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Baby Budgeting, The cost of starting a family

Starting a Family



Financial planning is a crucial aspect of preparing for the future, especially when starting a family. As you embark on this new chapter of your life, it is essential to make informed decisions about your finances to ensure a stable and secure future for your family. In this article, we will guide you through the key considerations and steps involved in financial planning when starting a family.

Financial Planning for Starting a Family

Starting a family is an exciting milestone, but it also comes with new responsibilities, including financial ones. It is essential to approach this phase of life with careful consideration and planning to ensure a strong financial foundation for your growing family.

Assessing Your Current Financial Situation

Before diving into financial planning, it’s crucial to assess your current financial situation. Evaluate your income, expenses, assets, and liabilities. Take note of your savings, investments, and any existing insurance coverage. Understanding where you stand financially will help you determine the necessary steps to take in your financial planning journey.

Setting Financial Goals

Establishing clear financial goals is a fundamental step in planning for your family’s future. Identify short-term and long-term goals, such as saving for a down payment on a house, funding your child’s education, or building a retirement nest egg. Setting specific, measurable, achievable, relevant, and time-bound (SMART) goals will provide you with a roadmap for your financial planning.

Creating a Budget

A budget is a vital tool for managing your finances effectively. It helps you track your income and expenses, ensuring that you live within your means. Start by listing all your sources of income and categorizing your expenses. Prioritize essential expenses and allocate funds for savings and investments. Regularly review and adjust your budget as your family’s needs evolve.

Building an Emergency Fund

An emergency fund acts as a safety net during unexpected financial challenges. Aim to save at least three to six months’ worth of living expenses in an easily accessible account. This fund will provide peace of mind and protect your family from unforeseen circumstances like job loss, medical emergencies, or home repairs.

Managing Debt

Debt management is crucial for maintaining financial stability. Evaluate your existing debts, such as student loans, credit card debt, or car loans. Develop a strategy to pay off high-interest debts systematically while staying current on other obligations. Minimizing debt will free up resources for other financial goals.

Insurance Coverage

Protecting your family’s financial well-being is paramount. Obtain appropriate insurance coverage, including health insurance, life insurance, disability insurance, and homeowner’s or renter’s insurance. Review your policies regularly to ensure they align with your family’s changing needs.

Saving for Your Child’s Education

Planning for your child’s education is a long-term financial goal that requires early consideration. Research and explore different education savings options, such as 529 plans or education savings accounts. Start saving as early as possible to take advantage of compounding growth and maximize your funds.

Retirement Planning

While starting a family may shift your immediate priorities, it is crucial not to neglect retirement planning. Allocate a portion of your income towards retirement savings, such as contributing to a 401(k) or an Individual Retirement Account (IRA). Take advantage of any employer-matching contributions to accelerate your retirement savings.

Estate Planning

Estate planning involves organizing your affairs to ensure the smooth transfer of assets and provide for your family’s future. Create or update your will, designate beneficiaries, establish a power of attorney, and consider setting up trusts if necessary. Consult with an estate planning attorney to ensure your wishes are properly documented.

Tax Planning

Optimizing your tax strategy can help minimize your tax liability and maximize your savings. Stay informed about tax laws and take advantage of available deductions and credits. Consider consulting with a tax professional to ensure you’re making the most tax-efficient decisions for your family’s financial situation.

Investing for the Future

Investing allows you to grow your wealth over time. Consider a diversified investment portfolio that aligns with your risk tolerance and financial goals. Seek professional advice if needed to make informed investment decisions that suit your family’s long-term objectives.

Adapting the Plan as Your Family Grows

As your family grows and evolves, it is crucial to review and adapt your financial plan accordingly. Life events such as a new child, career changes, or unexpected circumstances may require adjustments to your goals and strategies. Regularly revisit your plan to ensure it remains relevant and effective.

Seeking Professional Financial Advice

Navigating the complexities of financial planning can be challenging. Consider engaging a professional financial advisor who specializes in family financial planning. They can provide personalized guidance, help you optimize your strategies, and ensure you stay on track to achieve your financial goals. Starting a family is an incredible journey that brings immense joy and fulfillment. By incorporating sound financial planning principles into this chapter of your life, you can build a solid financial foundation for your family’s future. Take the time to assess your financial situation, set goals, create a budget, save for emergencies and future expenses, manage debt, obtain insurance coverage, and invest wisely. Regularly review and adapt your plan as your family’s needs change. Seek professional advice when necessary to make informed financial decisions that align with your objectives.

