(MONEY Magazine) – RAISING TWO-YEAR-OLD Rebecca Schuchat of Oakland has been a journey of discovery for her parents, Ilana DeBare and Sam Schuchat. This year, for example, they discovered that their 1985 Toyota Corolla was too small for a family of three and needed to be replaced; that Rebecca, who has been walking for only 13 months, had already outgrown three pairs of shoes; and that the cost of her toys, books and other sundries last year came to more than $1,900. "I was shocked when I added this stuff up," says DeBare.

Ah, yes. Like almost everything else about parenthood, the financial burdens of raising a child are something you're never quite prepared for. Economists at the U.S. Department of Agriculture, whose annual report tries to put a price tag on raising the great American kid, estimate it will cost the average upper-middle-income family $198,060 to support a child born in 1994 through age 17. If you factor 5.7% annual inflation into the picture, the number rises to $343,630, and if the kid in question is a first child--with no siblings to furnish hand-me-downs--the figure balloons another 26% to nearly $433,000. The kicker: That doesn't include a penny for college.

Nickel-and-diming every kid expenditure in your family isn't the solution. Even if it were possible, bean counting goes against too many deep-seated parental urges. When every kid in the fourth grade has $100 in-line roller skates, would you really condemn yours to the dweeb model with side-by-side wheels, just because it's cheaper?

On the other hand, you do want to get the big-ticket issues right when it comes to raising a family. For example, you need to find a way to stick to long-range financial plans, despite the costs of bringing up babies. You also want your children to develop a realistic attitude toward money, which may save you and them considerable grief down the road. While the particulars of your family's child-rearing costs will almost surely differ markedly from the national averages, the overall patterns are likely to be the same. Recognizing those patterns can help you strike the balance that every parent seeks between prudence and indulgence. Here's a rundown of what you can anticipate paying to raise your kids during different periods in their lives:

From crib to kindergarten. This is the period when kids disrupt your finances--not to mention your sleep--the most. Especially if the baby is your first, you face all the expenses of outfitting a new human with furniture, living space, clothes and so on, at the same time that you may have to adapt to the loss of one spouse's income. These years also offer a crucial chance to get a jump on building your own retirement nest egg (see the next story) and a college fund for your Harvard '13 alum. Says Stephen Wetzel, a financial planner in Yardley, Pa.: "For parents who are worried about being able to save, an automatic payroll-deduction program through a fund company or brokerage is ideal. It lets you put aside an extra $50 or more a month, and you'll never miss it."

As for the actual costs at this stage, affluent families (mean income in the USDA survey: $81,500) lavish an average of $10,725 a year on children up to six. Housing is the largest single expense for the four-foot-and-under set, since when baby makes three (or five), the family often heads for roomier living quarters. Cars too are a major but often overlooked cost, as snappy little Miatas get upgraded into more sensible Explorers and Voyagers. The Schuchats traded their cramped Corolla for a $25,000 1995 Camry station wagon, a car better suited to hauling the mule train of diaper equipment, toys, extra clothes and food that accompanies babies on virtually any trip. "It was family vacations that did it," recalls Rebecca's mom. "On one trip you almost couldn't see Rebecca because there was so much stuff in the back seat."

Day care, which can run $300 a week or more, is another major expense at this stage, and for two-career couples, it may be the one that poses the thorniest financial problem. Should one spouse stay at home, or should both continue to work? The worksheet on page B4 can help you with the arithmetic. Don't be surprised if it shows that after subtracting child care, taxes and work-related costs, the lower-earning spouse who stays on the job will toil for something close to the minimum wage.

If you decide to keep both spouses on the job, one of two tax breaks may help offset your outlays for child care: the child-care tax credit or, if you are among the 52% of employees eligible for it, a flexible spending account. (Tax rules prevent you from using both.) If your adjusted gross income exceeds $28,000, the credit lets you take as much as $480 ($960 for two or more kids) right off the top of your tax bill. The FSA, on the other hand, lets you pay as much as $5,000 of your child-care expenses with dollars deducted from your paycheck before taxes, essentially turning your child-care costs into a tax deduction.

Which is better? If you're in the 28% tax bracket or higher (married couples with taxable income of more than $39,000), the FSA wins, hands down. Not only does it give you a bigger write-off against income taxes, it is not subject to Social Security tax. That's a break you don't get from other salary-reduction benefits such as a 401(k).

The wonder years: six through 11. Why wonder years? Because this is the stage at which many families' income finally catches up with their child-rearing bills--and they can stop wondering what hit them. Odds are your salary has grown faster than your kid-related expenses. At $10,760, the average annual cost of caring for a grade schooler is not much higher than caring for a toddler, while the average parent's salary has grown 21% over the past six years. But don't let those extra dollars vanish. Use them to patch any holes left over from the toddler years: Rebuild your cash reserve, if needed, or direct some extra savings into stock mutual funds for your retirement or the child's college fund. Remember: Before long, your kids will be teenagers and the grace period will be over.

