Ahhh… Babies. They’re cute, no bones about it. But it is not much of a secret that your tiny bundle of joy brings a not-so-tiny list of demands. Besides premature gray hairs, sleepless nights, spit-up stains, and not-so-fun body changes, you can expect that having a baby will, to grossly understate it, put a strain on your wallet. Still, don’t fret! To help you keep those money fears at bay, here’s a list of tips that will teach you how to financially prepare for a baby.
Know your financial pulse
Before anything else, moms and dads should take a deep dive into their own financial situation. You probably have a pretty good picture of your assets, such as your cash on hand, total savings, et cetera. But how closely do you monitor your expenses? Start combing through your liabilities. More specifically, divide your outgoing money into categories of bills, loans, everyday expenses, including groceries, transportation, entertainment, etc. A personal financial check will help you maintain your household budget and shape your plan for the new baby expenses.
Moreover, the absence of parental leave is another expense you’ll want to plan for. US employers are not required to offer paid time off to the expecting or new parents. So, whether you have this option or not will largely depend on your employer, employment status, and benefits. And, even if you do, it may not be paid at your usual rate.
Map out the potential aspects of spending
When you start to financially prepare for a baby, there’s one thing you should know right off the bat: everyone’s situation is unique. There’s a whole host of variables that could influence the cost of having a child. But, in any case, expect your expenses to shift tremendously with the new family addition. It all starts long before that growing baby bump starts making the big news obvious, through the nine months of doctor checkups and long after your little tot arrives.
Saving up for one-time expenses
The medical cost
For starters, expect to see a lot more of your OB-GYN for prenatal checkups, ultrasounds, and lab work. And when the time comes to bring your little one into the world, you’ll be looking at a pretty staggering total. Of course, make sure to choose an in-network health insurance provider. Then, contact them about your prenatal coverage, out-of-pocket costs, and any à la carte fees of delivery. Also, do some research on your chosen hospital, and check with your doctor about a full breakdown of expected expenses.
Baby gear
Baby’s here! The list of what you’ll be buying is, again, a pretty variable one. The following are the baby items you may need either from day one or after a few months.
The nursery
- Bassinet ($50-$260)
- Crib ($120-850)
- Crib mattress ($60-$140)
- Mattress pad ($14-130)
- Changing table ($80-250)
- Blankets and bedding ($24-$60)
- Baby monitor ($40-$60)
- Hamper ($20-60$)
- Co-sleeper ($130-$200)
- Rocker or glider ($180-$600)
- Nightlight ($20-$70)
- Dresser ($80-$500)
- Decorations ($10-$150)
Nursing
- Electric breast pump ($30-$330)
- Manual breast pump ($12-$40)
- Accessories and products such as nipple cream, nipple shells, and shields, nursing pads, and nursing bras.
- Feeding
- Highchair ($50-$250)
- Bottles and nipples ($6-$60)
- Plates, bowls, and spoons ($10)
- Cups and sippy cups ($20)
- Sterilizer ($35-20$)
- Bottlebrush ($8)
- Burp cloths ($10)
- Bibs ($12)
Others
- Bath and grooming necessities typically include a hooded baby towel, washcloths, bathtub and a mat, brush and comb, nail clippers, and nasal aspirator. The estimated cost is roughly $100.
- Transportation-related costs estimate around $800. These typically include a stroller, travel crib, car mirror, and baby carrier or a sling. Most importantly, every state requires that parents have a proper car seat for a safe trip home.
- Also: pacifiers, thermometer, babyproofing supplies, humidifier, etc.
Estate planning
As new parents, there will be some legal documents you may want to get in place. These are typically one-time costs:
- Creating a will or updating an already existing one.
- Setting up a trust will significantly help you to financially prepare for a baby in the long run.
- Choosing a legal guardian for your children should something happen to you.
Taking a look at ongoing costs of having a baby
- Medical costs. Unfortunately, medical expenses belong to both the one-time and ongoing categories. There are so many different things that may call for checking out by a pediatrician. Not to forget about routine check-ups, immunization, dental and vision care, etc.
- Insurance. You’ll need to add your newborn to your health insurance. Additionally, your life insurance and income insurance also need to be in check.
- Childcare. This one’s a biggie. If you’re returning to work, there’s always an option of leaving your baby in the care of a trusted relative. Otherwise, you may need to consider alternatives (and the price tag they come with).
- Every-day expenses. These account for things you’re already spending on (groceries, electricity), with a couple of additions (diapers, formula/food, toiletries). Secondly, your kid will be plowing through clothing, so if you don’t want to pay out of pocket, you might want to consider some hand-me-downs.
