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Baby budget guidelines

Updated on October 13, 2014

Getting ready for baby

Planning for a new addition to your household is a wonderful step for new parents with many adjustments to consider. If you are in the baby planning stage, be sure to review the financial implications of this important event as well.

According to a 2013 report from the U.S. Department of Agriculture, the cost to raise a child from birth through age 17 will require a typical middle-income family to spend approximately $241,080. And that does not include the cost of a college education.

The government website below has a helpful child cost calculator that allows you to enter your own variables such as the region where you live and your household income. It also factors the number of children in the family, since the overall expense for the second or third children may be less than a single child (some items can be shared across siblings).

Guideline for new parents

There are many factors that new moms and dad should discuss and review. Here is a guideline to follow with the basic topics for new parents.

Health coverage for the family

  • Check with your health insurance provider or employee benefits representative to see what is covered during the maternity and the labor and delivery stages of pregnancy. It is best to review the type and amount of coverage available for the hospital visit and prenatal care. Also review the policy coverage when adding a child and the additional cost. Keep in mind that well-baby visits, vaccines and more frequent health care visits will be the new routine. Check with your physicians to determine what co-payments are expected and review the medical provider list under your current plan to be sure you have a nearby pediatrician for your child.
  • Touring the local hospital for new parent classes is a good way to get prepared and the hospital may offer helpful resources and discounts as well.


  • Your baby will impact your weekly expenses with the addition of items such as diapers, formula, etc. Take a stroll down the baby aisles at your local store and list the cost of typical items. Your weekly expenses will go up so look for ways to discount with bulk items or sales. The list of new purchases for baby equipment (crib, stroller, car seat, etc) will have to be managed into the budget. Look for discount stores or consignment stores that carry baby furniture in good condition. Some retail store offer special promotions for signing up as new customers. Look for membership perks for registering with stores. You may need to cut spending in other areas in order to offset the new baby expenses.

Life insurance

  • The importance of purchasing life insurance increases when the responsibility of a new child enters your family. The new life is depending on you for physical and financial well-being. Talk to your life insurance company about how to protect your family, and don't limit the coverage to just the primary breadwinner. The important contributions of a stay-at-home spouse are expensive to replace. So if one of the parents intends to stay home with the baby, make sure that you are both covered with adequate life insurance.
  • Life insurance reviews are also important if you are moving into a house at this time due to the growing family and now taking on the responsibility of a mortgage.

Update your Will and Legal documents

  • Update your will and discuss who you will appoint as guardian. Estate planning is important in all phases of your life, and the significance increases once you have children. Be sure to update your will and name a guardian for your children in case something happens to you. This is also a good time to review the beneficiaries that are named on your retirement accounts and life insurance since they may need to be updated.

Retirement funding

  • Don't skip your retirement funding. While your increasing family needs may seem like a strain on the budget, you can not recapture the loss of your own financial goals. Continue to make contributions to your 401k plan or IRA.

College planning

  • Planning for college early is the best way to get ahead of this big financial goal. The average cost of tuition and fees for the 2013-14 school year added up to $8,893 for a public college and $30,094 for a private one, according to the College Board. And that does not include the cost of room and board.
  • One type of education savings that offers some tax advantages is the 529 college savings plan. You can typically start this type of account for a small amount or set up a monthly automatic deposit for as low as $50.00 a month. Look for grandparents or relatives that may want to help gift into an account for the baby's future.

Having a baby allows you to spread the joy and share with family. This is also a time to look for help and assistance from friends and family who want to offer their gifts.



Get your financial ducks in a row


What is a 529 College Savings Plan?

Baby Budget



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