Everything You Need to Know About Budgeting for a Baby

Welcoming a baby into your life is one of the most exciting and life-changing events you'll experience, but it can also be expensive. With some planning and a clear budget, you can embrace this new chapter without feeling overwhelmed by your finances. Let's break it down and discuss how you can prepare for the costs of having a baby before and after they arrive.

Preparing for Baby's Arrival

If you just found out that you're expecting, congratulations! This is the perfect time to start crunching some numbers. If you haven’t already, check your budget to make sure everything is up to date before you start adding baby expenses. Don’t have a budget yet? Check out How to Create a Budget in 5 Steps to help you get started.

Once you have your budget including current income and expenses, you’ll need to start planning for various expenses before the baby arrives.

Prenatal Care

Depending on your health insurance, you might have some out-of-pocket costs for:

• Doctor's visits and consultations

• Ultrasounds and other tests

• Labor and delivery (hospital or birthing center fees)

• Maternity clothes

Call your insurance provider to understand what's covered and what's not. If you don't have insurance, look for local programs or doctors' offices that offer affordable prenatal care.

Baby Gear

Babies need a lot of stuff, but don't worry—you don't have to buy every baby item you see on social media. Start with the basics and shop secondhand, if possible, to help you save or create a registry to share with friends and family. Here are just a few of the essentials:

• Crib or bassinet: Once you decide which crib you are going to purchase be sure to also account for the cost of a mattress and bed sheets.

• Car seat and stroller: Have these items purchased and installed in your car at least 3 weeks before the baby’s due date just to be safe.

• Diapers and wipes: Consider stocking up gradually and buy different sizes in advance so you aren’t in a pinch when your baby moves to the next size.

• Clothing: Focus on essentials like onesies and socks. Look into hand-me-downs from friends and family or shop secondhand since babies outgrow things quickly.

Home Updates

You might want to create a cozy nursery or make your home safer for your growing family. Some common expenses include:

• Paint, furniture, and decorations for the nursery.

• Safety gates, outlet covers, and cabinet locks.

Remember, it's okay to keep it simple. Your baby won't notice if their nursery looks like a Pinterest board or not!

Ongoing Costs After Baby Is Born

Once your little bundle of joy arrives, your monthly budget may shift to accommodate their needs. Here's what you'll want to account for:

Diapers and Wipes

After the baby is born, you will, of course, need to buy diapers and wipes. Babies go through diapers like crazy—so expect to change 8-12 diapers a day at first.

Clothing

This is a recurring cost as babies grow so fast, you'll have to purchase new clothes every couple of months as they move into the next size group. Consider buying a size up or shopping sales and clearance racks. Again, hand-me-downs are a lifesaver.

Baby Food

If you plan on using formula, this can add up. Formula can cost anywhere from $100 to $300 a month. Once your baby reaches about 6 months of age, you can start feeding them baby food, creating another added cost.

Childcare

This can be one of the biggest expenses for working parents. Whether you're looking at daycare, a nanny, or a babysitter, research your options early. Compare prices and availability so you can plan ahead.

Healthcare

You'll have regular pediatrician visits for check-ups, vaccinations, and the occasional sick day. Make sure your health insurance covers your baby, and set aside a little extra for unexpected medical expenses.

Toys and Entertainment

While newborns don't need much in the toy department, as they grow, you'll want to invest in age-appropriate toys and books to help them learn. Keep it simple—babies are often more fascinated by a kitchen spoon than the latest high-tech gadget.

Extras

Once your baby is here, there will always be things you forgot to buy or realize you didn't get enough of. Put aside a little bit of extra cash just in case there are miscellaneous expenses you forgot about after the baby arrives.

Preparing for the Future

Track Your Spending

As your child grows and your lifestyle changes, so will your budget. Regularly review your budget and track your spending with a budgeting tool like Goals & Budgets. That way you won’t have to spend hours reviewing and categorizing your purchases to see where you can make changes. It will automatically sort this out for you!

Save for Emergencies

Life is unpredictable, especially with a baby around. Having an emergency fund is essential when unexpected expenses pop up, like medical bills for a broken arm or childcare for if you become sick or unexpectedly need someone to watch your child. Try to save at least 3 to 6 months of living expenses, but if you are just starting your emergency fund, set an initial goal of saving $1,000 to cover basic unexpected costs so you won’t go into debt.

Think Long-Term

It’s never too early to start saving for your child’s future . With a 529 Plan, you can easily save for future education expenses like your child’s college tax-free. The earlier you start saving, the less you will need to put away each month to reach your goal. Your future self will thank you!

Achieve Your Next Milestone

As you continue to budget for your baby as they grow, don’t forget to keep up with your own financial goals. If your next milestone is to pay off debt or save to buy a house, account for this in your budget so you and your family can be prepared for the future.

Having a baby is a significant financial change, but it doesn't have to be overwhelming. With a clear budget you can easily provide for your family while staying on the path to financial freedom.