Dear Carrie: Our first child is 2 1/2. We're thinking of having a second baby, but it seems pretty daunting financially. We keep reading that it costs more than $200,000 to raise a child. Can this really be true? — A Reader

Dear Reader: For just about everybody (unless, of course, you're the Duchess of Cambridge), having a second baby is a financial, as well as an emotional, decision. That's because kids today come with a hefty price tag. According to the U.S. Department of Agriculture, the cost of raising a child to age 18 is now upward of $245,000.

But when it comes to that big number, I feel the same as I do about retirement estimates. The actual cost depends on your personal circumstances and your own choices. You do have a certain amount of control — as long as you plan wisely.

Just as in retirement planning, to be financially ready for a second baby, you have to think ahead and prioritize. Of course, it doesn't hurt to start saving — starting now.

Plan for the Big Expenses First

These are the expenses that you can anticipate and plan for:

—Child care. This is often one of the biggest expenses, so be sure to look at all of your options. Having one parent stay at home is a choice for some. But that doesn't make financial sense unless one of you is making less than what child care would cost. Are you lucky enough to have a family member who could cover a day or two a week? Some providers of child care give a family discount. And there are co-ops, which can be less costly. What about sharing a nanny with another young family? And don't forget to check your employee benefits. Some employers offer discounted child care and other savings perks. Do your research now so you're working with real numbers.

—Health insurance. Contact your current provider. Often there's a flat family rate, so your premium may not increase, but realize that you'll most likely pay more for care over time.

—Housing. Will a new baby mean you have to move? If not, you can trim some costs from that big estimate, which includes housing. If you're cramped for space, be realistic about how much more room you can afford.

—Education. This isn't included in that general estimate. Fortunately, college costs can be handled in a variety of ways, such as with loans and grants. But get a head start by opening a 529 plan as soon as your child is born, and start saving something each month. Even a small amount can grow significantly over time. If you're planning on sending your kids to private schools, you've got some additional saving to do. An education savings account, which can also be used for elementary and secondary school, could offer some tax advantages.

Put Day-to-Day Expenses in Perspective

Day-to-day costs for a second child can be pretty reasonable at first. You probably already have many of the basics, so there shouldn't be a big "setup" expense. And the proliferation of moms groups makes it easy to get quality things secondhand.

The expenses will grow, of course, right along with your child. However, consider that if your kids move on to public schools, the amount you spend on child care can eventually be directed to other expenses, such as after-school lessons, bicycles, computers, summer camps — all the things that now seem to be synonymous with childhood.

Ramp Up Your Emergency Fund — and All Your Savings

I hope you already have an emergency fund. Now's the time to start adding to it so that you'll have an even bigger cushion against unforeseen events. And don't forget about life insurance.

But don't stop there. Focus on other ways to save. For instance, consider starting a special savings account for each child. If grandparents or other relatives ask how they can help, don't be shy about suggesting monetary gifts toward your kids' accounts.

Factor in the Tax Advantages

As you add up the dollars, remember that Uncle Sam gives you a bit of a break. On top of the extra dependent exemption, if your modified adjusted household income is under $110,000 (married filing jointly), the child tax credit can reduce your tax liability by up to $1,000 per child.

There's also the child and dependent care tax credit, which allows working parents to claim qualified child care costs of up to $6,000 for two or more children ($3,000 for one child). This credit also comes with income and percentage limits, so another option is a dependent care flexible spending account, which allows a family to contribute up to $5,000 pretax annually.

Don't Shortchange Yourself

At the same time, I want to remind everyone that saving for your own retirement should remain your highest saving priority. It's not selfish; it's practical. You don't want taking care of your kids now to mean they have to take care of you down the road. Once again, it's about planning ahead.

Enjoy Every Moment

We're talking about numbers here, but the joys of having a child are too numerous to count. Don't let financial concerns completely outweigh your desire to increase your family. Just do it with your eyes — as well as your heart — wide-open.

Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of "The Charles Schwab Guide to Finances After Fifty," available in bookstores nationwide. Read more at http://schwab.com/book. You can email Carrie at [email protected]. This column is no substitute for individualized tax, legal or investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax adviser, CPA, financial planner or investment manager. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.