E24: Frugal Parenting
Executive Summary
Kids are expensive. The estimated cost of raising a child until the age of 17 is $233,610 (with inflation, that is estimated to be $280k). That figure excludes the cost of higher education. Here are a couple of life hacks and financial hacks when dealing with the expenses of raising kids!
- Medical Expenses. Medical expenses make up about 9% of the estimated “raising until 17” expenses. Understanding what your insurance covers, your deductible, max-out-of pocket and in/out of network providers can help you plan for medical expenses. If you know you are hitting your deductible and/or max out of pocket in any given year, that might be a good time to schedule other medical testing, treatments, or surgeries that you or your family might need.
- Hand-me-downs or secondhand items. There is no shortage of baby clothing or gear in secondhand markets. You can usually score some wonderful hand-me-downs on Facebook MarketPlace. Lots for Tots and other consignment stores are cropping up all over southern Maine. I had the benefit of a nephew born before my sons. My sister-in-law stored hand-me-downs in Rubbermaid bins organized by size, and we have avoided having to buy any clothes for our 3.5-year-old and 3-month-old.
Baby and kids travel gear is another area where you can save a lot secondhand. I purchased a BOB jogger single for $100 on Facebook Marketplace when I had my first child, it usually costs $500 new. I became known as “that crazy running mom” in my neighborhood and a neighbor gave me a hand-me-down BOB double jogger, which is usually $750 new.
When should you splurge? Whenever safety is involved. Don’t use secondhand car seats. Splurge on a helmet that properly fits. Ensure all sleep spaces are safe and check for recalls.
- Our family and friends were excited to shower us in gifts as we prepared for our new additions. We were very clear about what we needed and didn’t need (specifically, clothing). We used an Amazon Registry and included practical items, like cloth diapers, sheets, wipes, soaps, etc. We currently use Amazon Wish Lists for Christmas and birthdays, which helps our families know exactly what our sons need. My son has an August birthday, so we usually put items he might need for school on the list (lunchbox, sleeping mat, backpack, etc). His Christmas Wish List usually has winter gear like snow pants, mittens, and boots. We told our family about the 529 College Savings Accounts we have for each of our sons and that anyone can contribute to that if they would like.
- Nursing can save about $1,200-$1,500 in the first year. It is not for everyone and it is never worth anyone’s mental or physical health. If you are nursing and have a surplus, you can sell or donate excess milk to milk banks. I donate to the Milk Bank of New England, which often supports NUCI babies. Aside from feeling good about helping a tiny human, another perk is they send you supplies for storing and sanitizing.
We made our own baby food and found that on average, pre-packaged baby food has a 3-4x markup from making your own. I enjoyed the process of making baby food and knowing exactly what my son was eating.
We pack lunches for our oldest son and avoid single-packaged items, again seeing about a 3x mark up on single-serving options versus buying in bulk. We utilize reusable pouches and BeesWrap instead of single-serving items wrapped in single-use plastics.
What we splurge on? We care a lot about what our kids eat, so even though produce and meat is expensive, we opt for quality here and seeing it as a long-term health investment to fill up on whole foods. - We primarily use cloth diapers. I know that is not a route for everyone, but I don’t mind it, we save money and cutback on what ends up in a landfill. How to really lose: if you buy a ton of cloth diapers and then use disposables instead. In that scenario, you likely made a $150 investment in the cloth diapers, but then also shelled out an estimated $900/year for disposable diapers. If you aren’t sure if cloth diapering will work for you, start small, buy 6 cloth diapers ($30) and try it out.
What financial tools do parents have?
- College Savings 529 plans https://penobscotfa.com/blog/live-in-maine-have-some-free-money/ https://penobscotfa.com/blog/2020-gap-years-and-529-plans/
- HSAs for medical expenses – https://penobscotfa.com/blog/the-humble-inadequately-appreciated-health-savings-account
- FSAs for childcare costs (BLOG?!)
- 529 ABLE accounts https://penobscotfa.com/blog/have-you-heard-of-529-able-accounts-they-just-got-better/
(https://www.usda.gov/media/blog/2017/01/13/cost-raising-child)
DISCLAIMER: The foregoing content reflects the opinions of Penobscot Financial Advisors and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security.
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Full Transcript
Tyler Hafford:
Welcome to Financial Discretion Advised. I’m Tyler Hafford, I have another co-host on today. Hannah has been on I think one of the podcasts when we did the team podcast but I brought her back. Hannah is the COO for Penobscot Financial Advisors. She’s also the mother of two, which is going to be very important for the conversation we have today. But Hannah, welcome to the show.
Hannah Tackett:
Thanks for having me, Tyler. Looking forward to digging into some of these parenting hacks and financial planning tools for parents.