- Entertainment. Some entertainment basics are essential for your newborn’s growth. Toys, for stimulating your baby’s senses and books, for helping them understand their environment much faster. Lots of parents also opt for infant swimming classes due to their muscle strengthening, coordination, and balance improvement benefits.
- Saving for education. Thinking about your child’s education will most probably start sooner than you might have expected. This especially applies if your area doesn’t have public education until 1st grade, if your child should go to a private school, or if your goal is paying for your child’s college tuition.
The ones you don’t always think about
- Maternity clothes. Unfortunately, mama clothing is often marked up just because it’s labeled maternity wear. Still, you can be stylish and still stick to your budget all in one go. You can shop your own closet, borrow, and buy non-maternity items.
- Complications during birth. Some things may not go according to plan, like a home birth turning into a c-section, and in such an event, you need to know what to expect.
- Hospital room. Your prenatal, intrapartum, and postpartum medical care costs will add up. Oh, and yes, your newborn baby will get their own bill, too. Surprise!
- Mental health care. The number of women undergoing postpartum depression is, unfortunately, high, and many of them find comfort in their coverage for mental health. Otherwise, treatment comes with a pretty hefty price tag when you’re paying out-of-pocket.
- Physical recovery. Be it vaginal delivery or C-section, either way, you could be looking at weeks, months, and, in some cases, years of physical recovery. If physical therapy is part of your plan, check your insurance coverage in advance.
- Convenience. Even savvy shoppers lose their inclination to comparison shop when they’re sleep-deprived, short on time, and with a crying baby waiting for them at home.
- Others. Halloween costumes, piano sessions, random things like going through five different sippy cups before you finally find the one your child likes; then there are your child’s birthdays, other children’s birthdays, travel plans, lost toys, snot suckers that need replacing…
At this point, you’re probably massaging your throbbing temples. Unfortunately, regardless of how meticulously you plan, something will crop up! Still, adding some financial unknowns, or things that are often overlooked or forgotten, to the mix will save you a lot of stress and help you to financially prepare for a baby.
Having another child further affects your finances
$233,610. That’s the average cost of raising a child over a 17-year period. But does this figure double with the second baby? In a nutshell, no. A second child won’t pack the same wallop to your wallet as the first one. Firstly, housing and food costs are more or less the same. Next, younger children can use their older siblings’ cribs, clothes, toys, stroller, high chairs. Also, camps and private schools usually give a little break (i.e., discounts) to the parents on tuition for multiple children.
Still, your kids will need individual uniforms, as well as lessons and gear, all depending on their interests and activities. Plus, a second child may mean you need to move to a larger home, get a bigger car, and that’s when the cost of having a second child ticks upward quite a bit.
Start trimming your outgoing expenses
To financially prepare for a baby, you need to start thinking long-term. Primarily, this means practicing living on less and making cuts where you can. Focus on your liabilities as well by reducing any debts and paying out loans. Bulking up your savings no longer seems like a sound plan when you have a high-interest debt additionally skewing your budget.
You should also consider cutting down on some baby expenses. You want the best for your little tot, right? But there’s no reason for it to cost you an arm and a leg. So why not make an effort to find some baby clothes and comfortable onesies at an affordable price? Moreover, secondhand, DIY, and hand-me-down items can save the day.
Stash away for rainy day
It’s a good practice to start saving early (and often) to prepare for all of the baby-related expenses. Besides cutting costs and addressing your liabilities, start shoring up your emergency fund. Moreover, a smart financial move would be to have a separate savings account dedicated to your baby’s expenses. Dipping into it will be less tempting if kept separate and without easy access.
Follow the Baby Steps
Having a better picture of your financial health, the expected costs, and priorities will make budgeting for your child much easier. Dave Ramsey recommends following the Baby Steps to take full control of your money. This step-by-step approach will help you save and stay on track of your spending. Also, it’ll help not to go overboard. Shopping can pretty easily go out of hand when you walk into the children’s department, and that super chick 700$ stroller starts calling your name.
The takeaway
To financially prepare for a baby, you ought to plan ahead and ask for professional help if you need to. Planning requires you to come up with smart financial moves, and make new, better practices of handling your finances a habit. But, perhaps the biggest takeaway for expecting, or brand new, moms and dads – take one (baby) step at a time!
Meta description: You’re thrilled about the new family addition, but don’t let excitement get the best of you. Here’s what you need to know to financially prepare for a baby.