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The Costs of Having a Baby

Bringing a new life into the world is a joyful and transformative experience. However, it’s important to recognize that starting a family also comes with financial responsibilities. From prenatal care to childcare, the costs associated with having a baby can add up quickly. Understand the various expenses you may encounter when welcoming a new addition to your family. The decision to start a family is a momentous one. The arrival of a baby brings immeasurable joy, love, and fulfillment. However, it’s essential to be aware of the financial implications that come with this life-changing event.

Before figuring out how much having a baby will set you back, it’s helpful to break down costs. Some include:

  • Prenatal care
  • Delivery
  • Postnatal care
  • Basic amenities for infant

Keep in mind that several factors can influence how much you spend, from what city you live in, to your personal health needs. Another determiner of your bill is your health insurance provider. They take into account what’s covered by your plan, whether you’ve met yearly deductibles, set copays, and if you have gap insurance to cover non-primary costs.

Prenatal Care and Medical Expenses

One of the first significant costs you’ll encounter during pregnancy is prenatal care. Regular doctor visits, tests, and ultrasounds are necessary to ensure the health and well-being of both the mother and the baby. These medical expenses can vary depending on factors such as insurance coverage and any additional procedures or treatments required. Most pregnant women receive prenatal care—a series of visits with a healthcare provider to ensure you and your baby are healthy. It comprises various tests and services such as physical examinations, x-rays, ultrasounds, or blood and urine samples. Services range in price, but if it’s classified as a preventive service and you have a qualified health plan, it should be free. Most plans cover preventive care resources such as prenatal vitamins, STD screenings, preeclampsia, gestational diabetes, anemia, or Rh incompatibility at 100%.

If you need services that aren’t classified as preventive care, you may have to pay out-of-pocket fees. Examples include:

  • Prenatal genetic testing to check for genetic conditions. Not all insurance providers cover the cost, so it could mean paying $100 to $1,000 depending on how complex the test is.
  • Doctor’s office visits that are subject to copays
  • Ultrasounds in hospitals that have physician fees and procedure charges. An ultrasound can range from $200 to $500+
  • Hospital stays if you have a complicated pregnancy could require copays or coinsurance payments
  • Procedures due to complications would likely be charged by your doctor depending on what benefits are covered and what your cost-sharing obligations are


Delivering a baby is both a scary and magical experience. It can also be the most costly aspect of having a child. It’s important to know how much your insurance will cover and how much you’ll be paying on your own. According to a 2015 survey by the International Federation of Health Plans, the average cost of delivering a baby in the United States was $10,808. Li Tian, mom blogger and founder of Full Time Baby tells us you should budget to spend at least $10,000 when delivering a baby. However, from her personal experience, she spent $2,000 out-of-pocket with both of her kids. This is why choosing the right insurance plan in advance is crucial.

EXPERT: Li Tian – Full Time Baby Li Tian of Full Time Baby “If parents have fairly comprehensive coverage, they might even hit their out-of-pocket maximums.”

Unfortunately, not every mother has a straightforward birth, and complications can lead to more expenses. Mommy blogger and financial educator, Fo Alexander, ended up paying $7,000 out-of-pocket for a vaginal birth because of minor complications with her daughter. However, she explains that the high cost of giving birth means you’ll likely meet your deductible and your insurance will cover subsequent costs.

EXPERT: Fo Alexander – Mama and Money Fo Alexander of Mama and Money “The positive side is that having a baby will typically meet your yearly deductible and, sometimes, out-of-pocket max. This means that future medical expenses should be covered at 100% by your insurance company.”

Hospital Births May be More Cost-Effective

Explore your options and compare the cost of home birth vs. hospital births. Most insurance providers don’t cover home births, which means it would be an out-of-pocket cost. On that premise, it could work out cheaper to have your baby in a hospital. Forbes contributing writer and founder of The Confused Millennial (TCM), Rachel Ritlop, agrees that going to a hospital can help you save.

