Economics of a New Baby

Babies are expensive! There are initial expenses such as clothes, crib, car safety seat, and stroller, continuing costs such as diapers and food, medical costs, and child care if you work outside the home.

As with everything else in parenting, things generally go much better if you prepare ahead of time. If you can, use the time before you have the baby to save money, to pay off debts, and to get your finances in better shape.

If you decide to stay home and you have been a two-income family, switching to one income is sometimes challenging. You will need to adjust your household budget and resolve any conflicts that less money may create. You may want to schedule regular times when you and your spouse can review the family's finances and decide what to do.

Hints on the Economics of Being a Parent:

• Make sure you have health insurance.
• Breast feed your baby. It’s free and convenient. You will still need to invest in nursing bras ($20 to $50 each) and a pump (from $20 for a simple manual model to $250 or more for an electric one). A year’s supply of formula can run from $1,500 to $2,000 or more depending on the brand. Bottles run about $5 each and you may need to try a few different kinds until you find the right one for your baby.
• Consider cloth diapers instead of disposable ones. Expect to change about 2,500 diapers during baby’s first year! Disposables will cost about $600 per year. Costs for cloth diapers include detergent costs and a slight increase in your water and electric bill.
• You can save money if you make your own baby food using a blender.
• Check yard sales and second-hand stores for baby clothes and nursery furniture. A basic setup of crib, mattress, changing table, and glider chair can cost $150 for each item. You might also be able to borrow from other parents you know. Never put your baby to sleep in an adult-size bed or waterbed.
• A car seat is an absolute must. You can’t drive home from the hospital without one. A new car seat costs $90 or more. Many hospitals offer free car seats to new parents. If you cannot afford a car seat, contact your local fire department or United Way for help.
• A good quality stroller system can range from $100 to $1000 for very fancy ones. Make sure that the stroller you choose is easy to use, and easy to collapse, and lift into the trunk of your car.
• Child care is a big expense. If both parents work full-time, child care can cost an average of $6750 a year. The cost goes down as your child gets older. Costs can vary depending on where you live. Usually, a group setting such as day care costs less than a babysitter or nanny.
• Clothing, highchairs, diaper pails, and swings can add up. Friends and family will most likely want to fill the nursery with gifts. Let them know what you need.
• New parents are great targets for all sorts of promotions. You can expect to get a lot of phone calls, direct mail, and callers. Take your time, and think carefully about whether you really need the products.
• After you become a new parent, you need to make out a will. Decide who will raise your child if something should happen to you.