Considering families spend approximately $13,000 annually per kid on child-related expenses according to a 2015 study from the U.S. Department of Agriculture, underestimating how much it will cost to have a baby can cause anxiety for first-time parents.

This is a special time and you want to be bonding with your new baby, says Brittany Kline, co-founder of The Savvy Couple, a personal finance blog. "Being a new parent is stressful enough and you shouldn't add money stress into the mix," she says.

Fortunately, there are simple and strategic ways to create a baby budget. Here are tips to help you get your finances in order, so you can maximize enjoying time with your newborn and minimize stress.


Understand How Much It Costs to Have a Baby and Start Saving

The costs of caring for a baby start well before your new bundle of joy arrives, thanks to maternity clothing, prenatal care and birth-prep classes. To alleviate this stress and avoid taking on debt, start saving money as soon as you find out you're expecting.

Figure out just how much you need to save by understanding what your health plan covers for prenatal care, delivery fees and hospital stay and infant wellness visits, as well as the type of benefits your state and employer offer for maternity or family leave. Speaking with other parents you know who have older children may help you realize the additional expenses you will need to prepare for that you may not have considered.

"Try to build your emergency funds to six months' worth of living expenses," says Henry Hoang, a certified financial planner at Bright Wealth Advisors, a registered investment advisory firm in Orange County, California. "If it means cutting down on some of your discretionary expenses now to save, you'll be very grateful for the peace of mind after having your baby."

There are a variety of commonly overlooked expenses that can cause you to overspend, including parent-bonding classes, additional babysitting services and extra doctor visits. Researching all the potential expenses that come along with caring for a child is crucial for setting a realistic budget.

"You don't want to be caught off-guard and stressed about any potential costs that you didn't plan for," Kline says.

Estimate Medical Costs

The cost of giving birth often shocks new parents, with fees ranging from $5,017 to $10,413, depending on location, according to data collected by Fair Health, an independent nonprofit that manages the nation's largest database of privately billed health insurance claims. These bills become even costlier for a cesarean surgery or if any complications arise during delivery. Other medical bills to account for include prenatal doctor visits, ultrasounds, lab work and other tests. After the baby arrives, there is also postnatal care, pediatrician visits for illnesses, possible medication and other potential procedures to consider.

Factor in Nursing and Feeding Expenses

Though most women get access to a breast pump through their health insurance plan at no cost, storage containers and bottles are still needed to feed your baby. You may want lactation support or supplements if you're experiencing difficulty with milk production. In addition, there is a need for nursing garments and some families turn to formula to supplement their feedings, which will run as much as an average of $1,200 to $1,500 for the baby's first year, according to the Office of the U.S. Surgeon General.

Account for Extra Child Care Costs

Child care is one the biggest expenses working parents take on and the cost is often more than they plan for. According to, the average weekly child care cost for one infant child is $199 for a family care center, $211 for a day care center and $596 for a nanny. Beyond daily child care for typically work hours, you may need additional sitting services on nights and weekends, so make sure you begin searching for reliable care early as the best and most affordable options will book up quickly.

Prepare for a Temporary Loss of Income

When planning for time off, make sure your bills and all other essential expenses are covered, and don't assume you will receive a regular paycheck during maternity leave .

"Some workplaces may or may not have an official maternity leave policy, and even if it does, it might not be paid," says Kumiko Love, founder of The Budget Mom, a family-focused personal finance blog. "If you are compensated for taking time off, it might not mean it's fully paid. If you are not happy with the length of maternity time you get off, don't be afraid to ask if you can also use paid vacation time as part of your maternity time."

Reevaluate Your Health Insurance Coverage

Spend time analyzing your health plan to understand all your potential out-of-pocket costs. You may also want to consider switching plans. For instance, opting for a low-deductible plan may cost more on monthly premiums but may reduce your total out-of-pocket spending on baby-related medical expenses.

"Child birth creates a qualifying event that allows you to update your employee benefits selection," says Zach Morris, a wealth advisor and co-founder of Paces Ferry Wealth Advisors, a financial advisory firm based in Atlanta. "This can also allow you to start saving more toward a fl exible spending account or health care savings account , which are tax-advantaged savings accounts that can be used to pay for health care costs."


Don't Jump Into Buying a Bigger Home or Car

Considering that the American Pediatric Association recommends infant room-sharing for the first six months of the baby's life, there is no rush to get more space before your baby arrives. Riley Poppy, a certified financial planner and founder of Ignite Financial Planning, a fee-only financial planning firm for young professionals and growing families based in Seattle, suggests families spend no more than 28% of their household income on housing costs. This calculation ensures a new home fits within your cash flow and other financial goals, he says.

Register Wisely

Resist the urge to buy baby items while pregnant , as your baby will likely be showered with gifts before or after his or her arrival. "You do not need to fill the new baby closet with the latest clothes and toys," Kline says. Think big-ticket necessities such as a car seat, high chair and stroller.

To avoid a bombardment of cute baby clothing that your kid grows out quickly, James Stuart, owner and blogger at, a personal finance blog, suggests keeping the gender a surprise. People are less likely to go off registry and gift unnecessary items when they don't know the sex, he says. Plus, it will keep you from buying those hard-to-resist baby items.

Borrow, Swap or Buy Used

Before buying any baby items brand new, look for opportunities to borrow, swap or save on second-hand options. Kline says you can score free baby items by joining local mom-swap groups through social media. Alternatively, search for second-hand options through local listings found online at Facebook Marketplace or sites that specialize in gently used baby items such as ThredUp.

Don't forget to look out for deals around popular sales events. "Black Friday is a great time to purchase any bigger ticket items. We purchased our baby monitor during Black Friday for over 50% off of a new model," Hoang says.

Save on Diapers and Other Daily Essentials

The average baby goes through six to 10 disposable diapers a day, which can cost anywhere from $70 to $80 per month, according to the National Diaper Bank Network. Beyond diapers, families will need to purchase wipes, formula and other daily essentials. Optimize savings by looking for rewards programs offering discounts for repeat diaper deliveries. For example, you can you take advantage of 5% off diaper orders by subscribing for repeat deliveries through on Amazon. Meanwhile, Target's baby subscription service rewards members with 15% off when using the Target RedCard to make the purchase.

Use the Right Financial Tools

The sooner you start saving for your kid's future, the less you will have to put away each month to help pay for college. A 529 plan offers benefits such as tax-deferred growth and tax-free withdrawals when savings are used for qualified education expenses, says Alex Joyce, president and chief executive officer of ReJoyce Financial LLC, a financial advisory firm based in Indiana, and author of "Rejoyce in Your Retirement: Everything You Need to Know to Get Everything You Want." But, there are some disadvantages, such as limited investment options and a 10% tax penalty when funds are used for nonqualified education expenses, she adds.

Beyond this traditional planning tool, mutual funds, exchange-traded funds and Roth IRAs are other smart options.


Sign Up for Life Insurance

A life insurance policy is an important part of your new baby budget as it will give you the peace of mind that your family will be taken care of if something tragic occurs to you or your partner.

To calculate just how much life insurance coverage you need, Cory Nichols, chief executive officer at Yes Life Financial, a registered investment advisory firm that specializes in financial coaching of everyday people based in Richmond, Virginia, recommends multiplying your monthly take-home pay by two, and then adding two zeros. "That's how much life insurance you need at a minimum," he says.

15 Money-Saving Tips for Big Families

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Raymond Mitchell, Author

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