When our daughter, Meredith, was growing up, we were determined to teach her more about money matters and responsibility than our parents had taught us. (Sound familiar?) Still, we'll never forget when she got her first paycheck from a part-time job. She stared in horror at the net sum and said, "Why is so much taken out for taxes? There's practically nothing left!"

Welcome to reality, kid!

Let's get one thing straight right off the bat: We're not out to tell you how to bring up your kids. But we absolutely believe that a healthy example of sound money management is one of the most important gifts you can give them. "Managing" a child's money smarts through elementary school, adolescence, college, and early adulthood takes vast reserves of energy, but the rewards are priceless.

One important way you can do that is by being smart about your own finances, which you'll need to do anyway to meet the growing expenses of raising a child.

Believe us, we've been there. Let's start at our beginning. . . .

The Timeless Formula

We were pressed for money when our daughter was on the way. The centerpiece of our living room—we were still in our bare-bones first apartment—was a big promotional Cinzano bottle that Daria put in a prominent spot on the floor, and we started throwing all of our spare change into that bottle. We managed to amass $400 toward the cost of Meredith's delivery -- a fortune to us at the time!

That was in 1972. Today we can't imagine a bottle large enough to hold the thousands of dollars in spare change you'd need to go to the hospital and deliver a baby. We hope you have health insurance to cover it.

Then there are those prospective parents who go through heroic measures to have a baby. We get calls from people who want to adopt children—a $20,000-and-up proposition. We hear of couples who can't conceive without tens of thousands of dollars in fertility treatments, single women and lesbian couples pondering the costs of artificial insemination, women over 45 considering donor eggs, gay couples looking into having a child by surrogate. We hear from people on their second marriage who already have children from first marriages but want to have another baby or two to cement this new "blended" family.

Any way you look at it, the formula doesn't change: Kids = Expenses.

The American family survives, and even thrives, against all possible odds, but it takes mucho moolah to start and maintain a family. The U.S. government has calculated the cost of raising a child from birth to the age of 18 as a whopping $160,140 for a middle-income family. Talk about sticker shock! Consider that this is the cost before you even begin to touch college tuition.

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