EXPERT: Rachel Ritlop – The Confused Millennial Rachel Ritlop of The Confused Millennial “The cheapest way for me to have had a baby was traditionally at a hospital. A home birth was going to cost us $3,000 more, and to rent a tub for birth was going to be $750 more.”

If you choose to deliver your baby in a hospital, also note that vaginal births are sometimes cheaper than C-sections. The average cost of vaginal birth is said to be $30,000 while a C-section could cost over $47,000.

Calculate Out-of-Pocket Costs

Even if you have insurance, you may still be faced with out-of-pocket costs. Whether you’re insured or uninsured, you want to get a breakdown of each birth expense to determine how much you’re going to spend in total. Bola Sokunbi, Certified Financial Education Instructor and founder of Clever Girl Finance, suggests contacting the hospital where you plan to give birth to learn about these costs.

EXPERT: Bola Sokunbi – Clever Girl Finance Bola Sokunbi of Clever Girl Finance “Ask them what their average delivery costs are for a surgical vs a non-surgical delivery and what the costs include (e.g. epidural, hospital stay, etc.). Then reach out to your insurance provider to find out what percentage of your delivery costs will be covered. This will give you a good sense of what out-of-pocket expenses to expect.”

Having an itemized list of expenses also gives you the chance to see if there are any services you can do without. Don’t be afraid to challenge high prices and ask if there are cheaper alternatives. “If you don’t have insurance, inquire from the hospital about what kinds of plans they have for uninsured patients and determine if you qualify for any government assistance like Medicaid,” says Sokunbi. You could also explore options like hospital charity care programs and negotiating lower medical bills.

Compare Plans

Another way to save is to compare healthcare plans and switch if you find one with more favorable terms. A plan with a low deductible and higher copay, for example, could shave dollars off your final bill. What you pay depends on the insurance you have. To put this into perspective, here are examples of different insurance plans and how each can impact out-of-pocket costs.

  • Scenario A: You have a zero deductible plan and pay high monthly premiums. As a result, your health insurance provider should pay for the entire delivery.
  • Scenario B: You have a low premium and high-deductible plan with 80/20 coinsurance. Your deductible is $5,000, so you’d have to hit that before your insurance would begin paying for your delivery. Because of your coinsurance, you would also have to pay 20% of the delivery costs and any agreed copays.
  • Scenario C: You have a high premium low deductible plan and no charge after deductible. Your deductible is $2,000, so once you’ve paid that in out-of-pocket fees, your insurance pays 100% of your labor costs and you aren’t responsible for any copays or coinsurance.

When comparing plans, you may find there are certain services or specialists you want to use that aren’t covered by your current network. This is yet another incentive to review other plans and possibly switch based on your needs. For those who are low-income earners, find out if you’re eligible for government assistance; you could get free or low-cost healthcare through Medicaid. John Schmoll of Frugal Rules also suggests using HSA or FSA accounts to save.

EXPERT: John Schmoll – Frugal Rules John Schmoll of Frugal Rules “Depending on your insurance, and assuming there are no complications, parents should expect out-of-pocket expenses to run $2,500. If you have an HSA or FSA, you can save money pre-tax for those expenses to help mitigate costs.”

Seek Out Hidden Costs

When having a baby, you must check for surprise expenses. Despite Rachel Ritlop getting an estimate beforehand, hidden costs still caught her off guard. “I paid what my insurance had projected, but then we got slapped with a bill that was similar for my daughter’s hospital stay. We asked for it to be itemized and saw it had a ‘nursery’ charge which was weird since she never left our hospital room,” said Ritlop. Fo Alexander also had a similar experience. Although she received an estimate for her delivery and stay beforehand, an unexpected bill blindsided her. “The hospital neglected to share that my child’s stay was not included in the estimate. This ended up costing us an additional $2,000 that was unexpected,” Alexander explains. If you do your research beforehand and leave no stone unturned, you may lower your healthcare costs and avoid surprise bills.

The Cost of Having a Child by Alternative Methods

Not every family can have their child through biological means. With this in mind, we explore some of the other options and costs of having a baby.


