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Valuable Tips for Affording a Baby

July 13, 2018 | By Mason Roberts

Having a baby is a wonderful and life-changing event, but the potential costs can be a little frightening. However, there’s no need to worry! With a little budget cutting and some financial planning, you can enjoy this wonderful experience without jeopardizing your financial future.

First, Get Over the Financial Fear

Many parents admit in retrospect that if they’d waited to be able to afford a baby, that their children would never have been born. When you consider that the average cost for a middle-income couple to raise a child for 18 years comes in at just under a quarter of a million dollars, the potential financial implications of having a baby can be quite daunting. Just remember that approximately four million babies are born in the U.S. every year, and most of their parents seem to adjust just fine to their new financial realities.

Recalculate Your Budget

If you are already on a budget, it’s time to adjust it accordingly. If you are not on a budget, the time to start is now. Having a child will significantly add to your monthly expenses. These could range from a few hundred dollars to thousands, depending on the cost of childcare, health insurance premiums, using cloth or disposable diapers, formula feeding or breast feeding, and more. For realistic planning and peace of mind, estimate how much money you have coming in, and how much it is going to cost you to reasonably live your new life. If you’d like some help with your baby budgeting, the U.S. Department of Agriculture has a handy budgeting tool to help you calculate the cost of raising a child.

Enjoy the pregnancy and anticipation, and use the time to prepare for this significant change in your life. Examine your budget in detail and try to find ways to cut-back wherever possible. For example, consider eating out less. Try to reduce your spending on holiday gifts. Simplify your vacation plans. Be realistic in outfitting your nursery. And most importantly, sock away any money that you save from these financial adjustments, as you will definitely need extra cash down the road.

Staying Home Versus Childcare

Consider the second income versus the cost of childcare. Does one practically cancel out the other? Will you still have adequate health insurance if the second income is eliminated? Will the person staying home be able to return to their job when the time is right? Have you established an emergency fund? If you can answer “yes” to these questions, you’ll feel more comfortable exercising the stay-at-home option.

Save Money on Childcare

As a creative alternative to childcare, you can save by creating a nanny share. Many neighborhood parents save money by splitting the cost of one caretaker for two or more children. And if you have more than one child, many daycare centers offer sibling discounts.

Don’t ignore tax benefits, namely the Child and Dependent Care Tax Credit where parents can claim up to $3,000 worth of child care-related expenses for one child or up to $6,000 for two or more children under the age of 13.

Practice Living on a Single Income

If both the parents are working when your child is born, one parent typically must stop working on a temporary basis. This usually occurs regardless of whether someone is going to stay home with the baby instead of opting for childcare. This can have a significant financial impact. In some situations, returning to work can take considerable time, meaning you will have to manage on a single income. It is important that you plan and prepare for this possible scenario.

Wait Until the Baby’s Born to Start Spending

Excited parents-to-be often want to purchase loads of baby gear in anticipation of their child’s arrival. It is often more prudent to borrow things from friends and family until you determine what suits your child’s size and environment. Obviously a good car seat is an absolute necessity, but spending a lot of money on a luxury stroller is not. People you know who have had children may be willing to pass on clothing and other items that they no longer need. And don’t worry; your baby won’t know the difference!

Regardless of how well you plan, life has a way of causing the occasional hiccup. In those situations where you may be experiencing a temporary cash crunch, eliminate the stress and take out an installment loan to get the cash you need and the flexibility to repay the loan over time.


Mason Roberts is a seasoned economics writer and blogger with a knack for breaking-down and simply communicating the ever-changing world of finance. He is philosophically committed to the premise that financial knowledge equals financial freedom.