Whether you’re planning to start a family in the near future or just found out you’re going to be parents, it’s important to know what to expect financially when you’re expecting. Parenting.com says the average family can spend up to $12,000 a year on child-related expenses for their first born. However, there are plenty of ways you can save money, and opening a high-interest money market account or certificate of deposit (CD) early will allow those savings to grow at a faster rate. As you create your baby budget, make sure you have a thorough understanding of the expenses you may face to help you prepare. We’ll help by outlining these below as well as give you tips for saving for a baby.
Expenses to consider when you’re budgeting for a baby
Make sure your baby budget includes the items we’ve listed below. You can save money by purchasing many items used or in bulk, and we’ll talk about that a little more later, but as you set your budget, use the average market price to ensure you have set aside what you need.
- Prenatal visits and hospital bills: Call your insurance company to let them know you are pregnant or planning to become pregnant, and to get an idea of what your out-of-pocket costs for delivery may be.
- Decorating the nursery: Whether you need to remodel the room or simply repaint and furnish it, this can be a large expense for a family. A home equity loan or line of credit may be able to help with the remodel, but you’ll still want to save for the decorations and furniture, including a:
- Crib (consider a convertible model to save money down the road)
- Changing table (you can also use a pad on top of the dresser to convert it to a changing table and save money)
- Monitors (while you can go with a basic model, video monitors are becoming more popular, though they are more expensive)
- Baby-proofing: To make your home safe for a baby, you’ll need to buy new supplies to baby-proof the house.
- Diapers: You’re sure to go through a lot of these, so make sure you budget accordingly as this is one item you don’t want to skimp on.
- Baby food and supplies: If you’re considering formula, you’ll want to make sure you’re prepared for the expense. Other costs include breast pumps (which may be covered by your insurance), bottles, solid food, spoons and dishes. Parenting.com says families can spend close to $50 per week on just diapers, formula and baby food.
- Clothes for mom and baby: Most moms aren’t going to forget to account for adorable baby clothes, but they may accidentally leave maternity clothes out of their budget. Make sure you have what you need for both of you.
- Stroller, car seat, swing and high chair: These must-haves for both mom and baby can be pretty pricey. Look for options that adjust as your baby grows to get the most out of your money.
Find ways to save on the expenses in your baby budget
While creating a budget with the standard or even high-end products on the market is important to ensure you have saved what you need, here are other ways you can create some wiggle room when saving for a baby:
- Wait for showers: Creating a registry for your baby is a great way to save and stick to your budget. If you’ll be having a baby shower, wait to make purchases on your own until you know what friends and family have taken care of for you. You may also receive gift cards as shower gifts, which you can use when you need to purchase something you didn’t receive.
- Buy secondhand or borrow whenever you can: This goes for both mom and baby. Whether they’re hand-me-downs or consignment store finds, secondhand maternity and baby clothes are a great way to save. But secondhand savings aren’t just for clothes. Some items – like a stroller or car seat – are best bought new, but you may be able to save on other items, like a secondhand bassinet or high chair.
- Get the minimum amount of necessary products: First-time parents can often be overwhelmed by all the choices of bottles, diapers, toys and pacifiers. But what really matters is what your baby likes. Purchase what you’ll need to get by for the first few months and save to stock up on the rest in bulk when you know what works best.
- Consider cloth diapers and convertible cribs: When you’re a mom, one of the greatest money-saving tips is to purchase something that is durable and reusable. Whether this means spending a few extra dollars on a high-end stroller for more than one kid or choosing to use cloth diapers and a convertible crib, look for items that will last and lower your expenses in the long run.
Plan for the years ahead – open a bank account and start saving for baby
As you continue budgeting for baby and open a savings account to cover expenses, make sure you also take time to think about experiences and expenses down the road. Will you want to be a stay-at-home mom? If so, Barbara Hetzer, author of “How Can I Ever Afford Children? Money Skills for New and Experienced Parents,” says to give a single income a trial run before you need it. Attempt to live on just one salary for a few months while pregnant. It will give you a chance to boost savings and learn how to stretch your dollars should you decide to take more time off. If you choose instead to go back to work, you’ll also want to factor in day care expenses. And no matter what, you’ll want to account for preschool enrollment expenses and contributions to a college savings account. Certificates of deposit and money market accounts help you grow your funds more quickly, but it’s important to consider that money market accounts are more flexible than CDs. If you choose CDs, you may want to choose terms that end before your due date and transfer the savings to a money market account to have more liquid funds.
Sponsored content was created and provided by RBS Citizens Financial Group.