When looking into adoption it’s important to do your research and know whether private domestic, international, or foster adoption is right for you and your growing family. According to the U.S. Department of Health and Human Services, adopting children from an international or private agency might cost $15,000 to $50,000, while adopting from foster care costs little to nothing—but that doesn’t mean you should choose an option solely on price. There are expenses such as consultant fees, agency fees, legal fees, and other placement fees with private and international adoption. As for foster adoption, there are several federal and state assistance programs that can help pay fees. is also a national financial grant program that seeks to help those looking to adopt by giving them up to $15,000. This service is available to all types of individuals or couples and it’s completely free to apply, so it’s worth looking into.

Fertility Treatments:

One popular fertility treatment is In Vitro Fertilization (IVF). IVF is when a woman’s eggs are combined with a sperm sample to manually create an embryo. This is then transferred to the woman’s uterus. To conceive, multiple IVF sessions are usually required which can cost up to $20,000. Although expensive, this process is widely used and highly successful. Those that have fertility problems can also go through IVF with donor eggs. While the success rate is just as high with donated eggs, it can be more expensive ranging from $27,000 to $65,000.


There are two types of surrogacy, gestational and donor. Gestational, where IVF is used to give the surrogate a fertilized embryo, tends to be more expensive averaging from $100,000 to $150,000—as you also have to pay for the IVF treatments. Whereas donor, when the surrogate donates their eggs, can range from $90,000 to $130,000.

Postnatal + Postpartum Care

Postpartum care is normally required about six weeks after giving birth to ensure that you’re healthy and recovering well post-pregnancy. Aside from performing a physical examination, medical professionals check on your mental health and general wellbeing. Similarly, postnatal care confirms your little one is thriving in the first few months of their life. As for costs, your insurance provider should cover both postnatal and postpartum care. If your insurance plan includes a copay or you use services your service provider doesn’t cover, you could pay high out-of-pocket fees. Your best bet is to verify with your provider before obtaining any services.

Maternity and Paternity Leave

Taking time off work to care for your newborn is a crucial consideration. Maternity leave allows mothers to recover from childbirth and bond with their baby, while paternity leave provides fathers with an opportunity to support their partner and actively participate in childcare. However, it’s important to note that not all employers offer paid leave, so you may need to budget for a temporary reduction in income during this period.

Basic Baby Necessities

Even before your little one arrives, you can expect to spend money on basic needs such as diapers, clothes, and formula if you don’t intend to breastfeed. According to the U.S. Department of Agriculture (USDA), parents can expect to spend around $12,000 in the first year alone. When calculating first-year expenses, it’s a good idea to plan for contingencies. As Sami Womack, podcaster and owner of A Sunny Side up Life rightly advises, things don’t always go the way you plan.

EXPERT:Sami Womack – A Sunny Side Up Life Sami Womack of A Sunny Side Up Life “You might plan to breastfeed to save money, but if that doesn’t work out, you’ll have to find a way to squeeze formula into your budget. Or say you want to use generic diapers, but your baby develops a skin allergy, so you’ve got to buy the expensive organic brand.”

Consignment or Thrift Shop for Baby Items

Buying used clothes is a fantastic and popular way to save as a new parent. In 2018, the second-hand apparel market was worth $24 billion in America. Carly Campbell of Mommy on Purpose tells us it’s no surprise, as you’re able to get cute buys for far less than you’d pay in traditional retail stores.

EXPERT: Carly Campbell – Mommy on Purpose Carly Campbell of Mommy on Purpose “You can get amazing deals on clothing second-hand. It’s good for the environment, as re-using lessens waste, it’s good for your community as it puts a few dollars back in the pockets of parents who’ve purchased the things originally, and it’s GREAT for your budget. Second-hand baby clothes are a win all around.”

If you’re looking for quality second-hand goods at an affordable price, thredUp, Poshmark, and Facebook Marketplace are three popular picks among our experts. These sites can help you get gently worn and sometimes brand-new items that still have tags on them. That said, parents don’t recommend buying all of your baby’s items second-hand. Car seats, pacifiers, or breast pumps are examples of items you should probably buy brand new. Bola Sokunbi recommends buying new car seats for security reasons, as manufacturers periodically update safety features.

Ask for Hand-Me-Downs

If you don’t want to spend any money at all, ask friends and family if they have used items they no longer need. Whitney Bonds, financial planner and founder of Tried and True Mom Jobs Blog, says she didn’t purchase much when having kids.