Tyler Hafford:
For sure, and I know you’re the COO of the company but that feels like it’s limiting in all the things that you do with the company. Do you just kind of want to let us know some of the stuff you do for PFA?
Hannah Tackett:
Sure. I get to do a lot of different things throughout the day with PFA. My favorite thing is I pick out technology and help integrate different systems to optimize our process here. I get involved with writing procedures and ensuring that we’re operating really efficiently as a team. I also do compliance for the firm and then sit on the marketing committee and get to do some web design work and making sure that our online presence looks like we want it to.
Tyler Hafford:
Yeah. Hannah essentially does all the things that allows the company to runs. She heads up kind of the [inaudible 00:01:36] of our company and that side of the business is so important to making sure everything else works. She also lets me do this podcast, so that’s nice of her, and I haven’t upset compliance just yet, but we’ll see. There’s still time.
Tyler Hafford:
So let’s dive into these parenting hacks and one of the most expensive things you can do is have a kid. Hannah’s chose to have two, I’ve also chose to have two, so we’ve doubled up on those really expensive things. But let’s talk about how can we be frugal and thrifty about this. How could we afford to have children and maybe give some tips to listeners as we go. So I think let’s start right at the beginning. Birth, right?
Hannah Tackett:
Sure. I looked up and found out the U.S. Food and Drug Administration did a study and they found that on average, a family of two, each child from birth until they’re 17 is about $233,000.00 worth of expenses, and that excludes higher education. They are including the fact that you probably need a larger house or apartment to house said kid, but that is a really huge cost.
Hannah Tackett:
None of these tips are going to make that go away. Having a kid is always going to be expensive. But we’re just going to share some little life tips that if you incorporate these into your day to day life, you’ll save nickels and dimes and over time they can add up.
Tyler Hafford:
Yeah. And like any kind of financial planning strategy, you do the little things and they can make a big difference down the road. I’ll tell you that my wife didn’t run those numbers by me when she talked about having children, and we’ll kind of get into some of the tools that can help mitigate some of those costs. But it is, it’s an expensive kind of thing. So let’s dive into these things.
Tyler Hafford:
So all right. Getting ready, we’re going to have the baby, the birth expenses, that’s really where a lot of the expenses start, right? So we’re looking at what does your healthcare cover here, what does that stay look like? Are there going to be … My wife, she ended up having a C-section, so there was extra things there. What can we do in that space? Like what are some of the things that we can be frugal about?
Hannah Tackett:
The first thing that you’re going to want to do is get to know your insurance plan really well. Things you should be asking, call your insurance company and say, “I’m doing family planning. Can you explain how prenatal delivery and postnatal expenses work for me as well as for the baby?” Find out your providers and see if they’re in-network and out of network, things to ask are about your deductible and your max out of pocket and special considerations with a hospital stay. So that’s kind of like in preparation, learning as much as you can so you can make decisions to not be surprised later. Then –
Tyler Hafford:
Well that’s kind of like having the baby in general, right? Not even just the finances. You should probably get a good sense about what you’re about to get into. But yeah, sorry, didn’t mean to jump in there.
Hannah Tackett:
Oh, no worries. So then you know what to expect a little bit more, and that can certainly help. I know one nice little hack I did was both of my kids, my prenatal and postnatal delivery all happened in the same deductible year, which is amazing because I hit my deductible before delivery even, which meant it just felt like free money. Like, “Oh, I just delivered a baby and I don’t have to pay a medical bill surrounding that because I had an expensive prenatal time.” So if for example you have a baby in January, that’s a very expensive baby because you probably just hit your deductible max out of pocket by December, and then January rolls again and all of that resets. So you’re almost double paying if you have a prenatal delivery over two different deductible years.
Tyler Hafford:
Right, and one of these things to take a look at, right? So every year, you get to choose which healthcare plan you want. A lot of companies are going to be an option between a higher deductible plan which is going to come with a really nice HSA, and then there’s going to be another plan that’s a lower deductible which tends to make a lot of sense if you do visit the hospital regularly, you got medications, those types of things.
Tyler Hafford:
Well if you’re doing some planning and you know there might be a baby on the way, maybe the high deductible plan isn’t the one you go with that year, right? You take the lower deductible plan, covers more of those expenses, you might come out of pocket a little bit less. I know with my wife and I, we did a combination of this. I have a high deductible plan, she has a low deductible plan, really helped with the birth. I’ve been saving at an HSA, which we’ll get into, which is one of the great financial planning tools here. I was able to kind of pick up what her insurance didn’t. A combination of those two actually made it somewhat reasonable, right? It wasn’t just a huge expense right at the moment. So great kind of ideas there and before we get out of leaving the hospital, is there anything else on the birth side of things that we should cover before we start bringing kids home?
