Budgeting for a Baby That Will Help YOU Stop Crying
Having a baby can be an exciting time but it also can leave you with some financial questions. When budgeting for a baby, there are plenty of different expenses you need to keep in mind, even before the baby arrives.
What Goes Into the Baby Budget?
Budgeting for a baby is no different than just planning a simple budget, as long as you understand the expenses.
Pre-Baby Expenses
Figuring out the costs for budgeting for a baby can be confusing and it starts before the baby will even arrive. Between what you need for the baby, doctor visits, and clothes to dress the baby, things can add up pretty fast.
Checkups
The largest cost for pre-baby expenses is doctor visits. Usually, pregnant women will see a midwife or doctor a few times within the first two trimesters and then once a month beginning in the third trimester. When it comes to the last stretch, you may be visiting a doctor even more often. If you are considered high risk, expect even more doctor’s visits.
If you have health insurance, you may get some of your prenatal expenses covered. You will want to check with your insurance and figure out what your coverage includes and what you will need to pay in out-of-pocket expenses. Knowing this ahead of time can help you fully prepare for any surprises that may come up.
Ultrasounds and Lab Work
In addition to those doctor’s visits, you may get billed separately for lab work and ultrasounds. Ultrasounds can be great ways to take a look at your baby but can be expensive if your insurance doesn’t cover their cost. Since many new parents like ultrasounds, it helps to add these in when budgeting for a baby.
Usually, your insurance will cover the first-trimester scan and another one at 20 weeks. Anything additional can come at an extra cost to you, depending on what your insurance covers. You may even have to hit your deductible first before your coverage can kick in. Tests such as blood draws can also add up. Many standard tests are covered by insurance but elective tests may not be.
Prenatal Vitamins
Prenatal vitamins are essential to the health of the baby and may not put you back too much. Over-the-counter vitamins can be about $30 for a month-long supply, depending on the vitamin you choose. If you get prescription vitamins then you owe whatever co-pay is associated with your insurance. You may be able to ask your doctor for any sample-sized boxes to hold you over to your extra appointment.
Dietary Needs
Your baby needs added nutrients that may increase your grocery bill while you are pregnant. Look for leafy greens and fruits, along with a variety of whole grains. This doesn’t have to break the bank if you shop smart.
Maternity Wardrobe
You need to shop for clothes that fit you during these nine months. However, there are ways you can save and stick to your budget. You may already have a lot of things in your closet that you can use. Stretch skirts, maxi dresses, and blazers can be worn as your bump grows. Buy non-maternity items since sometimes clothing can be marked up if it is for maternity. Borrow if you can and shop pre-owned and consignment maternity clothes.
Baby Gear
Babies need gear but it may not be as much as you think. Don’t go overboard on baby gear to help with budgeting for a baby.
For the House
One of the first things you will need is a crib. However, for the first few months, you may want the baby close to you in your room and this could mean a bassinet. Don’t spend an arm and a leg on a bassinet since the baby will outgrow it quickly. You will also need a spot to change the diapers but instead of an expensive changing table, use a portable changing pad or a dresser. You will need other things for the baby as well, such as bottles, a monitor, or a high chair. You can always borrow items from friends or add them to your baby registry.
For the Car
The one thing you can’t forget is a car seat. You won’t be able to get home from the hospital unless you have a car seat that is properly installed. Make sure you work a car seat in when budgeting for a baby.
Baby Delivery Expenses
Once you make it through the doctor checkups you also need to think about the expenses for delivery. The average cost of delivery will depend on where you live. If you have to have a C-section, it can cost a lot more. There are also hidden costs beyond the delivery.
A mother’s hospital stay can add up per day and family staying can also add up. A birth center is a typical short stay and may not include meals. If you have a complicated birth, you could end up staying longer. Other costs can include prolonged anesthesia, induction, excessive monitoring, or a NICU stay. Be sure to ask about these costs ahead of time. The birthing facility should provide you with a breakdown of costs.
Post Baby Expenses
If you are looking to save money then you probably have already heard the advice to go with a minimalist approach and buy only baby gear you need. You don’t have to purchase everything brand new. Don’t compromise on safety by getting a used car seat or crib but hand me down clothes are just fine.
Formula
There are still ways to save on formula expenses. Ask your pediatrician for any samples you can try out and also be on the lookout for any manufacturer coupons.
Food
If you are trying to save money once your baby is eating solids, you can make your own baby food.
Childcare
Child care can be very expensive. Finding in-home care or an at-home parent to watch your child can be a major budget saver.
Toys and Books
These are likely items that you will get for gifts. If you want to get some in the meantime then look at consignment shops and gather coupons. Don’t forget to use the library for books to read to your child.
Life Insurance
Having a baby makes you see things in a new light. You may want to have life insurance in place before the baby arrives.
Clothing
Baby clothes are small but they can be expensive. Babies grow out of them very fast so buy second hand when you can. Don’t waste $30 on an outfit that will likely only be worn once.
High Electric Bills and Water Bills
This is an expense you may not think of but you can expect your electric and water bills to go up due to all the extra laundry costs. In order to save money, wait until you have a full load before you run it.
Diapers
The decision to use cloth or disposable diapers is a huge debate. Cloth diapers may not be your cup of tea but they will be cheaper. If you prefer to use disposable diapers then look for coupons or try to generic diapers. You may have to go through some trial and error to figure out which diapers work for you and your baby.
Unpaid Time Off
More employers are offering paid paternity and maternity leave but some people aren’t that lucky. Depending on your workplace, some mothers are only given 12 weeks of unpaid leave. If your leave isn’t paid for by your employer then you will need to figure out a plan for how many weeks you can take unpaid. Are you able to use sick leave or banked up vacation? Start making plans before the baby arrives so you aren’t blindsided when the time comes.