EXPERT: Whitney Bonds – Tried and True Mom Jobs Whitney Bonds of Tried and True Mom Jobs “I’m a big believer in hand-me-downs; the only thing we purchased was car seats. My stroller is valued at $400 and I got it for the price of $0 by simply asking my sister if I could have hers once her son got too big for it.”

If you make it known that you’re interested in baby items your friends and family don’t use anymore, it’s possible to get big-ticket items without paying. You’d also be surprised that many of these items are still in great condition, or barely used, as children outgrow things quickly.

Look for Free Items

Believe it or not, you can even get free baby items such as diapers, formula, and clothing. If you’re creative in your search, you may find organizations and initiatives giving them away. For example, the National Diaper Network facilitates community diaper programs. Local churches can also be a helpful resource for free baby items. Whitney Bonds got a free supply of diapers by utilizing diaper donations. “My church partners with an organization where they donate diapers, so we have been VERY blessed where we have not had to pay for diapers for quite a while,” said Bonds. In terms of resources, Elle Martinez from Couple Money suggests using Freecycle, a grassroots initiative where people give and receive items for free.

EXPERT: Elle Martinez – Couple Money Elle Martinez of Couple Money “Besides tapping into options like Facebook Marketplace, OfferUp, and Craigslist, I would also suggest parents may want to check out a local Freecycle or Buy Nothing group. With money saved, you could redirect that money for some of the bigger-ticket items that you’re willing to spend more money on or stash it away into family savings.”

Shop Discounts and Sales

Some people would prefer to buy new items for their baby, and there’s nothing wrong with that. Carly Campbell gives us insight into her saving strategy when buying new clothes. “I LOVE the clearance section of the Old Navy website. It’s especially great to stock up for next year at the END of the season this year—you can save 60% or more on winter coats or swimsuits… as long as you don’t mind storing them for 6 months.” Aside from shopping in sales, stick to retail stores that are relatively cheaper. Walmart, Kate Quinn Organics, Target, Amazon, and Old Navy are just a few that sell quality items for relatively low prices. Some stores even have family-related discounts. If you are an Amazon Prime member, you can save 20% on food, diapers, and other baby products when purchasing them through Amazon Family. For those with a Health Savings Account (HSA), check to see if you can purchase items such as prenatal vitamins, nursing pads, and breast pumps with your account.

Baby Gear and Essentials

Preparing for your baby’s arrival involves acquiring necessary gear and essentials. This includes items such as a crib, stroller, car seat, baby monitor, and high chair. Additionally, you’ll need to stock up on diapers, wipes, bottles, pacifiers, and other everyday essentials. These costs can vary depending on the quality and brand of the products you choose. Eric Roberge, CFP® and the founder of Beyond Your Hammock, advises that by concentrating on essentials and adhering to a strict budget, you’re more likely to have control over your finances.

EXPERT: Eric Roberge – Beyond Your Hammock Eric Roberge of Beyond Your Hammock “Think about the ongoing impact your financial decisions will have, especially before you commit to big fixed costs that aren’t easy to just change when you realize you need to save more (like mortgages and car loans).”

Not only will focusing on essentials help you save, but it could also help you avoid debt in the long run. When you become a parent, you can choose to sink or swim financially. With careful planning and a reasonable budget, you should be able to swim. Always remember you can give your baby the world without spending more than you can afford.

Nursery Setup and Furniture

Creating a comfortable and safe nursery for your baby is another expense to consider. This may involve painting the room, purchasing furniture such as a changing table and dresser, and decorating with bedding, curtains, and wall decor. While it’s important to create a welcoming environment for your little one, remember to budget sensibly and prioritize essential items.

Diapers, Clothing, and Daily Needs

Babies require a constant supply of diapers, clothing, and other daily essentials. The cost of diapers alone can quickly accumulate over time. Clothing expenses may include newborn outfits, sleepwear, socks, hats, and jackets suitable for different seasons. Planning and budgeting for these ongoing expenses will help you manage your finances effectively.>

Feeding and Nutrition

Feeding your baby is a significant cost to consider. Whether you choose breastfeeding or formula feeding, there will be expenses associated with either option. Breastfeeding typically incurs fewer direct costs, but you may need to invest in breastfeeding accessories such as a breast pump and nursing bras. Formula feeding involves purchasing formula, bottles, nipples, and sterilizing equipment.

