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The Ultimate Guide to Budget Planning for a Baby

Man holding baby

There are so many joys in becoming a parent, and a great deal of excitement when you get to share the news of a pregnancy with loved ones. But are you ready? And specifically, is your bank account ready?

Because children are not cheap. With the cost of raising a baby in their first year averaging as much as $17,000, the best thing you can do is to prepare ahead of time.

Of course, your budget will likely fluctuate while raising a child. But between emergencies that call for spending some serious cash to surprise purchases you weren’t able to anticipate, starting your budget planning for a baby early is your best bet for getting ahead.

Budget-Specific Styles and PlansFamily budgeting for a baby

Not everyone has experience with preparing and sticking to a budget. Yet, you know that budget planning for a baby is a good idea that will likely save you some headaches early on once the baby arrives. Here are some ideas to help you get started.

50/30/20 Method

In this style of budgeting, you will take 50% of your income and use it for your needs. 30% of your income would then be utilized for your wants, and the remaining 20% should be used for debt repayment and savings.

If these specific numbers don’t work for you, use them as a starting point and adjust until you find something that does. If your needs take up more than 50% of your income, then you will simply adjust what you allocate for your wants, and the amount you put into savings. Of course, you only have 100% to work with—no matter how you divvy it up!

Envelope Method

You can categorize spending with more specificity as well. One option is the envelope method, where you put cash you have for personal spending into an envelope each payday, and allow yourself to spend only what’s in the envelope. People use the envelope system to regulate spending in categories such as:

  • Groceries
  • Dining out
  • Entertainment
  • Gasoline
  • Date night
  • Household expenses

When an envelope runs out of money, you need to wait to spend more in that category until you refresh it at the next payday.

Pay Yourself First Method

To switch things up psychologically, you can opt for the pay yourself first method. This means each time you get paid, you’ll put money into your savings account before spending a single cent on anything else. This allows you more freedom in terms of not having to crunch numbers each week—while still setting aside money for future concerns.

One-Time and Recurring Costs

Some costs associated with having a baby and raising a child will be one-time costs, while others will be recurring. This breakdown might look different for each family, but there are several things that are the same across the board that you should consider when budget planning for a baby.

Separating different types of costs can help you create a more accurate budget. Plus, having an eye on what costs might pop up in an emergency allows you to feel less panicked when one does strike.

Common One-Time Costs

Examples of one-time costs include: 
  • Medical bills for labor/delivery
  • Strollers
  • Cribs
  • Toys

Of course, some of these purchases can turn into recurring costs depending on your wants as a parent for your child, but it’s not a necessity to have excessive amounts of toys for your baby or various strollers based on appearances.

Common Recurring Costs

Ongoing expenses can include:

  • Childcare
  • Food
  • Clothing
  • Diapers

While you may be able to refrain from seeking out childcare if you have one person that stays at home all day and another who works to support the family, it’s never bad to plan for an emergency situation where childcare is needed, even if it’s just a relative or close friend coming over to watch the baby.

When budgeting for a baby, pay attention to how much your child eats each day, and calculate what a weekly feeding cost might be. Of course, this cost will probably increase as your infant grows!

Future Fund

Babies are full of potential. You can’t look at them at this age and know whether they’ll need:

  • Piano lessons
  • Baseball spring training
  • Theatre camp
  • STEM academy
  • Band practice

But you can rest assured they’ll have some unique passion to pursue. Start setting aside funds for lessons and camps now so you’ll be able to let them explore their desires when they get older.

And don’t forget to start a college fund! If later your child decides formal education isn’t for them, you can always reinvest the money you’ve been saving, or pay off a debt that’s been looming over your head.

Prepare Today

Kids can be expensive—but they enrich our lives in innumerable ways that go far beyond finances. Start preparing for the future today so you have the means to provide for everything they need as they get older.