What to Budget for When You’re Expecting
Parenthood is a lifetime sentence. For some, that might be extremely exciting – as kids add so much joy to our lives. But for others, that can be fairly daunting when you start to consider the financial impact children can have on your life for over 18 years (or more).
But worry no longer! Experts around the web (aka parents) have plenty of advice to share when it comes to budgeting for the newest addition to your household. Here are some of the biggest financial hurdles you’ll need to prepare for leading up to the big day.
According to WebMD, some of the most essential budgeting items you’ll need as a new parent are the following 1:
- Daycare: This one can run anywhere from $300/week to $1500 depending on where you live. Daycare is an expensive industry, but may be necessary for new moms and dads post-maternity leave. Luckily for some, grandparents and other relatives might be willing to step-in to help make this transition less expensive. If not, then start scouting for reliable and affordable options as soon as possible!
- Insurance and Medical Expenses : “Check with your doctor to see how many visits you can anticipate, being sure to include visits when your child is sick. Multiply that by your insurance co-pay to find out what you can expect in medical expenses.” 2 Brand new babies are exposed to a lot of potential health risks, so it’s important to stay vigilant on check ups, shots, and potential signs of distress or health issues. Of course, all of this can add up fast, so budgeting for emergencies is vital when preparing for a baby. As a final note, regardless of who your provider is, make sure you understand what prenatal care is covered under your plan so you aren’t hit with unexpected expenses.
- Diapers and Food: Yes, diapers do add up fast. For expecting parents, it’s always a surprise to find out just how expensive diapers can really get. When combined with specialty foods and formulas, that bill starts looking a little overwhelming. Rough estimates from parents 3 suggest that a baby will use between 2,500 to 3,000 diapers before being potty trained. An easy way to avoid this major expense is to invest in cloth diapers, if you’re willing to deal with the mess.
WebMD estimates that, when all is combined together, babies can cost up to $2,000 a month on average 1. That can make for an expensive first year, and with the added hurdle of unpaid maternity leave for some mothers (especially those existing below the poverty line), babies can be a pricey bundle of love.
Fortunately, there are ways to budget and prepare for the baby that can help provide a strong start to these new little humans, and can help save your wallet in the process!
Where to Start Your Budget
Time Magazine created a complete list of what budgeting actions you should take every trimester leading up to the birth of your new baby 4. The best way to start saving for a baby is to work on chipping away your credit card debt, or consolidating any loans you have to get a better interest rate. The sooner you start work on this, the easier it will be to save down the road.
In addition to working on your debt, it’s tremendously beneficial to analyze your company’s benefit packages. Check your insurance, your company’s plan for paid (or unpaid) maternity leave, and start saving a portion of your paychecks if you’re not already. Open up a tax-free 529 savings account for your child. The sooner you start saving, the more money your child will have when it comes time to go to college.
Time Magazine also suggests setting up a will to make sure your baby is protected, no matter what might happen down the road. Although this might be a bit morbid to think about, it’s best to be prepared for the worst.
On a more positive note, get ready for tax season! Parents get a fairly substantial tax benefit come filing time; close to $3,000. You can prep yourself by checking the irs.gov website, and determining if you can sign up for any exemptions.
Once these major items have been nailed down and the details have been finely combed through, you’ll be ready to start collecting coupons and finding other ways to save money!
Finding Ways to Save on the Basics
When you’re expecting a baby, there are a lot of companies that are going to want your business. Some of them even offer freebies or major discounts on their products, and your hospital or doctor may know about these deals. A great place to start is to simply ask around, from doctors, nurses, and fellow parents, and see what comes up!
Start to collect coupons like you never have before. Companies like Target, Walmart, and others love to offer up coupons on food, clothing, and toys, since it’s a big part of their business. Check regularly at coupon sites for special savings or coupons at your local “everything-store.” Another great way to save is to buy in bulk (Costco is your friend). Some moms even suggest creating a “diaper stockpile” to help ensure that diapers are always on hand, and to save money 5. Although, cloth diapers are also a reliable option. If you wash and care for them correctly, you can end up saving hundreds of dollars that you would have otherwise just thrown away with the disposable diapers.
Breastfeeding is also a great way to save money. It is considerably healthier for your child during the first 6 months 6 and requires no additional formula or substitutes. Once you get to the food stage, try making some food at home for the baby. Once you find some healthy recipes, you can save money and have a better handle on what your baby is consuming.
Finally, ask around for gently used baby items from your friends and family. With a good cleaning, there’s no reason the bouncy chair from a couple years ago isn’t just as useful as the one that came out last month. Your friends will be happy to get the item out of their house, and your baby won’t even know it was used!
There are also plenty of stores that specialize in second-hand baby toys and cribs. Some stores even have “never-been-opened” products, but sell them for a huge discount. You’ll never know until you start bargain hunting!
As you consider all the financial hurdles ahead, don’t forget to appreciate the little moments you’ll be able to enjoy with your new bundle of joy. Make sure your baby’s first journey into this world is a safe and healthy one by planning ahead.
1. http://www.webmd.com/parenting/baby/baby-gear-guide-9/baby-budget?page=2 <
2. http://www.usnews.com/opinion/policy-dose/articles/2017-01-23/donald-trumps-obamacare-politics-risk-health-care-for-women-and-children <
3. http://www.complicatedmama.com/2014/12/28/newborn-cheat-sheet-decoding-poop-feedings-nap-times <
4. http://time.com/money/2795207/baby-on-the-way-time-to-make-a-budget <
5. http://www.parents.com/parenting/money/saving/save-money-and-build-a-diaper-stockpile <
6. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1595080 <
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Katie McBeth is a researcher and writer out of Boise, ID, with experience in marketing for small businesses and management. Her favorite subject of study is millennials, and she has been featured on Fortune Magazine and the Quiet Revolution. She researches SEO strategies during the day, and freelances at night. You can follow her writing adventures on Instagram or Twitter: @ktmcbeth
This post was updated April 12, 2017. It was originally published February 15, 2017.