Having a Baby? Here’s How to Financially Prepare

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Having a baby can be quite the financial undertaking. Here’s how to plan for those new expenses.

Whether you are expecting your fourth child or just planning for a future family, the idea of having a baby can feel daunting… especially to your wallet. A new baby brings with it many different expenses, whether you’re talking about pregnancy (or adoption) or the newborn phase, toddler years, childhood, or even well into college.

Planning to add a baby to your family can mean a serious shift to your finances. Here’s a look at how much a baby really costs, how to prepare to have a baby, and some ways you can budget for the new addition to your home.

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How Much It Costs to Have a Baby

When most people think about the cost of having a baby, they focus on the expenses involved with, well, having (or birthing) a baby. This includes maternity care, a birth, and even postpartum care. If fertility treatments are required, these can also be factored into this category.

The cost of a child’s birth varies based on many factors, including the type of birth, your home state, and even the type of insurance coverage you have. Here are a few of the expenses you’ll need to prepare for when having a baby

Your baby’s arrival

Whether you give birth to a baby or adopt a new child, there are expenses related to his or her actual arrival earthside. These include:

  • prenatal care
  • your doctor, midwife, and/or doula’s services
  • a hospital or birthing center stay
  • postnatal care

According to data from FAIR Health, a vaginal delivery without complications can range from $5,017 (Alabama) to $10,413 (Alaska), on average, while a C-section can cost between $7,439 (DC) and $14,528 (Alaska).

A portion of this is likely to be covered by your insurance plan, but you are likely to have some out-of-pocket costs between co-pays, deductibles, and cost-shares. You should consider your estimated pregnancy, labor, and delivery expenses, then calculate how much you’ll pay after your insurance company’s coverage is applied.

Adoption expenses can vary even more, and may be difficult to predict as definitively. Depending on whether your child is adopted through an agency, out of the foster care system, or directly from the birth family (through an attorney), the cost will fluctuate. There is also a range of expenses depending on whether the adoption is domestic or international.

According to the Child Welfare Information Gateway, it can cost anywhere from $5,000 to $40,000 on average to adopt a newborn through an agency. Adopting a child from within the foster care system, however, may be free. There are also many adoption assistance programs, and some agencies may also charge fees based on family income, on a sliding scale.


Deciding who will care for your child (and how) is a big decision. It can be pretty expensive, too, and requires some financial planning in order to prepare.

You or your partner can choose to stay home with your baby, either for the first few months, until they’re in school, or throughout their childhood. Be sure to factor in any maternity leave you may be offered, or income that will be lost, if you choose this route.

Many parents may opt for dependent care in or out of the home instead. According to the Center for American Progress, the average center-based daycare costs $1,324 per month for an infant and $1,096 for a toddler. Family-based childcare can be more affordable, but still runs an average of $1,141 monthly.

Depending on where you live, how many children you have, and the caregiver you choose, childcare expenses can equate to tens of thousands of dollars a year.

Baby basics

There is no shortage of “stuff” that stores, magazines, and baby websites will tell you that you need for your family’s new addition. While you can definitely choose not to go overboard on the baby gear, though, there are some basics that you should be sure to include in your baby prep budget.

  • Diapers: While it’s impossible to pinpoint exactly how many diapers your baby will need (and how long they’ll wear each size), you can expect to spend hundreds of dollars per year on them. According to Parents.com, this can average anywhere from $500 to $900 annually, as you’ll go through about 3,000 diapers in the first year alone.
  • Car seat: An appropriately-sized (and -installed) car seat is probably the most important gear purchase you’ll make for your child. Infant seats can cost just (or up to multiple hundreds) of dollars, depending on the brand and style you want. The most important thing is that it’s never been in an accident, that it fits your child’s height and weight, and that it’s installed correctly.
  • Bed: Whether you opt to keep a bassinet in your bedroom for your baby, fully furnish a nursery with a crib, or both, you’ll need somewhere safe for your new baby to sleep.

While not “necessities,” you may also want to consider purchasing the following gear for your baby:

  • Stroller
  • Swing
  • Changing table
  • Baby carrier
  • Bouncy chair
  • Baby bath tub
  • Diaper bag


It’s impressive how quickly babies, toddlers, and even kids go through clothes. Infants in particular will go through many clothes, often outgrowing pieces after only a handful of wears and staining many of the rest. Plus, you’ll need to ensure that your baby’s clothes are seasonally appropriate.

When it comes to basic essentials for your baby, it can be easy to feel overwhelmed and underprepared. However, there are many ways to prepare for a baby without breaking the bank! Shop at secondhand stores or browse social media marketplaces for lightly-used second hand pieces. Your baby won’t mind!

You can also ask friends and family members for their hand-me-downs, and put other essentials on a baby registry, if loved ones want to buy you gifts.

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8 Ways to Prepare Financially for a Baby

Now that you have an idea of the new expenses involved with bringing a baby into your home, it’s time to start preparing financially. As with most large expenses, the sooner you start saving and preparing, the easier it will be to manage.

Here is a financial checklist to keep in mind, whether you’ll be new parents next month or in a decade.

1. Determine needs vs. wants

It can be tempting to buy every cute, baby-branded item that comes across your Facebook feed. However, it’s wise to think about whether those purchases are true needs or just wants before you spend the money.

