Budgeting for a New Baby

The arrival of a new baby can be both enjoyable and financially overwhelming. A tiny new baby can mean tremendous changes and significant expenses for new parents. How much money can you expect to spend on your little one in the first year? What financial tools should you consider creating? Here we’ll demonstrate how that you can prepare for your family’s most recent addition before he or she arrives.



  • One of the biggest expenses for new parents would be the delivery–the cost of which depends on the location and health insurance policy.
  • One-time costs often include travel, home needs, and nursing/feeding.
  • Other things to consider include the cost of child care and savings plans.
  • It’s important to have an emergency fund if a parent decides to stay home.

One-Time Expenses

In this scenario, we have a look at the first infant. That means starting from scratch in a number of areas like strollers, furniture, and toddlers. There is, of course, also the one-time health cost of delivering a baby in the usa. As we’ll see, this cost is definitely the hardest to pin down in any meaningful way.

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Medical Bills

According to the latest figures in Castlight Health, the average cost for routine maternity care was $8,775, but this is highly variable by where you’re. A routine vaginal delivery ran an average of $6,075 in Kansas City and a whopping $15,420 in Sacramento. A cesarean delivery in Pittsburgh keeps the minimal average at $6,891 and Sacramento is in the high end with an average cost of $27,067.1 Clearly, these prices aren’t taking your insurance policy into account. Review your policy to find out what your out-of-pocket costs are for prenatal care, hospital stay, tests, and postpartum care.

Unfortunately, it is almost impossible to create a precise prediction about how much you’ll pay without reviewing your health coverage. Difficult births with long hospital stays can run over $100,000 and still be covered by insurance, whereas an easy birth using a brief stay may cost only $5,000–but the new mother could end up paying the entire bill. Numbers from many diverse sources indicate that the average copay to get a mother with insurance is somewhere around 19 percent, so taking the average, no-nonsense delivery of $6,075, that is just over $1,200 on average.2 That said, it can’t be emphasized enough that your insurance policy and your location matter more than any national average.

Your insurance policy and location are important factors when determining how much the delivery of your baby is going to cost.

Baby Stuff

The one-time purchases for baby are as changeable as the medical care costs above, but for different reasons. This course can go up exponentially dependent on the requirements of the parent. For example:

    • Traveling Needs: To get out and about you’ll almost certainly want to get a stroller, a baby car seat (required by legislation ), a baby carrier, and a diaper bag. If you are planning on being out a lot, a portable playpen or bassinet may make sense. Like a lot of the things on this list, there is a wide range of costs. Purchasing an adapter, sew bags, and yet another alternative for numerous brands of strollers can be a $1,000 price tag without taking in the cost of the stroller. On the opposite end of this range, a seat and stroller combo might nevertheless be purchased new for under $150, and used equipment or hand-me-downs can fill in for all the others. It is worth noting that, in the very least, it is well worth buying a brand new baby car seat. There is no foolproof way to be certain a used one hasn’t been compromised in a previous accident or through hard use.
    • House Needs: To keep your little prince or princess occupied you may want to consider a mobile swing, bouncy seat, play mat, or jump seat. You may also need a crib or bassinet, crib mattress, basic bedding with blankets, changing table, small dresser, rocking chair, monitor, and a diaper pail. Again, this is a place where personal preference dictates cost. Unlike automobile seats, everything is to be used in your home, which means you can buy it used or even obtain it via among several talk and swap collections you’ll find online. If you move all brand new, a crib will run anywhere from $180 to over $3,000.
  • Nursing and Feeding: Feeding costs for your baby do, of course, change like everything else based on your particular situation. A mother who’s ready to maintain in the home and has no problems breastfeeding round the clock will see very minimal costs for weeks before a high chair and dishes are required. In that circumstance, some things like a breastfeeding pillow, burp cloths, or perhaps a cape are more than adequate. If mom will be storing breast milk for use, then things such as bottles, nipples, cleaning equipment, and a single or double breast implants become involved in addition to the financing goes from near zero to the $200 to $400 range. If breastfeeding isn’t possible, then formula feeding will add somewhere between $900 and $3,000 depending on the kind used over the first 12 months.
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Along with these one-time costs, there is the possible loss of income if you or your partner take unpaid leave. Under the Family Medical Leave Act (FMLA), your employer may grant you up 12 work-weeks of unpaid leave for your child’s birth. Here again, nothing is set in stone as small businesses don’t fall under the FMLA.3 So check to see which type of leave you might qualify for with your employer. If you take unpaid leave, calculate your regular expenses in this period–utilities, mortgage, insurance, markets, etc.–and determine how you will meet these costs.

