How to Budget for a Baby

For new parents, learning how to budget for a baby can seem like an overwhelming task. New babies come with a lot of responsibility - much of which is financial. In fact, according to the U.S. Department of Agriculture, the cost of raising a child from birth to age seventeen costs an estimated $184,000. If you or someone you know is expecting a child, plan ahead to avoid any financial surprises that could come your way.

1.  Budget for baby pregnancy expenses. Before you ever walk your bundle of joy out of the hospital doors, a hefty bill will be attached to your name. It is important to review your insurance policy when you become pregnant to find out which providers offer the best discounts through your insurance company. Many pre-natal office visits, lab work, sonograms and hospital births are subject to deductibles that can be as low as a few hundred dollars and as high as $10,000 or more. Arrange for a payment plan with your healthcare providers to pay off these debts in a reasonable amount of time. If you do not have insurance, check your state's laws for pregnancy medicaid eligibility requirements, or inquire of possible discounts for paid-in-full accounts at your local hospital. Often, a hospital will accept a flat fee payment if the account is paid in full before the delivery date.

2.  Budget for baby living expenses. Aside from the "start-up" costs (many of which are received as gifts at baby showers) of having a baby that include purchasing a crib, blankets, car seats and strollers, there are ongoing monthly costs to budget for a baby as well. Infants can plow through up to $40 a month in diapers, outgrow mountains of clothing and require around the clock attention. In addition is the cost of food and formula. If a parent does not plan to stay at home with the baby, the cost of a nanny or day care should be factored into the budget. In addition, children need doctor's check-ups, age-appropriate toys, and parents are likely to make use of a baby sitter a few times a month which can run $50 per night.

3.  Budget for baby's future. New parents have a big responsibility on their hands. That baby will eventually grow into a high school graduate who will likely require financial assistance to attend a college or university. College expenses are only expected to increase over the years, so start saving now by creating a 529 college savings plan. These accounts carry tax benefits and can accumulate interest for many years leading up to college.