Yes, having the most luxurious stroller and name-brand infant clothes is fun… but how much could you save with a household brand and hand-me-downs? Determining your needs versus your wants is the keystone of nearly every financial goal.

2. Get your insurance coverage in order

Health insurance and life insurance are imperative when preparing for a new baby, and as a part of any parent’s estate plan.

Your health insurance coverage can dictate the type of prenatal care received, which pediatrician your child can see, and how much your baby’s birth and healthcare will cost you out-of-pocket. Look over your existing coverage to estimate certain medical expenses; if you (or your partner) are uninsured, see what options are available to you.

Buying a solid life insurance policy is also important once you have kids. Ensure that you have enough coverage to protect your family if something were to happen to you, including:

  • Replacing your income for your beneficiaries, for a set number of years
  • Paying off shared debt, such as a home mortgage and/or auto loan
  • Covering important future expenses, like your child(ren)’s college tuition
  • Taking care of final expenses, such as medical bills or a funeral

Short-term disability insurance may help replace your salary after your baby is born or if you suffer pregnancy- or birth-related complications. You may want to purchase a policy directly from an insurer or see if coverage is offered through your employer.

3. Lock down a monthly budget

You wouldn’t bake a cake for the first time without a recipe, and you probably wouldn’t go on a cross-country road trip without at least bringing a map. Embarking on an expensive journey — like starting or expanding your family — without a budget can be just as crazy.

Different budgets work better for different households. You might want to set limits for certain categories but be lax with others. You might prefer the envelope method according to your specific needs. Or you may decide that a category budget (such as the 50/20/30 plan) is best for you.

Whatever you decide, spend some time developing some type of budget plan. Set limits for yourself and determine where you need to adjust spending habits; this will make it easier for you to prepare for your new addition.

4. Reduce monthly expenses

Trimming down your spending is a great way to save more and better prepare for any big expense, especially a new baby.

There are so many great ways to reduce your monthly expenses. Here are two effective ones to start with:

  • Begin meal planning. Plan your family’s meals, shop with a set grocery list, and even prepare meals in advance. This cuts down on “hungry shopping” purchases, allows you to take advantage of sales, reduces food waste, and makes healthy eating easier once baby arrives.
  • Cancel services and subscriptions. Pick through your monthly statements to see where you can cut out (or just reduce the cost of) monthly services and subscriptions you have. This might mean cutting the cord with your cable company, or calling your cell phone provider to ask about any new discounts.
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5. Ensure that your emergency fund is established

Well-funded emergency savings can provide your family with a safety net, whether you lose your job, fall ill, or simply want to take some extra time off with a new baby. However, building an emergency fund requires intention and time, so you’ll want to get started as early as possible.

If building an emergency fund for the first time, aim to set aside $1,000 for unexpected expenses. Once you check that box, keep going until you have three to six months’ worth of expenses stashed away. Eventually, you may want to aim to save up a full year’s worth of expenses, giving you flexibility and peace of mind no matter what life throws your way.

6. Automate everything

When it comes to meeting financial goals, automation can be invaluable. You can automate your monthly bills to avoid late payments (which lead to late fees and even negative reports on your credit). You can also automate your savings and investment efforts, ensuring that you meet your goals without having to remember it each month.

Automate your savings, whether it’s your savings account or your new baby’s college savings account, by setting up scheduled transfers on a regular basis. You’ll be so glad you did, especially when you’re up all night with a newborn.

7. Get out of as much debt as possible

Eliminate debt where — and as soon as — you can. Whether you owe on loans or credit cards, you’re likely paying interest on any balance you carry. Getting out of debt as soon as possible can reduce the cost of that debt, and can free up your budget by eliminating your minimum monthly payments.

Even if you can’t get out of debt, you can make your debt more affordable. The easiest way to do that is by refinancing.

You can consolidate multiple credit cards with a new balance transfer credit card, and may even get a 0% APR offer in the process. If you have an auto loan, you can refinance into a new loan; this can reduce your interest rate, lower your monthly payments, get you out of debt sooner, or all three.

8. Earn rewards where you can

Whether you’re buying diapers, baby food, or just paying regular monthly bills, try to earn rewards whenever you can. One of the most effective ways is with a rewards credit card.

With the right card, you can earn points, miles, or even cash back in certain spending categories or on all of your daily purchases. These rewards can be used to pay off your statement balance or put toward gift cards for your favorite store… which you can then use to buy diapers, formula, and more!

It’s essentially “free money,” too, as long as you make sure to pay off your card statement in full each month.

Financially preparing for your new family

There are many expenses and financial considerations to keep in mind when planning to add a baby to your family.

While some expenses are unavoidable, there are also many ways to limit your new out-of-pocket costs. As with any big financial venture, preparing as early as possible can help make those new expenses easier to manage. And if you’re not sure how to best plan for your new addition, consider scheduling a meeting with a trusted financial planner near you.

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About The Author

Stephanie Colestock

Stephanie Colestock is a DC-based personal finance writer with an expert focus on credit and lending. With over ten years of industry experience, she is a regular contributor on sites such as Credit Karma, The Balance, Quicken Loans, Dough Roller, Finance Buzz, and more. She enjoys teaching people how to optimize their finances and save themselves money in the process.

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