When you have a little one on the way, it’s only natural to want to give your new son or daughter the sun, moon, stars…heck, the entire galaxy if you can figure out a way to reel it in! But then again, there’s your budget. The truth is, with today's financial statistics, couples are waiting later to have kids. They are also having fewer kids. And often they are making different choices about how and how long to support those kids financially. The key to having the most time and energy to enjoy your expanding family is to get smart about budgeting as early in the process as possible. These tips and guidelines will give you the basics of how to build your baby budget step-by-step.
Estimating what baby will cost
Thanks to the Internet, it’s possible to quickly gather a down-and-dirty guesstimate of what baby will cost you by month, year and over a lifetime. Here are some helpful statistics (courtesy of Parenting.com and Daily Finance) you can use as a go-by.
- Hospital delivery: $10,000 (normal delivery); $12,500 (C-section); up to $300,000 (with complications)
- Initial one-time expenses (stroller, crib, et al): $2,000-$6,000
- Per-month basics (just for formula, diapers, food): $200
- First year of life: $12,000
- Second year of life: $12,500
- First 18 years of life (without college expenses): $217,000-$500,000
Your personal baby cost calculator
If you need some customized help for calculating your new budget "with baby," this handy budgeting tool from BabyCenter.com can help.
A step-by-step baby budget guide
At this point, you have two essential pieces of budget-building information:
- A general estimate of what baby costs other new parents.
- A personal estimate of what your first year of baby costs will be (sans medical/delivery costs).
So now it’s time to take a look at your existing budget as-is—and then add in baby. Follow the steps below to build your baby budget.
1. Take a look at your current income (without baby).
Here, what you want to do is estimate any income changes in the months leading up to and after baby. For instance, does your company have maternity leave—if so, for how long? Do you anticipate taking any unpaid leave? Do you plan to not work for the first year? If you anticipate any significant income changes, what will that look like?
2. Take a look at your current expenses (without baby).
If you currently work and plan to take a leave, note any work-related or other expenses that may temporarily or permanently cease with the addition of baby. Make any expense edits.
3. Edit the expenses by adding in your personal estimate of first-year baby costs.
Here, in step three, you’ll actually create your working baby budget.
First, add three umbrella expense line item labels:
- Medical/delivery costs: These expenses include checkups prior to delivery and all labor/delivery charges.
- At-home setup: These expenses include one-time costs such as outfitting the baby room, buying a car seat and stroller, etc.
- Monthly basics: These expenses include monthly recurring basics you will incur, including everything from formula and/or a breast milk pump system to diapers and medical checkups.
Using the data you have gathered from studying the general nationwide estimates and using the baby calculator, break out expenses by category and add them into your budget "with baby."
Now you have a working baby budget you can edit as needed.