Ongoing Expenses

Once your baby arrives, the normal expenses to look after your little one kick in. Variable These costs for your budget:

  • Child Care: If you and your spouse will work after your baby’s arrival, your single biggest budget item will be child care. Your child care costs vary by where you live, the age of your child, how much care you need, and sort of care you use. TheCare Index pegs in-center child care costs at just under $10,000 annually. Within this average, however, there are people in South Carolina paying around $400 a month and several others in Washington D.C. paying more than $1,500 a month. The normal cost of a nanny or other in-home care is about $28,350 yearly, but again that may be higher or lower based on location and so on.4 Recall, however, some costs may be offset by various tax credits, like the child and dependent care credit. Make sure to confirm if you are qualified.5
  • Necessities: Food, for example Gerber formulation , clothing, and diapers form most the requirements from the continuing costs.
    • Clothing: The average cost for baby clothing is about $60/month for the first year, but this varies and is highly correlated with earnings. Lower-income families make do with less than half that sum since you probably already know some parents who spend $60 on a single outfit.
    • Diapers: Diapers also vary in cost. The average child will use more than 2,700 diapers in the first year alone, which might add up to more than $550 (based on an average price of $0.20 per disposable diaper). You can buy disposables for as low as $0.15 with coupons or parents can pay $1.40 per diaper to import them from Japan. A cloth diaper service will cost you about $70 per month and doing the dirty work yourself at home with cloth diapers will cost you anywhere from $250 and up to discover the materials needed upfront. And recall an average of $20/month for wipes!
    • Food: If you’re using formula, then refer back to nursing and feeding above. Once solids start, plan on spending around $60/month. The early food costs for children is relatively small compared to what you might see from a teenager, but it can be somewhat frustrating as so little of the $60 appears to end up in their mouths.
  • The Doctor Part 2: Plan on three to four health visits for tests, immunizations, etc. ) and also a few additional visits for illnesses. Assess your medical insurance policy for your prices, but $80 annual is reasonable for many insurance plans and authorities.
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If One Parent Stays at Home

If one of you becomes a stay-at-home mom or dad, you’ll find considerable budget alterations to consider –the most obvious is reduced family income. No matter the high cost of child care, the cost of one spouse leaving an income encouraging to commit to fulltime parenting has been demonstrated to be greater in terms of lost earnings, benefits, and investment.6 This is compounded by diminished earning potential if this spouse decides to resume their livelihood. The option to stay home can be financial or private –at lower income levels, even government programs can not balance the big costs in certain regions. If it’s for personal reasons, however, some can at least try the one-income budget prior to the arrival to come across an idea for this while building an emergency fund with another income at precisely the exact same moment.

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Financial Tools to Consider

With your child’s arrival, you may wish to create financial tools to help provide for your child’s future. Review the following checklist to determine your own priorities and begin budgeting:

  • College Savings Tools: According to the College Board Report, the average cost per year for college at 2019 to 2020 ranged between $10,440 to attend a public four-year in-state school and $35,880 to get a personal four-year schooling.7 Start saving now through one of several college education investment programs, like a 529 program , Coverdell Education Savings Account, or UGMA/UTMA account. There have also been a few changes to how some accounts could be used–especially the 529 plan. The Tax Cuts and Jobs Act (TCJA) of 2017 and the Placing Every Community Up for Retirement Enhancement Act (SECURE) of 2019 have enlarged using 529 plans to include K to 12 education, apprenticeship programs, and the capability to repay student debt.8910
  • Life Insurance: if you don’t have life insurance, now is the time to buy it. For just a few dollars per month you can be assured that your child will have financial resources if you or your partner were to die suddenly. Speak with your employer or insurance agent for options on both life insurance and disability insurance.
  • Health Insurance: Without medical insurance, just one acute injury or illness could deplete your savings and put you in substantial debt. Explore your insurance choices should you not already have coverage, or financing for the increased monthly premium to add your child to your policy.
  • Flexible Spending Accounts (FSAs): FSAs allow you to use pretax dollars to cover significant family budget products, like child care and healthcare expenses. 11Speak with your company or financial advisor about establishing a dependent-care FSA and/or healthcare FSA.
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Ways to Save Money

The 2015 USDA study on the Expenditures on Children by Families found that parents earning less than $59,200 would spend just under $10,000 annually. That number goes up with income as families with pre-tax income in excess of $107,400 average just under $20,000.12 Regardless of your income, but there are a number of ways to fulfill your new baby’s needs without breaking the bank that we’ve hinted at throughout. Namely:

  • Consignment/Thrift Stores: Babies grow quickly. As opposed to paying full price for their clothes, check out gently used and even new items from the regional consignment or thrift store. Many stores will also buy back things after your child has outgrown them for cash or store credit. Online swap courses and parent networks can also provide quality products for cheap–and sometimes even free.
  • Family/Friends for Back-Up Daycare: instead of needing to take a day away (possibly without pay ) if your child is sick, make arrangements for family or friends to help out with emergency backup daycare.
  • Borrow Items From Friends: Ask friends with young children in the contest that you could borrow items –especially big-ticket things they aren’t using, like a crib, high chair, or rocking chair.
  • Baby Shower Gifts: Register so that party-goers can purchase what you really need and avoid ending up with multiple baby rattles and picture albums.
  • Downgrading Lifestyle: Getting a child will change a good deal of things, like your financial priorities. After reviewing your new budget, then you may not have the capability to earn the amounts accumulate. Consider closing the gap by downgrading in a couple of important areas. By means of example, consider trading in a gigantic car for a less costly version, shopping at less costly shops or buying more generic products.

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The Most Important Thing

Children are an superb gift–if sometimes an expensive one. The main point to keep in mind is that averages don’t mean much when the range is as wide as it’s with costs around a baby. Very good medical insurance can protect you from the hospital bills for the most part, but only planning and budgeting can help you handle the rest. The Finnish habit of sending mothers home with a simple starter box that can double as a baby bed suggests that a lot of those thousands of dollars spent on our children’s first years are more for our status than their well-being. You’ll be able to manage your baby on whatever income or situation you are in. It might take painful sacrifices and imagination, but if the experiences of generations of parents are any indication, it is going to be well worthwhile.

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