Creating Your Budget
Now that you know some of the expenses that come with a baby, it’s time to start budgeting for a baby and figuring out ways to save.
Determine Your Financial Priorities
Before you can begin, one of the important budgeting tips is to think of priorities. While new parents are in a rush to save for a child’s education, it shouldn’t come as a cost to your future financial security. Make sure you are still saving for retirement, paying off debt that is hurting you, and contributing to your emergency fund.
Save With Apps
There is just about an app for everything and there are numerous apps to help you save on baby items. Use apps to save on sale prices and find manufacturer coupons. Stack up the savings and you can be surprised by how much you can save.
Actually Save It
When you save money using coupons, actually save it. When you shop, check the receipt to see how much you save. Then log into your bank account and move that money from your checking account to your savings account.
Practice Living off One Income
One big change that comes with having a baby is work leave. Talk to your employer as soon as you can and start planning. It can be hard to drop from two incomes to one so start acting like you already have. When you are both still working, stick one income away into savings and pretend it doesn’t exist. Redo your budget based on the new income amount.
Register Wisely
It’s fun to scan all the items when creating your baby registry but if you are smart about what you are scanning then you can actually get what you need. Stick to the necessities for items you won’t be able to live without. Many baby items are not even necessary. Bottle warmers or baby shoes are some high-priced items you can skip. Your baby and you won’t miss them.
Set Up a Dependent Care Flexible Savings Account
When you set up this account, you can set aside up to $5,000 a year from your paycheck tax-free to use on daycare, afterschool care, and even summer camps while you work. This saves you up to $2,000 a year since contributions are deducted from your paycheck before taxes.
Start Planning Early
As soon as you learn you are pregnant, take every opportunity to plan for the future. Start pricing your life insurance and see which insurance has better maternity coverage.
Prepare for When There Isn’t Enough
Sometimes there just isn’t enough money, especially when you have to go down to one income. Cutting expenses and increasing household income are two strategies to help balance your budget. However, it can be easier said than done. Look closely at options to make more money, such as asking for a raise, selling a car or downgrading, refinancing the mortgage or student loans, and comparison shopping for your auto and homeowners insurance. You can also eliminate extra expenses, such as unused gym memberships and monthly subscriptions.
How To Save For Your Baby’s Future
It can be expensive to raise a child from infancy to age 17 and while the cost is worth the reward, there are ways that you can save for your baby’s future.
Make Sure Your Future Is Secure
It’s important to take care of your own future first. This may sound counterintuitive but making sure you are taken care of is the best way to set up your child for success. First file a will. You can do this pretty quickly and cheaply through an online legal service. The next step is getting term life insurance. Term life insurance doesn’t cost a lot and can give you peace of mind should the worst happen.
Be sure to save for retirement. You should be investing 15% of your household income into pre-tax retirement plans or Roth IRAs and not just your child’s college fund. By taking care of your retirement, you are freeing your child from the financial burden of having to care for you in your old age.
Save for College
Once you have taken care of yourself you can then start to take care of your child’s future. When saving for your child’s college education, you want to use tax-favored plans such as an Education Savings Account. If you want to save more than that then you can use a 529 plan. Be sure to take caution with these plans since some can restrict your options. You don’t want to use life insurance to save for college and you should avoid prepaid tuition and savings plans. These aren’t worthwhile investments in the long run.
Save for Child’s Other Life Expenses
In addition to saving for college, you want to save for your baby’s life experiences. Every parent has something they want their little one to do or see as they grow up. This could be regular camping trips, hobbies, a vacation, or even a wedding. There are things you will need to say no to but you want to decide what is important to your family and begin to dream. To make these dreams a reality, start working them into your budget and consider opening a savings account.
Extra Ways to Save
Besides borrowing items and buying used, there are other ways to save when budgeting for a baby.
Buy Generic
Marketers are smart and use buzzwords to make us choose their products over the less expensive store brand but they are usually the same thing. Read the labels carefully and save some money.
Declutter
You will accumulate a lot of stuff when you have a baby. It can get out of control quickly. Routinely gather, clean, and sell older items your child doesn’t play with. Whatever you can’t sell, donate.
Invest in Plastic Totes
As your little one grows out of onesies and pajamas, wash them and organize them by size in a plastic tote. This way, if you have another kid or a family member or a friend gets pregnant, you have ready to wear clothes to pass down.
Rethink Your Rooms
You don’t need to buy a new house just because you have a baby. Babies don’t take up that much space. Instead of going into debt for the extra bedroom, rethink the space you already have. Kids can share and playrooms aren’t a necessity.
Don’t Rethink Your Car
You may want to buy a newer or safer car but rethink if it’s truly a need. Budgeting for a baby is all about necessities and not wants.
Should You Pay Off Debt Before Kids?
When budgeting for a baby, you may be considering paying off debt before having kids. If you let money determine whether or not to have kids, you may never have them. If you want to be a parent and you and your spouse are ready in other ways then don’t let debt stop you. With the right tools for budgeting for a baby, a child won’t derail you on your journey to financial peace. You may have to press the pause button for a while or slow down for a bit but if you stay focused and have the right budget, you can be back on track to your financial goals in no time.
To Sum up
Having kids can be one of the most amazing parts of life but it can also be a stressful time for your finances. With proper budgeting for a baby, you can make the transition into parenthood much easier on your wallet. Consider all the expenses you have while pregnant and with a newborn and then look at different ways to cut back and save when budgeting for a baby.
You don’t have to go into extra debt just to have a child with careful planning. You also don’t need to pay off your debt before you have children, as long as you are ready in the other areas of your life.
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