handful of friends and provide snacks, cake and an activity to keep costs lower.
- Too much insurance: From extended warranties and rental car insurance to credit card and flight insurance, odds are high that you are paying for something you likely will never need. While it is good to be prepared (like with Verve’s Payment Protection insurance on our loans to cover your payments in the case of a death or disability), some insurance policies are sold on scare tactics (such as water line coverage and accidental death policies). The chances of needing many of these services are slim and often are covered with a different type of insurance (homeowners or life insurance).
- Hidden fees of payment plans (i.e. buy now and pay later): From tuition to a pair of shoes, it seems like you can enroll in a payment plan for just about everything. While some payment plans show exactly what you will pay over time (ex: three payments of $30 to pay for your $90 shoes), others have monthly fees, as well as interest charges if your payment is late or missed.
- Credit card interest: While credit cards offer the flexibility to pay for things that you may not have the funds for now, they can also end up costing you a lot in interest. Aim to pay off your credit card balance each month and keep your spending within your budget. If you do carry a credit card balance from month to month, try to pay off as much as possible (avoid making the minimum payment only) so you pay less in interest.
Looking for more tips to help your family manage its finances? Check out our blog posts with 8 fun ways to teach your kids about saving, how to build healthy financial habits as a family and conquering your kitchen budget.