Hannah Tackett:
Well, I’d say probably the next step is to bring the kids home, and you’re going to start to get bills. You’re going to get a lot of medical bills because the anesthesiologist does a charge that’s different than your room and board, and you have bills and your brand new baby has bills too. And you’re charged for rooms, but you’re sharing the same room, and there’s … It’s wild, the bills that you’ll get. So I’d say let the bills start to trickle in and then take one night where you just … You look at them, you start looking and seeing, go line item by line item. I know a lot of parents who say, “We never sent our kid to the nursery. They stayed in our room,” but we had like a $1,000.00 nursery as if we had sent him away for the night to be cared for.
Hannah Tackett:
So once you start to get a handle on all of those bills, going line item by line item, call the provider and say, “Hey, I need to speak with a billing specialist. Let’s talk about this.” In my scenario where I’ve met my deductible and it was all covered by my insurance, I wasn’t quite as specific with that, but I know if you’re paying for this, you want to ensure that what they’re billing you makes sense and a lot of times it’s just a bundle of like, “Oh, you got the baby cart and you got this. You must have had that too.” So making sure that where you can you’re eliminating some of those expense line items.
Tyler Hafford:
Yeah, any time you’re going to spend a lot of money, you want to take a look at what you’re spending your money on and take a look at that bill and make sure that it is what it is. You wouldn’t buy a car and have them throw a bunch of options into the price of it and then you just, “Well, that’s all right, I didn’t need the screens in the backseat but I’ll pay for it.” Yeah, so I think that does make sense. You should review those things, and just make sure that it all lines up. This is going to be something you spend a lot of money on, let’s not spend more than we need to.
Hannah Tackett:
And then discussing a payment plan, if you don’t want to –
Tyler Hafford:
Yeah. Good point.
Hannah Tackett:
Do that upfront expense right off the bat, you can set up payment plans and they’ll let you pay $10.00 a month from now until eternity.
Tyler Hafford:
Yeah, they are pretty flexible about it. Mostly I think it’s because they have so many people that don’t end up paying their bills that they’re like, “Whatever you need to do to get money to us, we’ll be okay with it.” So yeah, definitely don’t feel obligated or burdened by that I guess. You can set up a plan that works for you.
Tyler Hafford:
All right, so we get kids home. They need stuff. You mentioned this, right? Some of that cost goes into needing a bigger home and things like that. Someone told me before I had my first daughter that when you have a baby, it shrinks the size of your house by 30%. I laughed at that, I was like, “Yeah yeah yeah.” They were wrong because it shrinks your house by more than that I think. So you need stuff and you need clothing, cribs, [inaudible 00:10:18], baby [inaudible 00:10:18], toys, all those things. What can we do? I feel like you don’t just need to run out the store and run up the credit card buying all these things. Where should we start?
Hannah Tackett:
Yeah. So I’d say what I did was I asked moms that I know what they had and what they liked. I had the benefit that my sister-in-law had two kids before me.
Tyler Hafford:
Yeah. A full plate. Full plate.
Hannah Tackett:
So I asked her, “What did you use? Oh, you loved that? Oh, you’re not using that anymore?” So I had the benefit of getting a ton of great hand-me-down items and my first was a really cranky baby and my sister-in-law said, “I have six different baby swings.” And I’d take two at a time and try them out to see is this the magical thing. Because especially when sleep is involved, I feel like parents end up spending money because they’re desperate and tired.
Hannah Tackett:
I found out that of the eight different swings that I used or attempted to use, none of them worked. But I got to try it free. So I wasn’t out hundreds of dollars on each swing. So I’m a big fan of hand-me-downs. We do hand-me-down clothing, a lot of toys, we’re like the kids on the block for our neighborhood. So we get hand-me-downs from neighbors and from my sister-in-law, and a lot of it is lightly not to even ever used with the tags on.
Tyler Hafford:
Yeah, it’s awesome. So the hand-me-down method is fantastic for a couple reasons. One, you hit it. Not every baby likes the same thing. Anyone who is listening to this who has got multiple kids knows this. Anyone who is about to have a kid is about to find out that what your friend’s kid liked your kid’s not going to like. And like you said, anything that allows you to sleep just a little bit more is worth trying. So anyone who has stuff that you can try, try it. Just see how it goes. Maybe your kid will love it, I know that my wife, we’re having our first baby, we found … I think it was the mamaRoo or some really expensive swing. She was like, “Oh, we’re going to get this.” Both of my kids hated that swing, and it was one of the most expensive things that I’ve purchased when I had the kids. So definitely try those things out. You made a really good point there.
Tyler Hafford:
Additionally with clothing, new parents are going to want to get these certain little outfits and do all these things. That’s great, do that, go crazy. But the majority of the clothes that your kid’s going to wear, going to get ruined. Doesn’t matter, they’re going to spit on it, they’re going to spill on it, they’re going to do all those things. So don’t feel like a hand-me-down is a bad idea with clothing. It ends up being a great thing, and then once you have your kids, you’re going to be looking to people to dump the clothes off to anyway, so … Yep, great place to start.
