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Thursday, April 24, 2014

Elizabeth Street

RAISING TWINS: 7 FINANCIAL COSTS TO CONSIDER

Jul 19, 2013

Raising Twins: 7 Financial Costs To Consider

Pregnant with two bundles of joy? Consider this number: $406,300. That’s how much the federal government estimates parents will spend raising two children born in 2010 until they turn 18—and that’s before the college bills pour in.

One year alone could cost nearly $24,000. But before you break into a cold sweat, there are ways to prepare for the financial onslaught and cash in on the perks, too.

“It’s really been more of a cash-flow problem than anything else,” says New Jersey mom Karina Tahiliani, who has four-year-old twin daughters. “In the end, I don’t think we spend much more than other parents with two kids, we’ve just had to spend it all at once.”


1. Your Homecoming

Having twins doesn’t necessarily mean doubling what you planned to spend on one child, either. But it does mean paying for large-ticket items times two and doubling down on saving for college. Here are seven things you might want to anticipate—or plan for—when expecting double trouble, moneywise, that is.

Twins like to start the party early. In fact, about half are born before 38 weeks gestation, which means potential preemies, and a chance your babies could spend some time in a neonatal intensive care unit, or NICU. Twins are also more likely to be born by C-section, which means a longer hospital stay and possible complications for Mom. One set of premature twins can cost the health-care system approximately $130,000 from birth to discharge, according to Twins Magazine.

These costs don’t always translate to what parents ultimately pay, of course. That depends on what type of health insurance plan a family has. Parents may spend anywhere from $1,000 to more than $3,000 for one birth, depending on how complicated it is. How this adds up for two babies can vary depending on your insurance plan, according to WebMD.

2. Their Gear

Two babies likely means two cribs, two car seats and two highchairs. But not everything has to be a double set, and there are economies of scale to be had, so buy wisely. Twins can share a playpen, a double stroller doesn’t necessarily cost twice as much as a single stroller, and if you buy unisex onesies, sleepers and play clothes, even twins of different sexes can share threads.

3. Buying Double…Everything?

For Tahiliani—and many other parents of multiples—it’s not what you pay, but the fact that the cash layout is fast and furious. By staggering big purchases as the kids grow, you can ease the toll twins take on a budget.

For example, two babies can share the same crib for the first few months, so buy the first crib before they’re born and hold off on the second until they’re rolling over. The same goes for other big-ticket items, like highchairs. You could wait until babies are sitting up and eating solid foods, which is between four and six months, before you invest in two highchairs.

This will also give you lead time to source what you need used on local mom boards in your community, sites like Craigslist, or this new Facebook group, which resells gently used baby wares from multiples.

4. Surprising Places to Save

Twins account for more than 3 out of every 100 births in the U.S. But the numbers are rising. With more twins come more twin parent groups. You may want to consider joining one.

“My twin group was a lifesaver!” says Tahiliani of the group she joined before her daughters were born.

Not only can other twin parents provide emotional support, they may also have an abundance of used baby gear in matching sets to unload—at a cut rate. She bought her daughters’ cribs, stroller, tricycles and myriad other supplies at a fraction of retail from parents.

And retailers—wise to the fact that parents of twins must spend more—also incentivize you with special coupons, on everything from food to diapers, available to parents of multiples alone. Here’s a list, by category, of retailers offering discounts, just because you have more babies to clothe/feed/pamper.

5. Is Breast Best?

As daunting as the idea might sound, breastfeeding twins can save a family thousands of dollars in the first year. Twins will gulp between 3,000 to 4,000 oz. of powdered formula in the first year, which comes to about $2,340 a year, according to Twins Magazine.

But breastfeeding twins can be challenging, and if you’re going back to work, you will need to factor in the cost of a breast pump and bottles. Under President Obama’s new health plan, pumps can be paid for through a Flexible Spending Account, or FSA, at work, which can reduce your tax burden, and some insurance companies also now reimburse the cost of pumps.

6. Nanny, Day Care or Mr. Mom?

The upside of twins is having your early child care all over in five years. The downside is, well, it’s all over in five years. While parents of singletons have the luxury of spreading out the financial pain with fewer overlapping years, those rearing twins have to pay up all at once.

However, many preschools and day cares offer sibling discounts, sometimes as high as 15% or more. The same goes for nannies. A nanny for one child may cost $15 per hour, but for twins the price may increase only slightly, to, say, $18 an hour. If both parents work, parents can take the first $5,000 out of their pre-tax income by signing up for a dependent care program.

Whatever you ultimately do—day care, nanny, or stay-at-home-parent—consider your options before babies are born.You may want to spend a month living on the income you’d have if one parent stayed home for good, or if you were suddenly paying for a nanny full-time. See how it works before the 2 a.m. feedings begin.

7. The Slow Slog: College

Unless you’ve been living under a rock, you probably know that college is a wee bit pricey these days. In fact, if the annual college-cost inflation rate remains about the same, parents of children born in 2012 can expect to spend over $31,000 a year on tuition and fees alone at an in-state, four-year public college. (If you want to know what a private school will cost, sit down.)

If you haven’t opened a 529 college savings plan yet, you may want to consider it. Opening one in each child’s name will mean you can save more for each child. Another good idea? Tell all the grandparents, aunties and friends about it. Every time Aunt Bertha wants to buy the twins another matching set of china dolls, suggest she redirect the gift to the savings account. How much you’ll want to contribute to a 529 will depend on your other financial goals, so make sure you factor it in when considering your big picture.

The idea of matching college bills may be daunting, but think of it this way: You’ll be twice as happy on graduation day.


By LearnVest's Rhonda Kaysen

Information shown is for illustrative purposes only and is not intended as investment advice. Please consult a financial advisor for advice specific to your financial situation.

For more tips on family finance, check out 
The Other Really Expensive Baby Cost: ChildbirthHow to Plan for a Baby on Board, and Are You Ready for a Baby on Board…Financially?