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No one tells you when to start saving money for a baby. I don’t know about you, but when I found out I was pregnant, I was extremely nervous and excited and had an “Oh Sh*t” moment. It took me three days to tell my husband that I was pregnant once I found out.
Expecting your first child is a captivating event. The financial aspect of raising a child is probably not the only thing you have on your mind. However, having a child means you’ll soon have some new responsibilities, including preparing for your new arrival from a financial point of view.
I once read somewhere that from birth to 18 years old, one child was like $250K. If you want to read more about it, click here to check it out. I’m sure it’s way more expensive now. But you can imagine the financial implications of having a person or couple trying to have a baby. My husband and I are in our early 30s.
We’re pretty aware of what happens when it happens. For younger parents, this can be a massive financial shift in lifestyle. My son, Noah, is now 2.5 years old. Even in that time, we have spent $10K, and I’m not even joking (I wish I were, LOL).
While family members will always find ways to help you, a new baby brings on its own challenges that you must be aware of and find the best way to navigate at every age and life stage. If you are looking for my holy-grail must have baby items for first time moms, click here to read my blog post.
You don’t have to spend much money when you first have your baby. You can visit local consignment shops, which is a great place to find new and gently used items that your baby can use. Keep in mind your baby won’t remember any of this, and since they won’t be able to talk until they are closer to a year, you don’t have to worry about putting them in name-brand clothes (unless you can afford it).
This post is about saving money for a baby.
Thinking About Having a Baby
From getting cribs, diapers alone cost a fortune. Wipes and clothes, along with getting a high chair, are also expensive. Not everyone has the means to get a financial advisor unless you had them before starting your family.
You are already spending a lot of money on developmental toys and specialty formulas to make the baby happy. If you are thinking about the financial aspect of having a baby, think about the following accounts to set up for your baby while they are young.
- College savings plans
- Roth IRA (you should have one personally if you are working full time since your company only lets you match up to a certain percentage each year.)
- Personal Bank Accounts (checking and savings are goods ones to start out with)
- Mutual Funds
- Emergency Fund (you should have one before having a baby, but this would be a great time to start putting money away)
Make sure to research financial institutions that will help and support your saving goals. You don’t want to start saving money for a baby only to start over because you put the money in an account that wasn’t beneficial.
A great way to ensure you are getting the needs for your baby’s first year taken care of is to consider what custodial accounts you can start to take care of your baby’s medical costs.
Take as much time as you need to ensure you get the best deal when starting and maintaining an account for your new baby. Always account for out of pocket expenses if you are planning on having a second child.
While the first baby is always a little bit more expensive than the next, having these conversations will allow you to plan ahead and monitor your spending. The main thing to remember is that having a baby is an exciting time, but you also have to be prepared for what comes with the first year.
Baby Planning Checklist
But this is why I also tell my friends, regardless if they are a man or women, that you must be sure you want to have a child because once they are here, there is no return to sender.
Now our son was planned, but most babies aren’t, which is another reason why you must be careful before having one of these. Babies and children (even adults) can have you go broke if you are in no way, shape, form, or fashion ready for them.
Understanding that this only really happens in a perfect world, even if you are pregnant, having a plan now will allow you to better plan for the future. It’s never too late to start making plans. There are always free resources that you can get online or at the local library if you need them.
A lot of new parents underestimate the cost of having a baby. These are some of the main expenses you’ll have to cover in the first few months:
- Doctors’ appointments during the pregnancy and for the baby
- Birthing classes/Childhood Education classes
- Parental Leave can impact your budget if your employer doesn’t offer paid leave, or you may have to take a lower salary while on maternity leave.
- Purchasing a stroller, crib, car seat, and some baby clothes
- You are saving up to cover any other expenses you didn’t plan for, like specialty formula, blood work, tests, and co-pays, depending on what your insurance covers during the labor, delivery, and postpartum of your child’s birthing experience.
- Financial planning (either personal or professional)
- Medical Expenses – many things can come up during pregnancy that might not be covered by insurance.
- Child care costs
The good news is that you have nine to ten months to prepare and save money. This will be easier if you assess how much money you expect to spend on baby-related expenses during the pregnancy and the first year of your baby’s life. Put aside a certain amount weekly or monthly to reach your goal when saving money for a baby.
Baby Savings Account
- Go over your current health care plan to figure out how much coverage you have. At least a dozen checkups will be needed throughout the pregnancy if there are no complications. You should also review your policy to see if you would be covered for a C-section since this is a more expensive procedure.