Hannah Tackett:
And consignment shops for kids’ stuff are all the rage. I know in Southern Maine we have like Lots For Tots, Repeats, Goodwill. Facebook Marketplace is another really good resource for buying kids’ things secondhand. A lot of times you’ll see like size two girls summer clothes, and you’ll get an enormous Rubbermaid bin for $20.00 and it’s all the clothes that they’ll need, and they’re just going to outgrow it.
Hannah Tackett:
The only place I’ve seen this break down is 4T pants for boys. So my son is now in 4T, and his cousin who is older, he was rough on the knees of the pants so they all have holes in them. And then any time I’ve gone to Lots For Tots and looked for that size, it’s like, “Nope. Four-year-old boys will make the pants have holes in the knees.”
Tyler Hafford:
They’re just going to ruin it.
Hannah Tackett:
Yeah.
Tyler Hafford:
I’ll tell you, my daughter is in 4T. She doesn’t ruin it at the rate that boys do. So that might be a benefit for girls, but there’s plenty of pros and cons to that comment.
Hannah Tackett:
And another plug for Facebook Marketplace, BOB’s strollers, like these jogging strollers are so expensive, but they’re really nice, and I like to run, so it was important to me. I found a BOB’s stroller single, which retails at $550.00 new, I got it for $100.00 when my first was born. And then just through running and having my neighbors see me as the crazy mother runner of the neighborhood, one of my neighbors said when I was pregnant with my second, “Hey, you know what? I have a BOB’s double stroller that I don’t need. Do you want this?” And it was like the clouds open up and there was a beam of light down from heaven. It was like the greatest gift I could have been given, because the BOB’s double stroller retails for $750.00, and I got it for $399.00.
Tyler Hafford:
Wow. And I think you’re hitting on something here that’s really great too. If you are a parent, you know this, if you’re going to become a parent, you’re going to find this out. Parents are all going through the same stuff and it’s like a club. Like they want to support you because they’ve either been there or they’re about to go through it. So you’re entering this club of folks, don’t ever hesitate to come to them and be like, “Geez, have you been sleeping? Like what’s going on? All these things?” Because it’s going to open up this whole conversation. People are going to love talking about their kids, and then you’re going to find out they have stuff that they bought and they never used and now the kid’s too big or can’t use it and now it becomes your stuff. So yeah, don’t shy away from the club you’re about to join here.
Hannah Tackett:
Yeah. And I will say there are times when splurging makes sense, and one of those is car seats. You’re not supposed to use previously owned car seats. Car seats are a really sensitive thing, they expire every four to five years I think. If they’ve been involved in a car accident, they’re no good anymore. They’re good for a single bump, like a fender bender, and then they’re done. So any time it comes to safety, like safe sleeping, helmets or car seats, I’d say maybe get the sale of the new item and shop that, but definitely when your kid’s safety is at risk, spend the money.
Tyler Hafford:
Yeah, and that brings up another good point too is sometimes if you’re online trying to get a deal on a car seat or whatever, make sure you check if it’s still in line with safety regulations, because those do change pretty frequently and the car seats are constantly changing because of that. So just make sure that what you’re buying, it might look like a really good deal, it might be because those safety precautions have expired but yeah –
Hannah Tackett:
Like the recalls, the sleep surfaces are a very sensitive thing with newborns, so checking for any recalls on those and if you turn whatever object it is upside down, there’s going to be like a date, a model number, and you can search online for that.
Tyler Hafford:
Yep. So yeah, splurge when it comes to the safety of your kid. Don’t splurge like my wife did, who bought every pair of Nike out there for an infant when they don’t walk. So yeah, definitely pick and choose where you want to spend your money and that can make a big difference for you. But there’s some things in life where people are just going to bring you stuff, for your kid, right? So baby showers, birthdays and Christmas, how do we maximize those situations? Because I love when people bring me free stuff.
Hannah Tackett:
Totally. And one thing that I like to put out there is being open and honest with your family and friends on what you need. Our house isn’t enormous and I’m a bit of a minimalist, so if we get a whole Christmas haul of toys, we’re going to end up donating some of them because it gets to be too much. So I’ve let my family know, “Here’s an Amazon wishlist,” and a lot of times it has educational things like kind of those construction building block items or books or materials for learning and development. We put snow gear on every Christmas, it’s snow pants –
Tyler Hafford:
That’s a good one. Yeah, that’s a good one.
