Having a baby comes with a price tag and unless you prepare your finances, the cost may shock you. Now is the best time to begin preparing your baby budget and get a handle on finances for your new arrival and anticipated first year baby costs. Free Budgeting Worksheet to calculate the first year baby costs.
What First Year Baby Costs Should I Plan For?
How expensive exactly are babies?
What kind of costs should I plan for in the first year?
Can we afford to have a baby?
Are we able to make ends meet?
These are questions my husband and I hadn’t dug too deep into before we were pregnant, but hit us hard once we found out we weren’t expecting just one, but two babies.
Aside from the immediate fears I had of having two newborns at once, my brain also went straight to the expense of having children and raising them – times two.
- Could we afford to have two kids?
- Were we making enough money?
- What exactly are the costs I need to plan for?
- Will we be stretching ourselves too thin once they’re here? Or are we going to be OK?
We sat down and hammered out a new budget to plan for the costs of childbirth and then caring for two children in the first year. Taking an honest look at our expenses we saw what our financial state with kids *actually* looked like. I could breathe a sigh of relief that we’d be Ok, but in reality, we needed to cut some expenses back like coffee runs and entertainment to help out.
Initially I decided to go back to work after maternity leave, but that plan fell through when I went on bedrest at 34 weeks with preeclampsia and my position at the small company was filled. I didn’t have a job to go back to and immediately became a Stay at Home Mom still pregnant, and without any babies yet. (Which, I look back now and know it was all for the best, of course.)
The last-minute change had us scrambling to figure out how to make one income work, but thankfully I had planned well enough, stockpiled diapers for almost a full year and graciously accepted hand-me downs which saved us a lot of money (and fights over money, I’m sure.) I had a few freelance gigs offered in the first year which helped tremendously too.
These are the things you need to consider before, or right after, you find out you’re pregnant. Take into consideration what you deam neccessitities, the lifestyle you want to keep and what to do when unexpected costs show up (and they do, they always do.)
Budgeting for Baby: Figuring Out The First Year of Baby Costs
TAKE A REALISTIC EVALUATION OF YOUR FINANCIAL STATE
This is the most important part to evaluating your baby budget, so do this step right away.
The best way to get a real view of your financial state is to track all your incoming and outgoing expenses for one month. Don’t change anything when it comes to your finances YET. Right now you want to see exactly what you are spending on your home, groceries, eating out, cars, utilities, etc. before adjusting.
This will give you a true snapshot of how much you spend and save.
USE THE 1st YEAR BABY BUDGET TO CALCULATE BABY COSTS
Calculate all the items you’ll need, the estimated quantity and overall cost of each.
EXAMPLE: Diapers à $30/box à 2 Boxes Per Month x 12 months à $720/Year
Next, add all the line-items up to find the total cost of baby for the next year. This might shock you, but take a deep breath….
- Be sure to calculate health insurance deductibles for labor & delivery
- Doctor co-pays for each additional visit you may take (sick, odd visits)
- A lot of items you can ask for on your baby registry, but be cautious in your budgeting in case these are not fulfilled. It’s best to plan on them, just in case.
- Call your health insurance company to find out what your health insurance will increase to when you shift to a family plan.
- You can do an online Living Will and have it notarized, but plan on at least $100 (and yes, this is very important and should be a requirement for all parents.)
- College savings are not necessary, but the sooner you start these, the more they’ll grow. A little each month will add up quickly over the long term, even if it’s only $25 per month to start.
If you are going to receive any paid maternity leave or have disability insurance which will help cover costs, this will detract from the overall costs and help bring the cost of baby down. Whew!
DETERMINE IF YOU CAN LIVE OFF A SINGLE INCOME OR NOT
Once you have a snapshot of your expenses and money flow, you now have a better idea of where your money is going and how much of it you have left each month. Fingers crossed for a surplus!
- Look at your annual baby expenses and divide it into monthly chunks.
- Keep in mind some of the costs such as labor & delivery may need to be paid quickly and won’t be a monthly expense unless you need to go on a payment plan, and then they would. The more you can get the big stuff out of the way, the less monthly expenses you’ll have.
- First, look at your budget as a two-income family. Add in the monthly baby costs to this budget and see if you have money left-over, or you’re over budget.
- Next, look at your budget based on a single income. Add in the monthly baby costs to this budget and see where the numbers fall.
Now, it’s time to evaluate what happens after baby arrives based on these two strategic budgets.
Are you a two-income family who wants to remain this way, or shift to a one-income family once your baby is here?
Now that you know what the big picture of your budget looks like, you can take an honest approach to answering these questions:
- Can you live off one income if you chose not to return to work?
- Can you afford to live off one income… are there too many sacrifices to or will you be able to keep the lifestyle you want?
- How much of your budget do you need to adjust to make a single income work for you?
- Does it make financial sense to pay for childcare on two incomes? (if your take home pay is minimal after you deduct childcare costs… does this still make sense for your family?)
- If you want to keep working, will it be part time or full time?
- Where can you cut numbers?
BE REALISTIC ABOUT WHAT ITEMS YOU *REALLY* NEED
Some baby gear like a wipe warmer or bottle warmer for your car sounds nice, but aren’t necessary. A crib, mattress, diapers and wipes are necessary.
Baby registries at big box stores give you a dozen pages of items “you need,” but the truth is they aren’t required to care for your baby. In fact, newborn babies need very little.
It’s up to you to decide what you need, but shopping secondhand and accepting hand-me-downs are free or have minimal costs and are where it’s at.
