How to Budget for Your First Child
Even if you’re careful with money, having a child isn’t cheap. Raising your first child from birth to age 17 can cost well over $200,000 total, according to Fidelity Investments. “The baby is going to cost a lot more than you ever imagine,” says certified public accountant Cheryl Smith. “It’s going to take more money than you think, but you’re happily going to spend that money.” Making room in the budget for these new expenses can help ease the transition to parenthood.
Create a Spreadsheet
Putting your budget into a spreadsheet makes it easier to get a handle on what you’ll be spending. An effective spreadsheet budget, Smith says, includes everything: clothes, appliances, baby furniture, toys, car seats and anything else you think you might need. You can find information about costs and prices online, but the exact details of your budget depend on your choices. Whether you use disposable or cloth diapers, for instance, will affect your bottom line. To keep your budget accurate, consider the cost of replacing purchases as your child grows. “Their things are going to evolve as they grow,” Smith says. “The size of their clothes, the types of eating utensils, the different types of food.”
Think About the Cost of Food
You can postpone buying certain items or acquire them secondhand, but your child’s food isn’t one of them. Smith says budgeting for food requires thinking about what you want your child to eat: if you use formula, for instance, the costs are greater than if you choose to breast-feed. Some parents, Smith says, feed their child better-quality meals than they’d feed themselves, and that increases costs too. She recommends reading baby magazines or guides for advice on how much food a child needs at a given age. “You can extrapolate from that how much you’re going to spend,” Smith says.
Prepare for Doctor Visits
Having a baby means trips to the ob-gyn for prenatal care followed, eventually, by labor and delivery expenses and regular doctor’s visits. If you talk to your doctors and your insurer, you can get an idea of how much this is going to cost. Your insurer can also tell you how much it will affect your premiums to put a new child on your policy. Even when the baby is healthy, these minor costs add up, so an accurate budget spreadsheet should include those figures.
Start a College Fund Early
Putting money into a college savings account such as a 529 plan can make it a bit easier to cover the cost of higher education. Smith says it’s worth starting when your baby is born, even if you’re only putting in $25 a month. As kids grow up, she says, “the toys become more expensive, the needs become more expensive,” so even if you anticipate an increased income in later years, remember that your expenses will be greater too.
Look for Ways to Shop Cheaply
Covering expenses is easier when you make an effort to buy cheaply without compromising quality. For example, Smith says, many consignment stores offer good used baby furniture: families don’t use baby furniture for very long, so used furniture often comes with minimal wear. Finding the stores with the lowest prices, looking for sales and using coupons can all save money. If you set aside the money you save, you can use it as a cushion against unexpected expenses.
Quicken has made the material on this blog available for informational purposes only. Use of this website constitutes agreement to our Terms of Use and Privacy Policy. Quicken does not offer advisory or brokerage services, does not recommend the purchase or sale of any particular securities or other investments, and does not offer tax advice. For any such advice, please consult a professional.