Hannah Tackett:
Mittens and boots, and honestly, kids losing mittens, I don’t know where they go, but you will lose a mitten every week of the winter I feel like. So that’s one really practical way, the child’s grandparents want to do something. Hey, they love playing in the snow, that would be a nice thing. Or my son’s birthday is in August, and I put things like a little [Bentgo 00:19:02] lunch box and a sleeping mat and school supplies will wind up there, backpacks. So things that you know that they’ll need and they’ll use. Also I feel like the parents know what their kid’s into in that moment, so magnet tiles, oh my gosh. Kids will play with magnet tiles forever but they are pricey items, so if someone’s looking to splurge on your kid, put that on your list for sure.
Tyler Hafford:
Yeah.
Hannah Tackett:
And with the baby shower, I was really specific on what I don’t need. I said, “We have clothing. All of our clothing needs are met. So you might see that cute thing and want to get it, that’s fine for one outfit but we don’t need ten outfits.” And then I also plugged the 529 college savings plans, saying, “We have college savings accounts set up for both kids, and if you’d like to contribute, I can give you information on how to do so.”
Tyler Hafford:
Yeah. Really good one and I’ll get into 529s here at the financial planning strategy side of things but yeah, great opportunity to get folks to pay for one of the really expensive things that comes with kids if you’re going to help with college. But I think that’s good. Let people know what you’re looking for. As someone who’s been to these or buying things for these, I want direction, I want to know, right? There’s things that I think, “Oh geez, your kid would love this,” but going back to my last point, your kid is not going to like what my kid liked. So knowing what you need, I know we’ve gotten to the point where we have so many toys, birthday parties and things like that. We’re getting to the point where we’re just going to ask folks to bring books, say, “Thank you, kids love the book, we can read,” or whatever, but we just don’t need extra toys at this point and now I’m becoming that parent looking for someone new to say, “Geez, you want some stuff? We got stuff, come get it.” Because you’re right, if you’re not putting it out there, you’re going to get a bunch of stuff you don’t need and you’re just going to end up throwing it away or giving it to someone else or things like that. So I like that, be open and honest.
Tyler Hafford:
All right, so the next thing that we’re going to spend some money on is really expensive for everyone right now, but it’s food. You got to feed the babies and the kids, they tend to eat and poop a lot. What can we do there? What are some strategies to save some cash?
Hannah Tackett:
Yeah. Well first of all, your newborn baby is going to either have mom’s milk or formula, and I know nursing is just a big time suck for moms and can be really frustrating. One thing that kind of helps me is I think I just saved my family $1,500.00 this year, because that is about what the cost of formula for the first year of life would be is $1,500.00. Things that help with the cost of feeding your little through breast milk is insurance covers one pump per year for nursing mothers, so that is completely free of charge through your insurance. And if you have a second or end up nursing for longer, you can apply for one every year.
Tyler Hafford:
Yeah. We ended up getting two of them. I’ll throw a little … Actually, I’ll let you kind of do this as well because you’re going to have a little bit more input than I will. I know that the first time we got … I think it was the Medela pump that plugs into the wall, the second time my wife got one that you could charge and be portable with. Really liked the charging and the portable one. Mostly because those wires tipped the bottles over after you filled them up and I learned that lesson a lot mostly because I spill a lot. But yeah, I’d love for your opinion on that, if you go one way or the other.
Hannah Tackett:
Yeah. So I have one of each actually. With my first I got the Spectra S2 and that one has a battery, so you can charge it and take it on the go, you’re not plugged to a wall, reliant on that outlet. So that was really handy, and then my sister-in-law gave me her pump when she was done with it and this was like an awesome hack for working moms is that I have my home pump and my work pump, so I don’t have to carry it … I felt like I needed luggage just to get to and from the office. So that was really handy and then we did a road trip and I was pumping in the car really easily and things like that. So I would say go for the one with the built-in battery because that was pretty handy. And then I’d be walking around pumping with it, not having to sit there and wait.
Tyler Hafford:
Yeah, and I think my wife told me one time that breast milk is just gold, right? That that’s the gold, and you want to kind of build up a supply of it. I remember our freezer full of breast milk all the time, but even if you … I don’t think you can pump too much, right? You can’t have too much of this stuff. I know that people actually who are having trouble with nursing would ask my wife for extra milk and there’s just kind of a market out there for folks that need some breast milk, and that’s something you can use it for, right?
Hannah Tackett:
Yeah. So I have donated directly to individuals before but also I recently started donating to the Milk Bank of New England. So I donate there, and in exchange, they actually give me a ton of supplies. They give me the little bags for freezing it, sanitizing bags and other items, kind of as a little perk there. And the milk from that milk bank specifically helps kids in the NICU, so mom’s milk hasn’t come in yet or there are health issues and just the ability where I have a surplus to say, “Okay, I can help out another family’s child with that,” is great.
Hannah Tackett:
And then also there are for-profit milk banks where you can, if you want to make a dime, it’s actually … I can’t remember what the price is, I used to always [inaudible 00:25:24] street value of my milk, my freezer has x amount of ounces, I have this much money in milk. So you can sell it as well. I just opted, I want my freezer cleaned out so I’ll donate.