All three of my kids had used cribs and mattresses handed down. We never used baby bath towels and they were perfectly fine using our regular home ones. I got rid of our diaper pail and just put the diaper in a bag or the outside trash because the fancy diaper pail bags are expensive and just one more added expense.
Ask friends – and take them up when they offer – for maternity clothes, baby gear and clothing. Shop secondhand and scour garage sales for great finds at deep discounts. Often you’ll find unopened and brand-new items at these places. There is absolutely no shame in shopping gently used items for your baby – they will never know the difference and your pocketbook will thank you.
CREATE A PRACTICAL BABY REGISTRY YOU NEED, NOT JUST WANT
Shopping for baby is fun, and people love to buy cute clothes and blankets all day long… but that is not what your baby really needs. When you create a baby registry, aim for practical. Include all the necessities and in sizes up to the first year.
People love to buy newborn and itty bitty baby clothes, but this age will go fast and it’ll be a huge help to have items you need throughout the entire first year of baby’s life. Plan on diapers up to size 2 or 3, swaddles and sleep sacks for bigger ages, and if you choose to do bottles and pacifiers, these are sized by age, so register for them all!
When you create a Baby Registry, I highly recommend you Create an Amazon Baby Registry because they have all the brands (unlike certain stores) and you’ll hardly ever run into a stocking issue, which was a major problem for me at two of the stores I used. The stuff I wanted, always ran out of stock and it was really frustrating! You can add from any store and they have the best prices versus Babies R’ Us or Target which their baby gear is always marked up.
BREASTFEED TO SAVE ON FORMULA (IF YOU CAN)
I know not everyone is able, or choses to breastfeed, but this can really help with your finances because formula can be quite expensive – and you’ll need a lot of it each month. Breastfeeding is free food for your baby. FREE.
I know breastfeeding is very hard and can be painful (oh, I know this all too well), and sometimes babies require certain formulas due to allergies as much as you try to make it work. Do the best with what you can and be prepared to change plans if you need to. This is where an emergency baby fund can help if you run into extra expenses.
START SAVING & STOCKPILING EARLY
It’s a great idea to start creating a baby fund now – even before you’re pregnant or the minute you find out! Also, start stashing away boxes of diapers, wipes and essentials when you have the extra money for it.
Automatically putting away $25 or $50 out of every paycheck will add up by the time your baby is here and having an extra $1000 or more can be a huge relief if extra, unexpected expense pops up. (They always do!)
If your budget is already tight, try to find ways to make extra money while you have the energy and are feeling well, and ask your partner to do the same too! Working extra hours, helping tutor kids, babysitting, pet sitting or pick up freelance work all helps build an emergency fund.
MAKE YOUR OWN BABY FOOD
Once your baby begins solids, you’ll notice your grocery bill picking up. Making large batches of fruits and vegetables and then freezing them helps your bottom line, but ensures your baby is eating clean, fresh and nutritious foods.
I’d suggest buying about two dozen jars of store-bought baby food just for the containers. Once they’ve been eaten, clean and reuse them. They’re cheaper than the reusable baby food jars you find designed for parents who want to make their own. (I have no idea why this is the way it is, but trust me it’s pricey.)
You can also use ice cube trays, fill with baby food after you’ve made it, freeze and save in freezer ziplock bags for later. Later, you’ll only need to thaw, warm up and serve.
USE A SUBSCRIPTION SERVICE FOR DIAPERS & BABY ESSENTIALS
I love, love, love the Family subscription services with Amazon because you get 20% off diapers and other baby supplies, and it’s delivered to your front step so you don’t even have to leave the house! Great if you have a new baby or multiple kids.
There’s FREE 2-day shipping too so if you notice you’re down to your last 20 or 30 diapers, you’ll have more sent to your house and arrive in time. They also allow coupons and have a ton of deals to drop the price even lower, which I’m all about saving money as a Mom.
TAKE ADVANTAGE OF FREEBIES FOR MOM & BABY
Marketers know new moms are a gold mine for spending on their baby, but they want to entice you with freebies first… so take full advantage! Your OB’s office most likely has freebies including formula, diapers and baby products for baby like this nursing pillow and carseat cover.
Also you can find these products for free if you use my coupon code PRAGMATIC1. Most of these items you can pick your own colors, patterns and personalize for a small fee if you’d like. Other than that, the baby product is free and all you have to pay is shipping & handling. The products are valued between $35 – $75 and pretty awesome.
Be sure to use the code PRAGMATIC1 so the item is free at checkout, otherwise if you go to the store and don’t use the code, you’ll have to pay full price.
- Pregnancy Pillow (15% OFF) – www.pregnancypillow.com
- Carseat Cover (FREE) – www.carseatcanopy.com
- Nursing Pillow (FREE) – www.nursingpillow.com
- Baby Wrap / Sling (FREE) – www.sevenslings.com
- HOODED BABY TOWEL (FREE) – www.hoodedtowels.com
- 5 Pairs of Baby Leg Warmers (FREE) – www.nursingpillow.com
Don’t Forget to Download the 1st Year Baby Budget
The Ultimate Pregnancy Organization Toolkit
Be sure to snag the Preparing for Baby Toolkit Here – Read more about what’s inside to help you stay organized and prepare during every step of your pregnancy, and after you bring baby home. This information will help you prepare for baby, won’t let you forget any detail during pregnancy and take the overwhelm out of expecting a baby. Read more about what’s inside and how the preparing for baby toolkit will help you.