Childcare and Babysitting

If both parents work or you require assistance with childcare, the cost of daycare or hiring a babysitter should be factored into your budget. Childcare expenses can vary significantly depending on factors such as location, type of care (in-home daycare, daycare center, nanny), and the number of hours needed.

Healthcare and Insurance

Adding a child to your health insurance plan can result in increased premiums. It’s important to understand the impact of this change on your overall healthcare expenses. Additionally, you may need to budget for out-of-pocket medical costs such as vaccinations, routine check-ups, and any unforeseen medical issues that may arise.

Education and Future Planning

Even though it may seem far off, planning for your child’s education should begin early. Saving for college or other educational expenses can be done through various investment vehicles such as 529 plans or educational savings accounts. Starting early allows you to take advantage of compounding growth and reduce the financial burden when the time comes.

Adjusting Your Budget

As you navigate the costs of having a baby, it’s essential to review and adjust your budget accordingly. Consider reevaluating your expenses, reducing discretionary spending, and reallocating funds to accommodate the new financial responsibilities that come with parenthood.

Seeking Financial Assistance

If you find yourself struggling to meet the financial demands of starting a family, explore potential sources of financial assistance. Research government programs, grants, or community resources that may be available to support you during this time. Additionally, reaching out to family and friends for assistance or guidance can provide valuable support.



How can I manage the costs of having a baby on a tight budget?


Managing the costs of having a baby on a tight budget requires careful planning and prioritization. Look for deals and discounts on baby essentials, explore second-hand options for items like clothing and furniture, and consider reaching out to local support programs for financial assistance.


Are there any tax benefits or deductions available for new parents?


Yes, there are various tax benefits and deductions available for new parents. These may include the Child Tax Credit, the Child and Dependent Care Credit, and deductions for medical expenses related to childbirth and childcare. Consult with a tax professional to understand and maximize your eligibility for these benefits.
Learn more about tax deductions and credits »


How can I save on healthcare expenses for my baby?


To save on healthcare expenses for your baby, explore different insurance plans and compare their coverage and costs. Additionally, consider participating in flexible spending accounts (FSAs) or health savings accounts (HSAs) to allocate pre-tax dollars toward medical expenses.


What are some cost-effective alternatives to full-time daycare?


If full-time daycare is not within your budget, consider alternatives such as part-time daycare, sharing a nanny with another family, or exploring in-home daycare options. These alternatives can help reduce childcare costs while still ensuring quality care for your child


When should I start saving for my child’s education?


It’s never too early to start saving for your child’s education. The earlier you begin, the more time you have to benefit from compounding growth. Consider opening a dedicated savings account or exploring education-specific investment options like 529 plans.
Learn more about financial planning for college »


When should I start planning my finances for starting a family?


]It’s never too early to start planning your finances. Ideally, begin assessing your financial situation and setting goals before you start a family, allowing you to establish a strong foundation for your future. Learn more about how financial planning can help you prepare »


How much should I save for my child’s education?


The amount you should save for your child’s education depends on various factors, including the type of education, inflation rates, and your financial capacity. Research different options, such as 529 plans, and consider consulting a financial advisor for personalized guidance.
Learn more about how to lower college costs »


Do I need life insurance when starting a family?


Life insurance is essential when starting a family as it provides financial protection for your loved ones in the event of your untimely demise. It ensures that your family’s financial needs, such as mortgage payments or education expenses, can still be met.


What happens if I don’t plan for retirement while starting a family?


Neglecting retirement planning while starting a family can have long-term consequences. Without sufficient retirement savings, you may face financial difficulties in your golden years. Start saving for retirement early to benefit from compounding growth and secure your future.


Why should I seek professional financial advice?


Professional financial advisors have expertise in family financial planning and can provide valuable insights tailored to your specific needs. They can help you navigate complex financial situations, optimize your strategies, and ensure you make informed decisions to achieve your goals.
Learn more about how different advisors can help you plan your future »

Welcoming a baby into your life is a beautiful and transformative experience. However, it’s crucial to be prepared for the associated costs. By understanding and planning for the expenses involved in having a baby, you can ensure a smoother transition into parenthood while maintaining your financial stability.

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