How to budget for a baby: Babyproof your budget in 4 steps

Having a baby means countless changes in your life, and they can happen very quickly. Diapers. Day care. Days running on little sleep. While it may not be on the top of your parenting list, budgeting for a baby can help prepare your family for the excitement that’s ahead.

Kelsa Dickey is co-owner of a Phoenix-based financial coaching company. When she and her husband had their daughter in 2015, budgeting helped reduce her money stress.

“I absolutely worry less about finances because we budget our money,” Dickey says. “I find budgeting incredibly liberating.”

How do you prepare financially for a baby so you can worry less about finances as a parent? Here are four tips that expecting parents can use to prepare financially for a baby by learning how to budget for a baby:

1. Prep for pregnancy expenses

Budgeting for a baby often starts long before the baby arrives. You may have to account for medical bills, prenatal vitamins, and maternity clothes, for example. Budgeting for a new baby can become easier if you account for these new expenses before you even need to make the purchases.

Alli Wittbold, a digital marketing director at a website that offers online labor and delivery courses, says she and her husband were able to save a significant amount on their medical bills when they had their daughter in 2016. Before they were even pregnant, they thought about ways to save money and researched the maternity coverage on both of their insurance plans. They found the coverage on her husband’s plan was much better than hers. By switching their coverage to her husband’s plan before getting pregnant, they were able to save thousands of dollars in maternity-related medical expenses.

While not all pregnancy expenses can be so well-planned in advance, it’s smart to sit down and make sure you’ve got all the budgeting basics covered, while also creating a list of the new, common costs you’ll need to account for as you prepare for your family’s newest addition. Talking with other parents can help you get a sense for costs that may creep up higher than expected. (For Dickey, it was maternity clothes, including new shoes and compression socks.) It can also make you aware of costs that weren’t even on your radar.

2. Save for baby-related costs

For the Dickeys, budgeting for a baby meant accounting for increased monthly spending on things they’d anticipated, such as diapers, wipes, baby food, and day care. But they also encountered plenty of unexpected expenses. For instance, Dickey planned to nurse and found that nursing supplies and support took a big chunk out of their budget.

“Paying for one-on-one help and consulting was not something I anticipated,” she says.

The Wittbolds also encountered unexpected costs when budgeting for a baby. They didn’t plan for supplies for when their baby got sick. “During our daughter’s first cold, we ran out to buy a humidifier and nasal aspirator,” Wittbold says.

To cope with unexpected expenses related to their daughter, the Dickeys adjusted their budget and began putting a set amount of money into a specific savings account each month. “I highly recommend doing this because you don’t necessarily know what you will or won’t need, so this allows for some flexibility,” Dickey says.

If you’re looking for additional strategies to learn how to budget for a baby, you might start an emergency fund to help you better budget for a new baby’s unexpected expenses.

“You can’t plan for everything, but if you can plan for even 75 percent of what you’ll need,” Dickey says, “the other 25 percent will be that much easier to tackle.”

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3. Get creative with your purchases

While baby items can be fun to shop for (think cute little onesies), paying full price on everything can make it nearly impossible to stay within your budget. The Wittbolds were gifted a lot of the things they needed at their baby shower, but they also shopped secondhand—a great tip for those worried about how to budget for a baby. They perused local classifieds and online marketplaces, and they even picked up hand-me-downs from friends with older children.

The Wittbolds also found creative (and fun) ways to save money by pooling resources from their friends. “My husband had a ‘daddy diaper party’ with all of his guy friends. As a gift, each friend brings a box of diapers,” Wittbold says. “We didn’t have to buy diapers for months.”

4. Account for income changes

Whether you intend to take a parental leave from work or have one parent stay at home to care for your child, you may have to figure out how to budget for a baby with less income than you’re used to.

Dickey and her husband own their financial coaching business, and they were worried about loss of income since they don’t work for an employer with maternity or paternity leave benefits. She knew she wanted to take six weeks off after having her daughter, so they started saving for the drop in income as soon as they knew they were pregnant.

“It made it so I didn’t worry and knew I could enjoy that time off with my daughter,” she says.

Wittbold decided to cope with her time off work as a school teacher by enacting a spending freeze once she was no longer earning an income. “For us, this means no spending aside from grocery store essentials, baby essentials like diapers, gas and of course bills,” she says. “To prepare for this, I stocked our freezer with homemade meals that could be dumped in the [slow cooker] or popped in the oven.”

Not long after her daughter was born, Wittbold decided to continue staying at home rather than return to her teaching position. She needed longer-term solutions to account for one less full-time income. After seeking out online opportunities, she found a remote position where she could teach English online. This helped her start earning enough part-time money to make staying at home possible.

“I teach every morning from 5:00 a.m. to 8:00 a.m.,” she says. “This change meant an additional $1,200 for our family every month.” This kind of flexible side hustle works great if you’re budgeting for a baby and looking for ways to save money when you have a baby. Bringing in additional income for your financial goals is one of the main reasons you need a side hustle or at least should consider one.

Sleep soundly (well, eventually) thanks to your budget

While you might not be able to sleep through the night anytime soon, budgeting for a new baby will help give you peace of mind. Knowing you have a plan for expected and unexpected expenses, as well as understanding ways to save money when you have a baby, can allow you to make the most of your time with your family.

“Budgeting has forced us to do things like meal plan, create cleaning schedules, and use our time more effectively in order to earn money from home,” Wittbold says. “This all results in less stress and more time with our baby because we are using the time we have more intentionally.”

Is this your second child? All the more reason to budget. Learn more about affording a second child.

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