- Open a health savings account and make regular contributions. These contributions are tax-deductible, an excellent way to cover some pregnancy and delivery costs.
- What about your career? As an expectant mother, you’ll probably have to put your career on hold. If you work for a company with less than thirty employees, your employer is not required to offer paid maternity leave. Talk to your employer to find out if you can count on getting your job back after maternity leave.
- You are increasing your income. Raising a child costs $165,000, according to the U.S. Department of Agriculture. You should expect to spend between $8,000 and $10,000 during the first year of the baby’s life. Saving money is necessary, but you might want to look into ways to earn more money in the long term. Think about the financial impact of not increasing your income or saving.
- These items would also be beneficial:
- Disability insurance that covers any complications linked to pregnancy
- Term life insurance
- Look into upgrading your health insurance. If you plan on scheduling all your appointments with the same professionals, a preferred provider option can be more affordable and provide you with more coverage.
- A 529 Saving Plan to start saving up for your child’s college education
Avoid making the mistake of overspending on items you don’t need, like a lot of young parents do. I have another blog post about basic essentials for newborns that you can click here to read.
I also give facts and tips on ways not to overspend for your baby. While there are tax benefits to having children, if you aren’t careful, you will still owe money at the end of the year.
That post came after I realized we were headed down this dangerous path of just buying things for him. Other people told us that is what they were using for their children. I want to add that Noah is doing very well not have many options to play with.
He doesn’t like to play with things for an extended period. My husband and I spent a lot of time playing with him, so why buy all this stuff when he does not like it.
Products for Babies and Toddlers
I got some of my favorite products from Amazon when I was pregnant. Not only was it convenient, but with same-day delivery, I could get some essential items that I needed without having to leave the house. Check out my list of products for babies and toddlers by clicking here. The products that you want to make sure you are not buying knock-off or cheap versions of are:
- Breast Pump – here is the one that I used.
- Baby Gear – invest in a good stroller, diaper bag, and infant car seat.
- Changing Table – if you want to get one to put in rooms, you can, but a changing pad is all you need.
- Toddler Bed – getting a transitional crib is the best investment you can make.
- Newborn Clothes
- Cloth Diapers – if you are going to use cloth diapers, look into a great company so that you don’t end up having to buy these diapers over and over again.
You also want to think about products you will need as you recover. Here are the other items moms need to help you and your baby in the long run.
- Maternity Clothes – don’t ruin your normal clothes by trying to stretch them out. Get two or three pairs of jeggings or leggings, which will get you through the later trimesters of pregnancy.
- Disposable Diapers – they are not the same.
- Bottles – whether you are breastfeeding or formula feeding, get bottles that aren’t going to break or leak.
- Baby Wipes – same as the disposable diapers. They are not the same, so check which wipes work for you and your baby’s needs.
If you have big-ticket items, put them on the baby shower list. If you can’t afford it, see if you can have family help. With the new addition to the family, most will get pregnant women what they want, so the new mom is happy.
Having One Child
A transition must happen before bringing the baby home if you have a pet. My tips are great since I have a corgi. Read my blog post on how to prepare a dog for baby. If you don’t have any pets, the process will be different.
Focus on upgrading your health care if needed, putting as much money aside as possible, and shopping for good deals for baby essentials. Also, you need to worry about stacking up cash and a fund for your baby. You will have unexpected expenses with children, and there will be things that the insurance company may not cover.
Your baby is the actual investment. Your kids won’t need all the toys and other items after a few months to a year. I’m glad this is something that we are doing now because you are getting into a deep black hole when it comes to continually buying stuff for your baby. After all, they are cute, and who doesn’t want their baby to have the best of the best.
Short Term Financial Goals
Help yourself to meet your money goals for the baby expenses by creating and following a budget. Saving money for a baby can be easy if you do it correctly.
It will be easier to avoid overspending if you have a good idea of the expenses you still need to figure out. Also, please pay attention to your child’s temperament when buying items.
They will let you know quickly if it’s something that they like or if you have wasted your resources. If you plan on having another baby, you can always wait until the next baby to try again. If this is your last one, try to be mindful of spending.
Having a baby is a significant life event. Saving money for a baby should be a priority, especially for financial security in the future. Don’t hesitate to ask friends and relatives to help with some baby items. They’ll likely be glad to help with baby clothes and other essentials.
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