Tyler Hafford:
Yeah, and doing something nice. I think there is a big market in the bodybuilding world for breast milk.
Hannah Tackett:
Yeah, every now and then these bodybuilders infiltrate a mom group and you’re like, “Why does this guy need breast milk?”
Tyler Hafford:
Yeah, that’s probably a totally different [inaudible 00:25:54] but there are options if you have enough of this and if you are on the other side where you don’t have enough milk, there are options to get help and find some, so … All right. Baby starts to eat actual food. This is where most of your clothes are getting ruined. How do we handle that? For one, our food system right now for adults is difficult to find good things to eat because we’re just packing it full of stuff you probably shouldn’t be eating. Baby food is no different, right? We have again good stuff and bad stuff. How do we figure out what we should be feeding? Or how do we do it affordably?
Hannah Tackett:
Yeah. So the biggest thing that I found is my frugal parenting kind of partners really well with my hatred of plastics. So what I try to do is eliminate single-serving items that have single plastics involved as well. So you get the little three ounce jar of sweet potatoes for your dear little baby that’s learning how to eat that’s going to throw 90% of it on the tray, on the ground, in their hair. That three ounce jar is $1.05. You can buy a one pound sweet potato for $1.60, and so what we did is we just made our own baby food and it usually involves steaming vegetables and then pureeing them. I joked with my mother-in-law, she got us for our wedding present or maybe my bridal shower a really nice blender and it used to make really fun blendy drinks, like frozen margaritas and then for a while it was making really healthy smoothies and then we had kids and it was making baby food and it was kind of like the lifecycle of the blender from the really fun frozen drinks to baby food.
Tyler Hafford:
Well then they become toddlers and you go back to the margaritas.
Hannah Tackett:
Yeah. And smoothies, we do a lot of smoothies for Isaiah. So by making our own food using that blender, we were avoiding a three to four times markup, like 300 to 400% more expensive to buy the single one, and it gave me some sense of control too over what my child was eating. I know that had peas and apple in it. I know because I took an apple and I took peas and I cooked them and blended them. So that kind of met those three needs, like I want my kid to eat healthy, I don’t like unnecessary waste, and I’m a little bit cheap, or I don’t want to spend money I don’t need to spend.
Hannah Tackett:
And then Isaiah grew up out of needing baby food and into needing packed lunches for school and that was our next chance to try and avoid the single serving items. There’s a product I really like, it’s called a Haakaa Silicone Pouch, and you know, like you see the kids with the little pouches of whatever puree or smoothie. It’s the same idea but it’s a reusable one. So I take yogurt, I make smoothies, applesauce, and whatever that item was that was going to be in a single serve little yogurt dish or whatever, we just put it into this little fun, you slurp it down, just like the food pouches.
Tyler Hafford:
Yeah. That’s brilliant. I know yogurt in general, my kids love like the pouch of it or whatever it is, and we try to get it and we try to get something a little more healthy than like a Dannon or something that’s just loaded with sugar, and they’re incredibly expensive and you get like four of them.
Hannah Tackett:
And the options are so limited so that like Stonyfield Organic Kids item, you get a four pack of those for $5.29. And it has a lot more sugar, it has … The ingredient list is huge. We can select, “Okay, this is the whole milk Greek yogurt with no added sugar that we want for our kid,” and put that in a pouch instead of being pigeonholed into you put kids on it and double up the sugar, so again, having a little bit more control over the ingredients and options there. And it ends up, it’s a 400% markup for the yogurts and the applesauces and those types of things.
Tyler Hafford:
Yeah, and it’s crazy, and if you’re listening to this thinking, “My kid is never eating plain Greek yogurt,” one of the things that I like to do is I’ll take like raspberries or blackberries, pop it in there, mix it up, gives it the sweetness, gives it some taste, they feel like they’re getting something and it’s not just packed with added sugar. Really love that idea and actually I’m going to look at getting some of those because we do spend just tons and tons of money on those little pouches. Which are fantastic, because if you have a toddler, you really don’t want to hand them one of those cups of yogurt because that’s going to ruin everything.
Hannah Tackett:
In the car too, oh my gosh.
Tyler Hafford:
Car.
Hannah Tackett:
Car snacks.
Tyler Hafford:
Yep. Or before bed, which is always something where you need snacks and things like that. So yeah, really good one there. I want to go back to your idea of making the food yourself, knowing what’s in it. We did a mix for a little while, we were trying to find really healthy baby foods and the ones that just had all ingredients just for convenience and then ended up moving into more of what you’re talking about here where you’re making your own, but one of the things I found is that the variety that you can do at home of things that you puree is much broader than what you’re going to find in the product at the store and my kids were more apt to try different foods because we were being a little more … A wider spectrum on the foods they were getting. Not just bananas and sweet potato every time. So I do think there’s a good benefit there.
