Childcare costs are huge. Is there a way to still be a high-saver while paying for childcare?
I’m well aware of the savings deficit in America – in case you’re not, the national personal savings rate (PSR) right now hovers around 5.3%. Folks, that includes retirement savings. If you look at the World Bank Gross Savings Rate, you’ll see we fall far below (in the same way you call the Mariana Trench falling far below Mt. Everest) countries like Kuwait, China, and India.
True, these are two different measurements of savings. But trust me when I say that as a country we just don’t save money.
Our Personal Savings Rate…BB (Before Baby)
Our personal savings rate has always been more in the range of those other countries.
Looking through the archives of my blog, I found that we saved:
- 2009: 42.9%
- 2010: 29.8%
- 2011: 38%
And even though it seems that I stopped calculating our PSR after these two years (or at least I can’t find it after looking through several years’ worth of articles), I know our percentages stayed about the same for several years thereafter.
Then…we had a baby.
Our Little Bundle of *Non-Savings* Joy
Over the years I’ve been contacted by several upset mothers who just don’t understand how you can save money when raising kids. I certainly understood where they were coming from, as much as one can when they are not in the same position.
Then I experienced it myself. 20 months ago we gave birth to a little boy…and a whole lotta extra bills.
(I kid, but we’re in love with the little guy?).
What I’m not particularly in love with? All the extra costs (not even counting childcare costs) I couldn’t have even dreamt up that came along with the parenting lifestyle…starting with a $10,000-out-of-pocket birth bill!
- Year 1: At the beginning of last year is when all our medical bills rolled in (he had an October birth), so that put us out of the realm of saving more money for the first half of the year.
- Year 2: This year, thankfully, is more back to normal. Or rather the “new” normal. We still manage to spend far more than I’m comfortable with on all sorts of things as a result of parenthood. And our black hole-savings account has been touched for our $3,800 recent new beater car purchase (got my last car to 223,000 miles!). However, we’re on track to fully max out each of our Roth IRAs, and Paul is contributing the max to his 401(k) plan for the year. I calculate this will put us at around an 18% PSR for the year.
So, we can’t be doing too badly, right? (the question mark is me trying to convince myself, as I’ve a HUGE saver mentality).
Areas Tagged for Improvement in Our Own Lives
Always looking for ways to improve my bottom line (and in my world, that bottom line is our savings account balance), I’ve earmarked the following areas for improvement to bump up our 18% PSR, post-baby:
- Groceries: Holy smokes, our grocery expenditures went way up after the baby. This is for several reasons. For one, we need more convenience. However, I refuse to buy unhealthy convenience foods…so we’re paying more there. Also, our little guy eats, eats, and eats some more. It’s pretty ridiculous, especially from how I’ve seen other kids his age eat. But it’s not for nothing; he’s as tall as 3-year olds and has been in the 97th– 99th percentile for height since his second checkup. I’d like to just dissect this area a bit now that I’ve come up for air from having an infant. I’m sure we can shave at least $100/month here.
- Home + Auto Insurance: Our premiums continue to rise like clockwork. I really want to start shopping around for a new provider (not during hurricane season, however) and see if we can cut some costs here.
- Husband’s Cell Phone Plan: While I whittled my cell phone plan down to just $39/month (unlimited everything), Paul’s is still around $83/month. We’ll shop around or he can come to the same plan I’m on once his contract is up, which would take the cost down by $44/month.
But seriously, is it actually possible to save close to 50% of your income – the way I’d like to be saving – with a baby or babies (fill in the blank with whatever age your kid(dos) are)?
Tune in next week, when I share our personal childcare costs + solution we came up with. Then I’ll continue this Childcare Mini-Series by sharing the stories of several other parents who are both paying for childcare as well as saving large sums of money. We’ll dive into how the heck they accomplished it, and hopefully you can glean some info for your own situation.
Psst: maybe I can, too! I’m always looking to improve our bottom line. And that bottom line? It’s all about the savings account in my world.