And even though your child's overall costs are likely to be flat, brace yourself for some dramatic shifts in how the cash is consumed--or rather, devoured. Day-care costs typically plunge once a kid enters school, but the cost of feeding the average growing scholar soars by some 43%. It's not only the additional chow that kids scarf down that elevates the outlay. Most families are so busy with careers and school activities that they tend to gobble takeout and restaurant meals, which can double their monthly food bills. "Trying to please our four boys is tough," says Joe Morrison, who with his wife Susan runs an insurance brokerage in Springfield, Pa. As a result, the family grabs fast-food meals three times a week. The Morrisons spent $2,768 last year on food for 10-year-old Jeffrey alone. After a brisk game of street hockey, Jeff thinks nothing of demolishing four slices of pizza. "When we go out for breakfast, Jeff has two meals," says Joe. "And he's still hungry."

At this stage the costs that government statisticians call miscellaneous rocket 15% as well. Part of that increase is attributable to the head-spinning annual birth rate of must-have toys: Ninja Turtle begat Power Ranger begat Buzz Lightyear. To combat the constant "I want it," planners recommend you start handing out an official allowance by the time kids are six. The proper sum depends mainly on the going rate among your child's peers, but experts suggest a dollar a week keyed to the grade the child is in--five bucks for a youngster in fifth grade, say. While experts differ on the issue, Carol Volker, associate professor of human development and family studies at Iowa State University, argues that you shouldn't tie the payment to the performance of household chores. Children should understand they are receiving a portion of the family income for their expenses because they are members of the family. "Explain that we all do things like make our beds and take out the trash just because we want to live in a nice house," says Volker. "If kids stop making their beds, take away other privileges," but don't use dereliction of duty as a reason to dock their allowance. The self-reliant years: 12 through 17. At least you hope they're more self-reliant. In any event, teenagers start to make decisions for themselves, and the consequence is, you'll be writing some big checks. The kid whose whereabouts you used to track with a $25 baby monitor now requires a $52-a-month cellular phone. That's one reason subsidizing the average adolescent--if there is such a creature--runs $11,525 a year.

Costs for clothing rocket the most, up 60%. "Kids at this age no longer want to wear an older sibling's hand-me-downs," says Mark Lino, a USDA economist who has crunched many of these numbers. Take Carrie Marsh, 15, a member of the student council at East High School in Denver. Total tally to keep her in Gap jeans and Express sweaters last year: around $2,000. "And that's conservative," says her mom, Kristin. "It's awesome."

Fueling those Nike-powered engines goes up another 17%. "When the kids were little, I used to ask them, 'Are you going to finish that?'" says Linda Dunlap, a child development professor at Marist College in Poughkeepsie, N.Y. and the mother of two teenage eating machines. "Now they ask me."

About the time that kids turn 16, the day comes that you both dread and yearn for. They get their driver's license. "I'm already shocked that it costs $1,000 annually to insure a car that's six years old," says Dunlap. "When we add our 16-year-old son next year, that premium will double." Fortunately, there are several ways to put a dent, so to speak, in your auto insurance costs.

As you know, the insurers regard all unmarried males under 25 as a highway menace--and they're only slightly better disposed toward girls. So put young Evel Knievel on your own policy as the occasional driver of your oldest, cheapest clunker, and drop collision and comprehensive coverage if the car is worth less than $4,000. That should be good for 40% to 45% off your premium. Be sure he--or she--takes driver's ed, often given free at local high schools; that's worth another 10% right there. High school or college drivers under 25 who are in the top 20% of their class, have at least a B average or are on the dean's list or honor roll are often eligible for as much as 25% off; check with your insurer.

Finally, as part of your child's lifelong tutorial in the value of a buck, you'll need to give your kid a raise. Experts recommend allowances of about $10 a week for 12- to 15-year-olds and $15 for 16- to 17-year-olds. Says Jack Morgan, a professor of economics at the University of Louisville in Kentucky: "The amount depends on what you decide it should cover. You may want the older ones to pay for their own gas but not for their own school lunches, in case they decide to skip a meal so they can fill up the tank."

About 80% of teens will have held a job by the time they graduate from high school. Research shows work may actually improve their grades as they learn to budget their time, provided they put in no more than 10 to 12 hours a week. But don't count on their saving much of what they earn. "One thing we have found," says Carole Prather, assistant professor of consumer and family economics at the University of Missouri, "is that almost all the money disappears immediately." To prevent that, sit down with your kids and figure out a saving schedule before they start to work. For example, have them put 50% of their pay into a savings account for college. There's no reason why they shouldn't pay for some of those expenses themselves.

The payoff for your considerable outlay over the years comes on the day you proudly settle your kids into their first dorm room. But as you kiss their little pink cheeks good-bye, you may consider whispering gently in their ears: "Study hard, because the word boomerang isn't in my vocabulary."