Hannah Tackett:
Yeah, we had a big beets phase, where Isaiah really liked … We did beets with applesauce and it looked frightening, there were a lot of like beet stains, but that just was exposing him to that food and that flavor and getting his palate used to a variety. I feel like baby foods all taste the same when it’s not like that apple just made this food.
Tyler Hafford:
Right. Yep, okay. So we’re making our food, we’re saving some money there, we’re using some reusable stuff. We talked about splurging in the department of like safety stuff. Is there a place to splurge when it comes to food and what we’re giving the kids?
Hannah Tackett:
Yeah. So for me, with the grocery bill, if produce, meat and dairy end up costing a lot, I’m okay with that. What I don’t want is to get a bunch of frozen pizzas. I see this as an investment in my child, like their health and wellness. So we try to get pretty clean meat and there are like a lot of farms around where you can get a really nice chicken pot pie or Zach’s parents always get like half a cow that they split with the neighbor. So I think meat is an important one, trying to get food that is as closest to food … Like I always say like your food should look like food. Like, “Oh, that’s a sweet potato and there is a pea and these are things that I know and identify and they’re not the chemicals that I can’t pronounce.”
Tyler Hafford:
Right, and this is big for anyone, right? You should be eating actual food, and there’s a lot of studies out there that show that the additives, preservatives, the added sugar, all these things that are going into food really affect human behavior and we see rises of ADHD and kids acting out and extra energy and those types of things, and they can be directly linked back to the diet of the child. So splurging in this makes sense, one for the health of your child, two for the mental health of your child, three for the mental health of you, because I know that if I give my kid sugar, 20 minutes later they want to kill each other. This is a place to me where it makes sense that if you have room in your budget to splurge to take care of your kids and take care of yourself, I really think that you’re going to go a long way with creating harmony within the home because everyone’s going to be on a level kind of emotional basis. So I agree with that, and then the vitamins. I know that we do like the Troll vitamins or whatever just to get something into my child because as they get older, they get a little more picky on what they’re going to eat. So you want to make sure you’re covering all your bases.
Tyler Hafford:
All right, so food comes in, and then it’s got to go somewhere. This is the one I remember before we had a kid, everyone was like, “[inaudible 00:35:07].” This was keeping me up at night, like I’m just going to spend so much money on these diapers. A little bit of an insight on that, it’s not as expensive as I guess I thought it was going to be. We still have a home, I’m not living out on the street because of it. But there is some ways to save money there. So talk us through where can we save money?
Hannah Tackett:
So one thing is if you’re going the route of disposable diapers, don’t ever think, “Oh, I’m just going to buy like these three bulk boxes of diapers.” Because what’s going to happen next is your kid will not fit into those diapers. It will be like a tiny little Speedo and there will be a lot of messes. So knowing your kid’s growing at an alarming rate, so don’t go all in on size one or don’t get too many newborn, a lot of babies are born already too large for newborn diapers, at least mine are. Mine were both nine pounders.
Hannah Tackett:
Then there is this other route you can take which I’ve done which is I do cloth diapering, and we’re kind of a hybrid. If I’m going out, if we’re out and about, I use a disposable diaper. But often we’re using cloth diapers at home. I had the benefit of like try before you buy again, my sister-in-law did cloth diapers, she said, “I have a newborn stash. You can use these diapers and figure out if it’s something that works for you.” It’s not going to work for everyone because it is work and it is kind of gross. But I ended up on my baby registry having cloth diapers, so my friends and family bought me diapers, and I think the average household would end up spending about $120.00 on getting your cloth diaper setup, and then you save about $900.00 a year as a result.
Tyler Hafford:
Yeah. Like I said, it wasn’t crippling. We were a disposable diaper family, that’s just where we decided we were going to, “All right, we’re going to spend the money here.” Fully aware that that is not the best choice for the environment. We tried to offset that and be as good as we can, this was one area where we didn’t, but anyone who is kind of sensitive to that, remember the cloth diapers are always going to be the best option here, but I like your idea. At least try it. We tried it, we were saying, “All right, is this going to be something that we can do?” Just didn’t end up being our kind of way but we have plenty of friends where it was perfect. It just fit their lifestyle. I also like your hybrid idea. If you’re going somewhere, bring the disposable diaper. The majority of them are going to be at home, you’re going to be taking care of that. So yeah, definitely a good way to save some money, save the environment. At least explore it. Don’t be close-minded to that idea.
Tyler Hafford:
All right, so let’s talk about some other places to splurge here. Two big expenses you’re going to have, we already talked about one was college, and I’m going to get into some of the tools for that. But childcare. So expensive, but nothing you want to cheap out on, right?
