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How to Budget for a Baby

November 11, 2020 · 4 minute read

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How to Budget for a Baby

Having a baby can fill your house with love. It also can take a toll on your finances.

So while you’re obsessing about pink, blue, or both, try not to forget about the green. Just getting ready for that new little bit can mean a big budget hit. And like your baby, you can expect the costs will keep growing.

That means you’ll have to reconfigure your household budget more than a few times through the years—and it might be a good time to start planning for those modifications right now.

It might seem a little challenging (and boring) to work on a baby budget when you have so many other fun things to think about.

But if you break down the process and do a little at a time, it can make the task less daunting.

If you already have a budget in place, you have a head start. If not, you can begin by gathering your financial information—what comes in and what goes out.

Assessing Your Income

Look at your household income after taxes and other deductions come out of your paycheck each month. That’s the money you’ll actually have to work with, not the gross amount. Also, if one parent plans to stay home with the baby full- or part-time—or if your income already fluctuates from check to check, plan accordingly.

You might be willing to do without new clothes and other indulgences in leaner times, but your baby will always need diapers. Be sure to consider the loss of any non-cash forms of employee compensation, such as insurance and retirement contributions.

Looking at Your Current Expenses

Some things won’t change at all, but there may be costs that will go down or go away after you have the baby. For example, the amount you spend on movies, dinners out, and travel might be reduced for a while.

If one parent decides to stop working, the wardrobe budget might drop. But you’ll also be adding expenses. This is a good time to identify your priorities and be prepared to make some trade-offs . Can you live without Netflix, Starbucks, and the latest iPhone update?

Planning Ahead For Recurring New Expenses

Child Care

Typically, child care is the biggest ongoing expense a family will have with a new baby. The cost will vary depending on where you live, the type of care you choose, and whether you need part- or full-time care, but according to Care.com’s 2018 Cost of Care Survey , one in three families now spend 20% or more of their annual household income on child care.

The survey found national averages ranged from $211 per week for a full-time slot at a child-care center to $580 for a full-time nanny. (You can learn more about the costs in your area by contacting the nearest Child Care Resource & Referral agency.

Or check out the difference in price when hiring a nanny, sharing a nanny or going with a day-care center with Care.com’s Cost of Child Care Calculator .)


Even if you plan to nurse the baby, you’ll need to prepare for the possibility that breastfeeding might not work out and formula could be a regular expense. Powdered formula can cost from $70 to $150 per month .

When your baby starts on solid foods, typically at about 4 to 6 months old, you could be looking at a cost of $50 to $100 a month .


The average baby uses 2,500 to 3,000 diapers in the first year, which could add up to more than $1,000 a year in diapers and wipes.

House and Car

Maybe you’re lucky enough to already have an extra room in your home that’s ready to be transformed into a nursery. And maybe a baby car seat will fit into your current ride without a struggle.

But if that’s not the case, and you have to make some adjustments for your growing family, you may have to add more expensive house or car payments to your get-ready-for-baby budget.

Miscellaneous Expenses

Even newborns have toys and books. And then there are the pacifiers, the tiny outfits and socks, the lotions and creams, the Mommy and Me classes, etc. This is where you can prioritize.

If you don’t mind hand-me-downs, clothing could be a place to cut costs. (Unfortunately, you probably can’t count on your shower guests to provide everything you’ll need.).

Preparing for Some Upfront Costs

Depending on your insurance coverage, you could be going home from the hospital with a bundle of joy and a bundle of bills. Check your health insurance plan ASAP to gauge what your costs could be.

The amount of your hospital bill will depend on a lot of factors, including the part of the country in which you live, the size and location of the hospital, the length of your stay, and how much extra care you or your baby might require.

You also may need some starter equipment—a crib, changing table, dresser, car seat, stroller, gates and other safety equipment, and you may want a baby monitor and even a nanny cam.

Smaller ticket items include a diaper bag and Diaper Genie, a baby bathtub, bedding, and towels. Here’s another place where hand-me-downs and resale shops can help you save.

Ready, Set, Transition

Remember those expenses you thought about prioritizing in step 2? You don’t actually have to wait until the baby arrives to make changes. You might want to practice by giving your new budget a test run before your delivery date.

To take it a step further, if one parent plans to quit working, even for a short while, you could start living on just one salary a few months early and put the extra income into an emergency fund. That money could come in handy later if unexpected expenses crop up. (And you know they will crop up.)

Overwhelmed? Take Baby Steps

Preparing for a new baby, especially your first, can be exciting. It also can be a little overwhelming.

Doing a few breathing exercises could help as you’re working on your budget for the new baby. Start now with baby steps (see what we did there?), and you could be on pace long before your little one arrives.

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