It is not a secret that having a baby is a life-changing experience. Every aspect of your life will be altered, especially how you spend and save money. A recent BabyCenter survey found that 42 percent of parents expect to spend around $10,000 in their first year with baby. Of course, this number is an approximate cost.
With some forethought and careful budgeting, you and your family can moderate some of the costs associated with the first year of your baby’s life. While you can’t foresee every cost, being proactive will minimize surprises and increase peace-of-mind and enjoyment when your beautiful new addition arrives.
Labor and delivery costs vary wildly. Location is a big factor. Depending on where you are in the country and where you choose to give birth (home, hospital, or birthing center), choosing where to give birth can alter your plans and budget.
According to the U.S. Agency for Healthcare Research and Quality (AHRQ), the average cost of a normal (no C-section or complications) birth in a hospital is around $3,200. Add in the costs of pre and postnatal care, you’re looking at an additional $4,000 (or more) added to your hospital bill, and this is after insurance. If there are any kinds of complications, such as low birth weight or jaundice, you can realistically except to pay more.
When you find out you’re pregnant, contact your insurance company to find out what kind of coverage you have and if you have it, what your HSA or FSA will cover. If you’re insured through work, talk to HR. You will likely be having several conversations in his or her office, especially if you’re going to take maternity leave.
Taking Time Off
Finding out what kind of family leave your company offers (or doesn’t offer) is going to affect your budget. It may be surprising, but only about one-third of all working women in the United States are offered any sort of maternity leave. If your company offers leave, find out if you get the full amount or only a percentage of your regular paycheck. This may affect how long you take or even if you return to work. If your company doesn’t provide leave, they’re still required to honor 12 weeks, unpaid, under FMLA law. Fully understanding your own benefits will give you a clear idea of how to create a feasible budget for you and your growing family.
Budgeting For Baby
Once you have a clear idea of how much money will be coming in, you can begin creating a budget for the months leading up to, and after, giving birth. Use a ‘first year’ calculator to figure out what you’ll need to save. The numbers may surprise you so expect to make some adjustments in your spending. Curious about how to start making some cuts? Start by figuring out where your money is going now. Track your expenses in Excel or if you’re more comfortable on your phone or the computer, try using an app/program like You Need A Budget.
Once you’ve figured out where your money is going, create a budget with savings in mind. More importantly, start that budget before the baby is born and stick to it! If you’re spending more than you’re earning (or saving), start cutting unnecessary expenses like cable or magazine subscriptions. Limit your travel and avoid eating out too often. Packing a lunch, instead of ordering a sandwich, can add up quickly.
Buying For Baby
Buying furniture and supplies as you prepare your home for your little one is where a lot of families tend to blow their budgets. First-time parents are often unsure about what and how much they will need to care for their newborn. Before you build a registry or go on a shopping spree, have an honest conversation with your partner, yourself and other parents about what’s truly necessary.
Bring a parent on your registry trip – they will give you the lowdown on strategic purchases and can assist your internal debate between that fancy baby Jacuzzi or $10 plastic tub. That doesn’t mean you can’t splurge on something adorable you love. Just call a splurge a splurge, save for it and buy other things more affordably.
Don’t buy anything without seeing what your friends or family members are willing to lend or give you for free. Some babies grow so quickly they never get the chance to wear their newborn outfits or onesies. The same can be said of furniture like gliders or high chairs – parents may discover that their kids prefer their car seats or booster chairs. Buying gently used clothing, furniture and supplies can save you a lot of money over time. Also, consider registering or purchasing gender-neutral clothing and equipment. If you plan on having more children, you won’t feel pressured to buy new things.
Lastly, if you’re planning on using day or homecare, the sooner you can start interviewing centers or home care candidates, the better. Some have an admissions process, waiting lists or deposits so if you have a certain person or location in mind, schedule your visit well before your due date. With this sort of prudence and planning, you’ll feel more confident about bringing your baby home.