Baby on the Way?

How to Plan Your Post-Delivery Budget

Whether you have a bundle of joy on the way or you’re dreaming of the day you can welcome a new member into your family, the best time to figure out your baby budget and start looking at ways to save money for your baby is right now.

The United States Department of Agriculture reported the average cost of raising a child to age 18 in the United States (not including the cost of college) at $245,340. While that number is massive, and overwhelming to look at in its entirety, you won’t have to pay for it all at once. That’s why, a little planning and saving can help make it possible for you to add a new member to your family.

Plan for Immediate Costs First

The beginning is an ideal place to start when you develop your financial plan for affording a baby. Planning for college is important, of course, but you’ll need to cover the monetary side of your baby’s birth long before your child heads off for higher education. Considering the average costs of giving birth at over $18,000 for standard delivery and closer to $30,000 for a C-section, having good health care coverage protects you financially, according to a CNN report.

Along with health care coverage and your deductible, some of the first big expenses to plan for are your new baby’s immediate needs: Diapers, clothing, nursery items and bedding. Purchasing gently-used baby clothing, some nursery furniture, a stroller, and even a baby monitor ahead of time is one way to save money, as is choosing cloth diapers over disposables. According to the American Academy of Pediatrics, it’s critical to purchase certain items — car seats and cribs in particular — brand new to ensure safety.

5 Places to Find Money for Your Baby Fund

As you make a plan to cover the costs that come with being a new parent, it’s helpful to look for places in your budget where you can cut costs to increase the amount you save for your little one.

According to budgeting information from the University of Arizona, the maximum amount of after-tax income anyone should spend on fixed expenses, like mortgage payments, food, utilities, and car-related expenses, is 50%. Experts also recommend that about 20% of after-tax earnings go into your savings, if possible. To prepare for parenthood, you can increase the amount you save to build a nest egg that covers time you’re off work when your child is born, depending on how far ahead you begin to save.

Here are six ways to consider as you work to save for your future child or children.

  1. Cut Back on Going Out: Reducing the amount you spend on discretionary activities, like entertainment and eating out, is one way to find extra money to save. Consider bringing lunch from home instead of going out a couple times a week or having a date night in instead of always going out.
  2. Selling Things Online: Can you cut some of the clutter out of your life? If you have unnecessary or unused items around the house, listing things on online auction sites or having a tag sale to turn unwanted items into spare cash can boost savings for your little one's arrival.
  3. Use Your Creativity: Creating and selling crafts can become a spare income source, as can taking on some freelance or consulting work in your industry if possible. If you have a creative hobby, there’s the option to create a few extra pieces to sell and generate extra money for savings.
  4. Part Time Work: Have time to pick up some seasonal work or a part time position? A second job for one or both parents before the baby is born can help put more money aside before you welcome a baby.
  5. Cash Back and Credit Card Perks: Your credit cards can really pay you for your spending, like with cash back or other rewards. You may want to read the fine print of your credit card agreements to see what other perks your card offers so you don’t pay twice for something. What do we mean by this? Some cards offer provides emergency services you may need while on the road (think towing, changing a flat tire, boosting a car battery, etc.). This is like putting money back in your pocket.

Without budgeting and some extra planning, the added expense of bringing a child into your life can leave you financially vulnerable in both the short term and the long term. It’s an understatement to say that having a baby changes almost everything about your life, but the financial changes you face don’t have to be painful. Luckily, you don’t have to pull the entire cost of raising that precious child out of your pocket the day your baby is born. With some smart saving, your baby’s first few months can also benefit from some smooth financial sailing.