How to Pay for Kids

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In some cases, especially in the most expensive Zip Codes, renting may be a better choice.

Food: It certainly helps to shop in bulk at stores like Costco (COST) and Sam's Club (WMT), but make sure you bring a list and stick to it, resisting the temptation to buy things you don't need. Another smart way to keep food costs in line is to learn to cook, says David Brady, an investment adviser in Chicago at Brady Investment Counsel. "It is cheaper, plus you get leftovers," says Brady. His blended family includes five kids, so they try not to eat out more than once a week. And when they do go to a restaurant, they keep it simple, with pizza or Mexican food, for example. "Our family's favorite is Chipotle," he says, adding: "We save a little by drinking water."

Activities: Whether it's skating, horseback riding, or tennis, extracurricular activities can get very expensive, with an average cost of $35,000 over an 18-year period. While your son or daughter might play ice hockey for just five months out of the year, your best bet is to set money aside year-round to finance things like the cost of team membership, additional ice time, travel, and equipment, says Diane Pearson, a financial adviser at Legend Financial Advisors in the Pittsburgh area. And though parents may want to expose kids to many different experiences, one way to limit expenses is to focus your children on a few activities they are passionate about.

Technology: As any parent with a young one knows, kids like to talk, and cell-phone bills can really add up. Throw in an iPod, the latest video game, and the cost to upgrade your computer—the one they've managed to clog with spyware—and your tech tab starts to soar. One tip: Buy refurbished computers. "All the major computer manufacturers offer refurbished models that are practical and affordable, and often they are 10% to 30% cheaper than new models," says Ori Pagovich, an adviser at Gotham Financial Services in New York. If your children have cell phones, a prepaid plan or a family calling plan can keep costs in check. And instead of letting unused video games pile up, consider setting up a swap with a few other families.

Child and Health Care: Costs for child care and health care are significant, though they vary wildly around the country. But you can shore up your finances by planning ahead. Find out whether your employer offers a child-care or health-care flexible spending account. If you are in the 28% federal tax bracket and live in a state with a 5% tax rate, a $5,000 annual contribution saves you $1,650 in taxes, according to Mark Berg, a certified financial planner at Timothy Financial in Wheaton, Ill.

Adoption and Fertility: Adoption expenses range from $10,000 for a domestic adoption to more than $40,000 when going international. Expenses tied to fertility treatments can range from $20,000 to more than $50,000. Many employers offer financial assistance for both, so check with your human resources department. Another potential resource is lending company FirstAgain, which offers relatively low interest loans for adoption and fertility treatments.

Getting More from Less Money

Many parents say they will do anything for their children. But that doesn't mean you have to go out on a financial precipice. "The bottom line is that while there certainly are expenses associated with kids, they don't have to be nearly as expensive as some people think," says Bob Nusbaum, a certified financial planner at Middle America Planning in Pittsburgh. One of the biggest surprises about parenting "is that spending less can actually give you a lot more."

Check out the BusinessWeek.com slide show to learn about even more expenses parents face.

Join a debate about whether kids are worth the cost

Young is a Personal Business editor for BusinessWeek .