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Family Financials: What to Expect When You’re Expecting

Special guest Might Mommy has 7 expert tips to reduce the financial stress of having a baby.

By
Laura Adams, MBA,
Episode #282

Family Financials: What to Expect When You’re Expecting

by Laura Adams and Cheryl Butler

Having a baby can be an exciting time for a couple—but it can also leave you worried and stressed out about your finances. Since I’m not a parent, I asked a special guest to share her sage advice in today’s episode. It’s Cheryl Butler, the host of the Mighty Mommy podcast. She’ll give you 7 financial tips to plan for a new family member, so you’ll be as prepared as possible.

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*** A Mighty Mommy Exclusive ***

Starting a family is one of the most exciting and important decisions a couple will ever make.   There is so much to consider: What will the sex be? Can you decide on a name you both like? How will you decorate the nursery? Who will stay home with the baby? And perhaps the most overwhelming question: How are you going to pay for all that comes with this bundle of joy?

Take a breath and relax. I’ve been down this path 8 times, (don’t worry, you don’t have to be extreme like I was!) and believe it or not, once you take the time to figure out what expenses go hand in hand with a new baby, you’ll be able to plan your life and your budget much more efficiently:

Related Content: 5 Smart Money Management Tips for Couples

The Cost of Raising a Child

According to the Department of Agriculture’s latest estimates, raising a child to age 17 in the U.S. costs about $235,000. This figure includes just the basic expenses like food, housing, transportation, and child care. Add college into the mix and the cost of a child can run much higher.

Here are some key expenses to keep in mind before (and after) the stork arrives:

#1: Maternity Leave

You will need to consider how you'll manage on one income during maternity leave and a possibly reduced income during the pregnancy. This will of course depend on your employer’s maternity benefits options.

#2: Work v. Stay Home

Who will care for your new baby is a very personal decision between you and your partner. If you are contemplating one parent staying at home and possible future children, you need to determine what your expenses are ahead of time so you can see if your growing family can manage on just one income.

#3: Health and Life Insurance

The most immediate issue when you're thinking of adding a new member to your family is how much of the associated cost will be covered by your health insurance. Be sure to consider co-pays for both well and sick visits, as well as deductibles and certainly what any out of pocket expenses will be for the prenatal care and delivery. In addition, don’t forget about life insurance. If something happens to you or your significant other, life insurance can help your surviving family cover the bills, including child-rearing expenses and college costs.

Related Content: 7 Tips to Buy Life Insurance

#4: Setting Up a Nursery

Babies don’t come with instruction manuals and they also don’t come equipped with all the items you’ll need to care for them. A typical nursery consists of a crib, bedding, changing table, cradle, dresser/bureau, rocking chair, and even a book case and toy chest. 

Next, there are big ticket items such as car seats, high chairs, and strollers. Keep in mind that most expectant moms have baby showers thrown in their honor, but if you don’t receive all your items as gifts, you can either shop the sales or check out great finds at consignment stores, yard sales, and on ebay.com and craigslist.com.

#5: Miscellaneous

The web site babycenter.com estimates that disposable diapers for a newborn will cost $72 each month. The same website estimates that using a diaper service would cost $76 and washing your own cloth diapers would cost $19. Food for a newborn varies depending on whether you breastfeed or formula feed. If you breastfeed exclusively, the cost is virtually nothing. The Breastfeeding Center of Ann Arbor website advises that formula feeding a newborn for the first month will cost between $49.50 and $99, depending on how much the baby eats and the formula you choose (and that does not include the cost of bottles). Medicine will cost approximately $23 per month, toiletries will cost approximately $21, and many parents spend as much as $35 per month on toys and books.

So if you’re having a new baby, you should expect to spend anywhere from $148 to $255 per month at the outset. And of course, more as your baby grows and his needs change.

#6: Daycare

If you plan to place your child into daycare, you need to calculate the cost of that service into your budget. According to WebMD, average daycare costs are approximately $1,200 per month. Perhaps hiring a nanny is more your style, and more companies are now offering in-house daycare centers so parents can visit their kids at lunch and break times. Be sure and check with your pediatrician and other mom friends to get recommendations so that you can compare settings and cost.

#7: College

Most parents dream of sending their children to college, and in my case, that’s 8 tuitions! But it’s a priority for our family so we have made sacrifices to make this happen. Paying for college has dictated the size of home we live in, the vacations we take, and even the food we eat. You wouldn’t believe the things I can do with macaroni and cheese! It’s never too early to start thinking about a savings plan for college.

Related Content: Should Students or Parents Pay for College?

Having a child is one of the happiest, most exciting, and most stressful times of a couple’s life. The list above is a guideline of what new parents can expect financially. But the overwhelming love and joy you’re going to feel when you hold your baby for the first time—that is absolutely priceless!

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For more practical parenting tips, be sure to subscribe to the Mighty Mommy podcast.

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