Monday November 29, 2021

updated - November 29, 2021 Monday EST

How to Budget for a New Baby

May 06, 2021 02:16 PM EDT | By Staff Reporter
How to Budget for a New Baby
(Photo : How to Budget for a New Baby)

One of the best things in life is the moment that you find out you're having a baby, but that feeling can quickly be followed by panic. When it comes to being a first-time parent, financial planning can be very stressful. 

While money will be a factor no matter what, there are several things you can do to prepare for when the baby arrives. It's best to build these habits now, so consider the major one-time payments, recurring costs, what you'll need, and where to be frugal.

Large One-Time Payments

While every potential cost may or not happen to your wallet, it's good to know what to expect when you sit down to budget for a new baby. These are major costs that would only hit once, but they're large sums to cover.

Hospital Bills

The medical costs of pregnancy and birth have a large variance based on insurance, complications, and how long you're in the hospital. That's because copays and deductibles make a huge difference in considering costs.

With insurance, the total cost out of your pocket averages out to just over $6,000 among first-time parents. It's important to understand your insurance and make choices accordingly to save money when possible.

For example, if your insurance will kick in after you hit $5,000 but the hospital stay is only $2,000 a night you might want to look at being there at least 3 nights to get maximum coverage.

Complications in the pregnancy can lead to more frequent doctor visits, which can increase the overall cost significantly. Some hospital bills can end up well over $100,000, so be prepared to play the long game paying it off.

Common Baby Needs

While every baby is different, some necessities are universal. The good news is that most of these items you can shop for ahead of time or be smart and put them on your registry. That will be discussed more later.

For now, some of the things every baby needs are a crib, a car seat, and a stroller. Even better news, though, is that many of these are designed to modify as your child grows. So look for a crib that becomes a twin bed or a car seat that becomes a booster seat.

You don't need the most expensive things on the planet, but remember that they keep your baby safe. Every stroller holds a baby and rolls around, so instead of the $500 one you might look at the $100-$200 range.

Recurring Costs

The one-time bills can look daunting and expensive, but the real cost of having a baby comes in the repeating expenses. While they'll vary from parent to parent, or how much their grandparents spoil them, these are things that every baby needs one way or another.


Obviously, everyone eats and babies are no different. However, they'll normally need specific food. If you don't or can't breastfeed, formula can be expensive at $20-40 a can. Then come the bottles, nipples, and straws.


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After that phase, you'll hit the baby food. Depending on the baby, your child might eat several times a day and go through multiple containers in 24 hours. Even when they reach the point of eating your food, that's a third mouth to feed so prepare for the grocery bill to rise.


The good news about baby clothes is that they're cheap and easy to find. Sometimes you'll even find them in packs or bulk and not need to shop for a while. The bad news, though, is that babies grow faster than you think.

Be prepared to buy the next size every 2 or 3 months, and that's conservative. One of the biggest pieces of advice is to not spend an absurd amount on brand-name shoes, because your baby will out-grow that $40 pair of Michael Kors in a matter of weeks.

One of the largest recurring expenses for babies is diapers. Cloth diapers sound nice, since you can wash them, but most parents go with single-use diapers. You can save by getting diapers and wipes in bulk, but you're in for at least 2 years of buying them and it adds up.


Medical check-ups and dental appointments are in your future and these, too, add to the growing list of bills. These are unavoidable, since they're for your child's health, especially if your baby has any special concerns.

Again, take a look at your insurance plans and figure out the best method of financial reimbursement beforehand to save money.

Who's Watching Your Child?

While many jobs will allow some leave for new parents, eventually both parents might end up going back to work. That means daycare or babysitter costs unless you have a very lucky situation with a family member that doesn't work and lives nearby.

Of course, there's also the common occurrence where one parent stays home while the other works. Talk to each other before the birth to prepare for the financial impact this will have on your budget.

Where Can You Cut Costs?

Before you freak out and dump all of your money into pinching pennies for your child's future, it's important to understand that you still need to live. Set aside small amounts over time and invest it, but your financials will fluctuate for at least the next 18 years.

Role-Play Your Expenses

This is one of the best methods of budgeting for a new baby because you'll develop habits for the future. Essentially, once you've estimated monthly bills and decided on your home situation moving forward, take out any extra money that you won't have when the baby arrives.

Work on only spending that amount and see where it goes from there. Maybe you'll need a supplemental income to help the sole working parent or maybe you'll need to exchange your vehicle for a cheaper one.

Whatever your expenses, this is the time to find out where you can adjust what you spend. If you're able to save all the extra money leading up to the birth, that will be a nice starting emergency fund to invest so it's a win-win!

Bargain Shop

Too many people look down on being frugal, but one of the best ways to save money shopping for a baby is by thrifting. Since your baby will grow so quickly, there's no point in spending full price on every single article of clothing and every toy.

Think about things that you don't want anyone else to have used, like stuffed animals or a toothbrush, but clothes can be washed and toys can be cleaned. If you can find the right size, consider saving the money to put toward something else.


It was mentioned earlier, but a huge way to save money is to be aware of your insurance costs. Make sure that you've fully read your insurance policies and make plans accordingly.

If you need to stay 3 nights instead of 2 to unlock your insurance, tell your doctor. If your insurance will only cover a doctor check-up every 6 months, prepare to spend some money on the 3-month and 9-month visit. 

It might help to pick your pediatrician and dentist ahead of time and find out how often they'll want to schedule a normal check-up, assuming your baby has no special needs.

Use the Baby Shower to Your Advantage

This can't be stressed enough, because a lot of parents are afraid to be greedy. Obviously choose wisely, but don't worry about putting necessities on your baby shower registry. Maybe don't put the biggest things, like a crib, but you can put a stroller on there.

The same goes for diapers, baby toys, bath items, and the other hundred essentials your baby will need. People love shopping for babies and new parents, so allow them to be happy shopping!  If nothing else, gift cards work great for those recurring expenses.

Final Thoughts

One of the most important things that any first-time parents can do when budgeting for a baby is to prepare for financial changes.

Save money where and when you can, but make sure that you focus on enjoying your baby and giving them everything they need. Bills will be paid off over time, but your baby won't be a baby for long.

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