How to Budget for a Baby

To budget for a baby, you will need to list all the new one-time and ongoing expenses you will have, such as buying a crib and paying for child care, and figure out how your income may change after the baby is born. You may also have to cut back on discretionary spending to afford the new baby expenses. You should have everything in one budget to make it easier to keep track of all your expenses, though you can have separate categories for baby items.

Having a baby can be very rewarding but also extremely expensive. In fact, it costs more than $300,000 to raise a child from birth to age 18, on average, according to multiple sources. However, having a plan can help you support your baby now and save money for future expenses without going completely broke.

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Average Cost of Having a Baby

The average cost of having a baby is $18,865 without insurance and $2,854 with insurance, according to KKF (formerly known as the Kaiser Family Foundation). This is the cost associated with the pregnancy, delivery and post-partum care, and it does not factor in the cost of any baby supplies you may need. Below we break down some common expenses you may have before and after your baby arrives.

The above costs can be a lot to manage, especially for new parents. However, making a budget can help you track how you are spending money and find ways to cut unnecessary costs.

How to Make a Budget for a Baby

1. Make a List of All Your Current and Potential Baby Expenses

You should list all the current maternity care expenses you have and expect to pay for throughout and after your pregnancy. You should also list things you will need to take care of a baby, including one-time expenses such as a crib, a car seat, and a carrier, along with ongoing expenses like feeding supplies, toys, and childcare. Factor these costs into your overall budget, alongside your other monthly expenses.

2. Account for Potential Income Changes

Once a baby is born, your family may experience changes in income. For instance, you or your spouse may take unpaid parental leave to take care of the baby for the first few months or decide to leave the workforce altogether. It is important to base your baby budget off the income you will be working with once the baby is here instead of your current income, so you can avoid any shortfalls in your budget.

3. Allocate Your Income

Figure out how much of your income to allocate to each expense. You can use strategies such as the 50/30/20 rule or the 60/20/20 rule as a guideline on how much to spend on baby supplies.

For instance, you can allocate 50% of your baby budget to needs (feeding supplies and diapers), 30% to wants (baby toys and accessories), and 20% to savings (future unexpected baby expenses) if you follow the 50/30/20 rule. Alternatively, with the 60/20/20 rule, you can designate a little more money for necessary baby expenses and less for wants, splitting it 60/20 respectively.

4. Track Your Spending

It’s easy to underestimate how much you will spend on diapers. That’s one big reason why it’s important to track how much you are spending on all of your expenses. You’ll be able to see when you need to adjust your budget.

You can use tools like spreadsheets and budget apps to track your expenses. Budget apps, such as the WalletHub app, may allow you to sync your financial accounts to have your expenses automatically tracked. This can make budgeting much easier and less time consuming compared to using spreadsheets.

5. Review and Adjust Your Budget

Regularly reviewing your budget allows you to determine whether you are actually sticking to your plan or spending more than your income. It is also an opportunity to adjust your budget for constantly changing baby expenses. For example, as your little one starts crawling, you may have to look into babyproofing supplies.

Learn more about making a budget.

More Tips for Budgeting for a Baby

Cut unnecessary expenses. Identify some non-essential areas where you can cut back on spending, so you can repurpose the funds for new baby expenses. Some examples can include limiting how often you dine out at restaurants and canceling subscriptions you no longer use. On that note, WalletHub can help you find and track subscriptions you may have forgotten about.

Consider secondhand baby supplies. From a crib and a stroller to books, clothes and feeding supplies, babies need a lot of stuff. Consider going to a thrift store and getting hand-me-downs from friends or family members with kids to save on costs.

Practice living with less money. You may be working with less money in your budget if you take parental leave. It’s a good idea to practice living with less income before the baby arrives, so you can feel more comfortable managing a smaller budget when you have to. It can also help you build up your savings while your income is still high.

Build an emergency fund. It’s a good idea to have an emergency fund to cover unexpected expenses you didn’t factor into your budget. For example, it may turn out you need a C-section instead of your planned traditional delivery. An emergency fund can help cover the additional costs for the C-section. Experts recommend having three to six months’ worth of your living expenses in an emergency fund.

Add your baby to your health insurance plan. The birth of a child is considered a qualifying life event that allows you to add your baby to your health insurance plan outside of the standard enrollment period. Typically, insurance companies give you 30 days to update your plan. Making sure your baby is covered under your health plan can help reduce out-of-pocket costs for medical expenses.

Take advantage of employer-sponsored benefits and tax credits. Your employer may offer benefits such as paid parental leave or child care subsidies that can help lessen the costs of supporting a baby. You may also qualify for the child tax credit and the day care credit to lower your tax burden.

Create or update your financial plan. Ensure you have a financial plan in place that puts you on the path to affording necessary expenses such as child care, health care, and your kids’ future education. It is also important to have a plan to protect your family financially if anything were to happen to you.

Start saving for college. With yearly tuition rates averaging more than $11,000 for a public in-state school and $41,000 for a private university, a college education can be very expensive. The sooner you can start saving for college, the more money your child will have for tuition when they start college.