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How to Make Financial Plans for a New Baby

Updated on December 16, 2008

Making financial plans and going through the process of budgeting for a new baby will help you become aware of the many costs that are involved in raising a child. Although I don’t believe you can ever really be ready for a baby – financially or otherwise -  there are some things you can do before baby arrives to make life go a little smother.

Making financial plans and going through the process of budgeting for a new baby will help you become aware of the many costs that are involved in raising a child. Although I don’t believe you can ever really be ready for a baby – financially or otherwise - there are some things you can do before baby arrives to make life go a little smother.

How Much Does a Baby Cost?

As of this writing in 2008, according to the U.S. Department of Agriculture the average middle class family will spend over $180,000 to raise a baby from birth to age 17. And that's before you even consider college tuition. It can be an overwhelming figure and the truth is you’re paying that over time. What most expectant parents are interested in is how their finances will be affected as soon as they bring baby home.

Study Your Health Insurance

It’s a good idea to begin thinking about finances as soon as you know you’re pregnant. The first thing you’ll want to consider is health insurance. Familiarize yourself with the details of pregnancy, childbirth, and infant care. If you and your spouse are both covered, you’ll want to compare policies to determine whose coverage offers the best benefits. (If you’re already pregnant, you probably won’t be able to switch policies for the pre-natal care because the pregnancy is considered a pre-existing condition.)

To Work or Not to Work?

If there is the remotest possibility that you or your might leave the workforce to be a stay home parent, use the time of pregnancy as a trial run to live on a single salary. You’ll find out quickly if you can live on one paycheck. Even if you decide that’s not a feasible option, at least you’ll have saved a substantial emergency fund.

Ask Around

One of the best ways to get a realistic, and timely, idea of the costs associated with a new baby is to ask other parents. Here are a few additional costs you can expect to incur:

  • Food/formula
  • Diapers, wipes
  • Childcare
  • Clothing
  • Doctor visits, medicine

Although it may seem a long way off, you may also want to consider adding college savings to your baby budget. However, if this isn’t a realistic goal at this time, don’t let it bother you. While it’s best to start saving for college as early as possible, there will be many opportunities to do this later when you aren’t so preoccupied with a brand new baby!

Image: Peasap, Flickr

Comments

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  • MasonsMom profile image

    MasonsMom 9 years ago from U.S.A.

    I cannot imagine being able to afford more than 2 kids--and as you know, I currently only have 1!

    Great ideas for planning!

  • jim10 profile image

    jim10 9 years ago from ma

    The costs really add up. With our third we were able to save money ahead of time so it was somewhat of a relief. But to be honest it is never enough. We saved several thousand and bought lots of stuff in advance. We really should have tried to get someone to throw us a baby shower. After all it was over five years since the last one. Well anyway my wife was able to take 3 months off but we did end up going into credit card debt anyway which we never did before. It was worth it to have her home though. For the others she couldn't take nearly as much time off we just couldn't afford it since we were pretty young and in school also. Oh and insurance actually covered his formula since it was so expensive and all of the others were upsetting his stomach. That was quite a relief too. I buy lots of bulk stuff like diapers and wipes at BJs to save money.

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