Budgeting with a New Baby

December 05, 2010, By Steve Thompson 0 comments

It's terrifying to think about the fact that, over the course of your child's life, you'll spend a quarter of a million dollars to clothe, feed, house and otherwise care for your little one. And that doesn't include the car he totals on his 17th birthday or the ridiculously overpriced dress you'll have to buy her for prom.

But more often than not, new dads are much more concerned about their budgets in the here and now. A baby isn't cheap and it's important to start budgeting for your new arrival as soon as possible.

Delivery or Adoption Expenses

The first part of budgeting with a new baby comes as soon as you bring him or her home. If your wife delivered the baby in a hospital, for example, you'll have to pay for the care she received before, during and after delivery. These medical expenses can drown your budget whether or not you have insurance.

My wife and I adopted, but our expenses were comparable to that of delivering in a hospital. There are numerous fees associated with adoption and no insurance to cover them. The good news for adoptive parents, however, is that you often know a year or more in advance of your plans and can start saving for the baby.

The best course of action is to put yourself on a payment plan, whether official or unofficial. Most hospitals and clinics, for example, will work out a plan with you so you don't have to come up with it all at once. It is best to do this as soon as possible after you bring your baby home.

Medical Expenses for the Baby

What new parents don't always comprehend is the enormity of the task in front of them. You are responsible for another human being, and when the knowledge of that responsibility hits you, it's almost impossible to think of anything else. Consequently, every strange noise your baby makes, every mark that appears on his or her skin, becomes a medical emergency of epic proportions.

In short: You're going to run your kid to the doctor far more than necessary and will rack up a few hundred dollars in bills for a guy in a white lab coat to say, "Your baby is fine, sir. No, really. I promise."

Plus, your new baby is likely to incur medical bills for valid ailments, from colic to formula intolerance. Set aside a portion of your household budget for these expenses.

College Savings Plans

It's hard to think of your new baby in college when he or she isn't even out of diapers, but it's important to start saving as early as possible. College savings plans, such as the widely-recognized 529 program, can ease a lot of the stress you'll be facing in 18 years.

There are lots of college savings plans available, however, and I recommend using a search tool, such as the one available at SavingForCollege.com, where you can search for college savings plans by state.

New Baby Help

These days, households with two working parents are common, and there will be times when both you and your wife need to get out of the house for a few hours. You might need a full-time nanny, a part-time babysitter or a generous friend or family member, depending on your circumstances.

It's important to budget for childcare regardless of how often you think you need it. Right now, you might not be able to imagine leaving your new arrival in the arms of a stranger, but eventually your sense of self-preservation will kick in and you'll realize you need at least an evening free of spit-up, screaming and poopy diapers.

My advice: If you just need a babysitter for a few hours, go with a friend or family member, preferably someone who is a parent him or herself, so you know they know what they're doing. Plus, this will save money in your baby budget and allow you to get away guilt-free. 

What other expenses can you share that you need to prepare for?