Hannah Tackett:
Yeah. So as far as daycare, preschool goes, you want to be sending your kid to a place that you feel comfortable with. If a place that I love is $25.00 more a week than a place that I don’t love, it’s worth it to me because I’m a working mom, my husband is a working dad, and I want to feel good while I’m in the office knowing that my child is cared for. So I wouldn’t go like budget discount creepy basement for a childcare solution.
Tyler Hafford:
Yeah. Yeah, I agree. You want to find somewhere, comfort for you is really important. And comfort for your child, but you just hit it. You’re going to have to go to work, and that is something that if it’s going to weigh on you, that’s going to ruin every day. It’s going to be something that you add to your plate, it’s going to add stress to you. So you’re almost paying for peace of mind and there’s a lot of value in that. I know we always talk about value in dollars and cents, I think there’s other values out there, and paying for something can give you that.
Tyler Hafford:
But there are some tools that help you pay for daycare to make it a little more affordable. I know this is one that we’ve started to use here at PFA, but FSAs or flexible spending accounts can pay for daycare, and you can do it on a pre-tax basis. Which allows you to really save some money on paid daycare. So if that is an option for you in your kind of work plan, explore it. You’re going to spend this money anyway, right? We were talking prior to this podcast, you’re spending this money. If you can do it on a pre-tax basis, you might as well do it.
Tyler Hafford:
On the other side of the FSA, there’s the HSA, and that’s your medical expenses. This is something that, and I know we talked about it in the last podcast, so if you missed it go back, Jim and I really break this down. But an HSA is going to be something where you have a high deductible plan and you can put this money, pre-tax into an HSA, a health savings account, as long as you take the money out for qualified medical expenses, it comes out tax-free. It’s the only account that allows you to go tax-free in, tax-free out. Really helped us through the birth of both of my children. I was able to [inaudible 00:40:45] on that account, you can use it on your family, so I used it for my wife and my kids. Is that something that you guys utilize, Hannah?
Hannah Tackett:
Yeah.
Tyler Hafford:
Yeah, really good kind of way to save for medical expenses because you’re going to have them and then your kids are going to be going to the doctor, right? So the first year, all of the years I guess, but I felt like in the first two or three years, we were at the doctor more often, having regular checkups, doing vaccines and all of those things. Those all come with copays and bills and things like that, so having that.
Tyler Hafford:
And then for college, the 529 plan, and you kind of talked about this and use that on birthdays or holidays to say, “We’re saving for our kid’s college. Throw some money into the bucket for us.” Those college plans, really good. What we’re doing here is we’re putting after-tax money in. The money is going to grow tax-free in that account, and as long as you pull it out for higher education expenses, so college, books, things like that, it’s going to come out tax-free. It’s like a Roth IRA except for college. But anyone can contribute to it, just like Hannah was talking about. So if you have a family member who wants to give a gift, give the gift of a college education. That’s fantastic, they can contribute to this plan.
Tyler Hafford:
If you live in Maine, it gets even sweeter. So the Alfond Foundation very generously has grants out there where they’ll help you out if you’re going to do this. So if you have a child born in Maine, they’re going to give you $500.00 if you open up the account. $500.00 per baby is the website, they should give you something at the hospital, check into it. Free money, one of my favorite things. If you put $1,000.00 into those accounts, they’re going to match up $300.00 of that every year. So if you’re putting your money in and investing it, regardless you’re making 30% because they’re giving you $300.00. That’s a great little incentive there and they also will give you $100.00 for setting up automatic contributions, and I think there may be a couple other out there. [inaudible 00:42:46] is where you’d want to check these out. You can set up accounts really easily.
Tyler Hafford:
I’m trying to think of the other, the ABLE accounts, 529 plans. So this is an account where maybe you have a child that’s dealing with some type of disability and you want to save for things like education but not just education, anything that may improve their life down the road. It works just like a 529, you’re going to put your money into it, it’s going to go tax-free as long as you use it for the qualified expenditures that come out of that account. But it is a great way to save for things that can be really expensive down the road, tax-free growth obviously is extremely valuable to all these things.
Tyler Hafford:
So Hannah, I want to thank you for coming on.
Hannah Tackett:
Yeah.
Tyler Hafford:
A really kind of cool discussion. Mom of two, you bring a really good insight to this. Hopefully people got some ideas on how to save some money and thanks for being here.
Hannah Tackett:
Yeah. Thanks for having me.
Tyler Hafford:
Awesome. Thanks guys. Make sure you like, subscribe, write anything in the comments. If you have a good tip, we’d love to hear it, so make sure to share. Thanks.
Speaker 3:
The foregoing content reflects the opinions of Penobscot Financial Advisors and is subject to change at any time without notice. Content provided herein is for informational purposes only, and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Thank you.
