Ways to Prepare (Financially) for a New Baby

Getting ready for parenthood is a time of exciting "firsts," ranging from oogling over ultrasound images to shopping for baby booties. This is also when you can explore ways to handle expenses so you'll feel at ease financially by the time your baby arrives.

If you check recent studies on the pricetag for raising a baby, you'll see that it tends to be steep: The USDA reported that the average cost of bringing up baby could be nearly $13,000 a year! Consider inflation, and the total cost through age 17 could jump to over $280,000.* That's why Just Mommies wants to share some tips to help you plan for the cost of having your baby.

Take the first (financial) step

First, figure out and agree on a "livable" budget. Check out www.mint.com for an easy way to do a basic budget. Here are some practical ways to get ahead of the game:

  1. "Divide and conquer." You and your partner can each write down all your expenses over the next month. Keep a notepad with you (or type it into Notes on your smartphone).

  2. Keep an income/expense sheet on an Excel spreadsheet or in your notepad/Notes. Put down your salary and other income in one column and "outflow" in the expense column.

  3. Start paying off your debt – so that you're debt-free (or as close as possible, with a plan on how to pay down the remainder) when the baby arrives.

  4. Do a month of a "baby budget practice run." Live within your newly designed post-baby budget to see what you can cut out.

  5. Research day-care centers in your area. Call your Chamber of Commerce to ask for local certified child care centers. Or check trusted sources online such as: https://www.care.com/child-care-centers.

  6. If daycare costs too much… figure out if it's possible for one parent to stay home or work part time.

  7. Put at least $1,000 in an emergency fund. And keep building it over time for unexpected expenses.

Next step: Look where your money goes

See if your income/expense sheet matches the typical budget percentages shown below (according to USDA):

  • Housing is 29% of the total cost.

  • Food is 18%.

  • Education is 16% (not including saving for college).

Of course, these expenses change – based on the child’s age. For example, food costs rise as your child gets older.

Figure "first-time" expenses

If this is your first child, then you'll be starting from scratch. Begin by listing basic items needed and prices, such as:

  • Crib/bassinet: A crib can cost anywhere from $180 to over $3,000.

  • Travel needs: You will need a baby car seat (average $59 - $299.99+ at Walmart and Target) and a stroller (average $121.99 at Walmart or up to $900 at specialty stores). Other useful travel items include a baby sling ($39.99+ at Target) and a diaper bag. When visiting grandparents, a portable crib is a worthwhile investment (starting at $69.99+ at Target). Shop around, checking for coupons, sales and "package deals." Note: It's advisable to buy a new infant car seat. Check the date the seat was made – car seats expire after a certain time frame and safety standards change.

  • Home needs: You'll need a baby monitor, changing table and diaper pail. Think about getting a portable swing, bouncy seat, or play mat to keep baby busy.

  • Baby item swap groups: You can buy items used or get them through swap groups you'll find online. Start with Facebook or https://www.mom365.com.

  • Diapering: The average baby uses more than 280 disposable diapers each month. The average monthly cost of Huggies®, for example, runs about $80+. If you prefer cloth diapers, a diaper service like Pannolino or Dy-Dee Diaper Service (based on 320-360 diapers per month) could cost $88+/mo. or more. This depends on whether you add diaper covers and other accessories. Buying and washing cotton diapers yourself could run roughly $48+ per month, according to mintlife.

  • Clothing: The average cost for baby clothes is $60/month in the first year. This changes according to location. Many families can make do with with less than half that amount.

  • Nursing/Feeding:

    • A mommy who can stay at home and breastfeed will have low costs for months. In that case, some items like a breastfeeding pillow and burp cloths will be enough.

    • If you breastfeed and plan to store breast milk, then you'll need bottles, a breast pump and cleaning equipment. This can bump up your budget from nearly nothing to approximately $200 - $400.

    • If you choose formula feeding instead, then it will add somewhere between $900 and $3,000. This depends on the type of formula used in the first year. Add $60/month after starting your baby on solids.

  • The Pediatrician: Be ready for 3 to 4 "well visits" (about $95+ per visit, according to the American Academy of Pediatrics). These may be covered by your health insurance, however.

  • Birthing place/Medical center & more: Recent studies show that the cost of a routine delivery varies across the nation. On average, it is roughly $6,075 with a copay of about $1,200. This depends on the region and place where you give birth... and whether you have a doctor vs. midwife, whether you hire a doula, and more. Call your insurance company to find out co-pays and out-of-pocket expenses.

Ongoing Expenses

Once your baby arrives, the regular expenses to care for your little one kick in. Factor these into your budget:

  • Child Care: If both you and your spouse work after baby's arrival, your largest budget item will be child care. These costs vary by where you live, the age of your child, how much care is needed and what type of care you use. Research shows (from Economic Policy Institute and the Care Index) that average costs were just below $10,000 per year in 2016.

  • The cost of a nanny or other in-home care is around $28,000 a year, but again that can be higher or lower based on location and so on.

Don't let these and other costs catch you off-guard. By taking steps to prepare, you'll have a clearer view of how to carry on with ease after your baby arrives!