How To Budget For A Baby: A Guide For New Parents

When budgeting for a baby, the first step is acknowledging that your finances will change — and keep changing — for years. It’s important to evaluate your finances, set a budget, and save money so you can handle the one-time expenses — like a crib — and ongoing costs — like child care.

As exciting as this new season of life is, it can also create some anxiety about the dramatic increase in spending. This guide will help you start understanding how to budget for your new baby in the first year and beyond.

How Much Do Babies Cost?

The most recent data from the U.S. Department of Agriculture estimates that it will cost parents roughly $233,610 to raise a child born in 2015. That breaks down to about $12,980 per year per child in a middle-income family with two parents and two children.

Other sources indicate the figure could be even higher. The Brookings Institute used similar data, along with inflation data from the Consumer Price Index, to recalculate the number accounting for inflation. Their calculation found the number to be $310,605 overall.

Of course, these numbers are just averages and will look different for every family. The numbers account for things like housing, food, child care, transportation, health care, clothing and more. Some families may spend more than the average in some areas and less in others.

There are some spending categories that are more within your control than others. Things like housing and food are necessary for every family. And while most families will also bear some child care burden, it may be higher for some than others. Finally, there’s plenty of discretionary spending associated with raising a child that’s more within your control.

6 Tips For Creating A Baby Budget

If you’re expecting a new baby in your family, it can be valuable to make a budget ahead of time to help you prepare for expenses. Your budget should be flexible, but these tips can help you get started.

1. Start Planning Early

The good news about budgeting for a baby is that you usually get plenty of advance notice to start planning. You can set yourself up for success by starting the planning process early.

One of the first steps you should take after finding out you’re expecting is to assess your income and spending to set a budget. If you haven’t already started saving for baby expenses, now is the time to do so. Consider adjusting your budget for post-baby ahead of time. Not only will you get used to your new spending constraints, but you’ll also be able to set aside some money for the expenses that will come up before the baby arrives.

As you’re planning for your baby-related expenses, consider using the 50/30/20 rule. It suggests that you allocate 50% of your budget toward needs, 30% toward wants, and 20% toward savings. This rule can provide a good framework for your baby-related spending.

2. Pay Off Debt

Having debt can place serious restrictions on your budget. And when you have a child to raise, the last thing you need is more budget constraints. Paying off debt before your baby arrives can help clear up funds in your budget every month that you can dedicate toward baby expenses. Even if you aren’t able to pay off all your debt, every little bit can make a difference.

If you have debt to pay off, consider using either the snowball method or the avalanche method to help you. The snowball method helps you pay off your debt with the smallest balance first, while the avalanche method helps you pay off your high-interest debt first.

3. Anticipate Ongoing Expenses

Having a baby requires plenty of one-time expenses, including all of the gear you’ll need, the hospital costs and more. However, there are also plenty of ongoing costs. Do some research ahead of time to figure out how much you should plan to spend and how that will work in your budget. Some ongoing expenses you should expect are:

• Health care
• Child care
• Clothing
• Diapers and wipes
• Formula
• Toys

4. Save When You Can

Once you have a baby on the way, it can be difficult to build savings because of all the expenses you’ll have. That being said, saving money before your baby’s arrival can take some of the financial pressure off later.

Not only can you use that money to help you pay for your baby expenses, but you can also build an emergency fund, which will help pay for any unexpected expenses that arise. Having emergency savings in place will give you some peace of mind that you’ll be able to care for your baby despite facing any financial hardship.

5. Shop Secondhand

Baby items can be expensive, but you don’t necessarily have to buy new ones. There are plenty of things that you can buy used but still in good condition.

Buying secondhand is particularly beneficial during your baby’s first year, when there are so many things that are helpful for only a short period of time. Examples include a bouncer, swing and bassinet. Additionally, babies grow quickly during their first year, meaning you’ll go through many sizes of clothing.

For safety reasons, it may be worth purchasing some things, such as your car seat, new. However, there are plenty of items that can sustain more wear and tear and that you can buy used without sacrificing the quality.

When you’re looking for secondhand items, look for local thrift stores (especially those specifically baby-related), Facebook marketplace, and local online mom groups.

6. Expect Constantly Changing Expenses

It’s the nature of having a baby that the budget you plan out when you first find out you’re expecting will change over time. First, you may find that things cost more or less than you previously expected. Additionally, some expenses will change over time. For example, you will eventually be able to stop spending money on diapers and baby formula. But at the same time, you’ll probably find that your grocery bill gets bigger.

Your baby budget will also change as your priorities change. Once the baby arrives and grows, you might find that some things are more or less important to you than you thought they would be, meaning your budget will need to adjust.

Common Baby Expenses

There’s no shortage of expenses you will incur while preparing for and raising a baby. Some of these costs are necessary for safety, some are optional but can make your life as a parent more convenient, and some are simply luxuries that you may still choose to spend on. Remember that some of these can be added to a baby registry for your loved ones to buy as baby shower gifts.

Child care

Child care is one of the biggest expenses associated with raising a child. According to the USDA, childcare and education makes up 16% of the cost of raising a child. And according to Care.com, the average weekly cost of daycare for an infant in 2023 was $321, while the average weekly cost of a nanny is $766.

For most families, the bulk of childcare expenses are incurred during the first few years of a child’s life, including day care and nanny expenses. Additionally, families who choose to send their children to private schools will incur even more child care costs.

The good news is that while these costs are significant, there are credits available for child care costs for tax dependents that can help offset some of these costs.

Diapers

Diapers are a necessary cost of raising a child, whether you choose cloth or disposable. According to the American Association of Pediatrics, the average baby goes through almost 3,000 diapers in their first year and 8,000 diapers overall. Those costs add up. If the average diaper costs $0.20 to $0.30, you can expect to spend between $600 and $900 on diapers in your baby’s first year.

Stroller

A stroller isn’t necessarily a must-have, but it can certainly be nice to have. A stroller can be used for everything from walks around your neighborhood to your day-to-day errands.

A stroller is one expense where your personal preference can make a significant difference in cost. You can find strollers as affordable as just $100, while others cost more than $1,000. Additionally, you can find plenty of strollers secondhand, allowing you to get a quality stroller without the extravagant prices associated with some brands.

Car Seat

If you rely on your own vehicle to get around, then you’ll need a car seat to safely transport your baby. Not only does a car seat keep your baby safe, but it’s also legally required in every state.

So car seats cost less than $100, while others can cost upward of $500. Additionally, depending on whether you decide to start with an infant car seat, you may end up buying two car seats within the first year or two when you upgrade to a convertible car seat.

Furniture

There are many different furniture items you can decide to purchase for your new baby. Some of these items are entirely optional, while others are necessary to give your little ones a safe place to sleep and rest. Here are some of the furniture pieces you may need for your baby:

• Crib: $125 – $350
• Bassinet: $150 – $250
• Changing table: $100 – $200
• Glider or rocking chair: $200 – $500

In addition to these staple furniture items, there are plenty of others you can choose to purchase, including bouncers, swings and more.

Nursing And Feeding Supplies

There are plenty of ways you can choose to feed your baby, including breastfeeding, formula feeding, pumping and bottle feeding, or a combination of those. No matter which option you choose, there are likely to be costs associated. Here are some of the most common feeding supplies and their average costs:

• Breast pump: $25 – $500
• Bottles: $2 – $12 each
• Formula: $1,200 – $1,500 for the first year

While those are the most common feeding supplies you may need, there are plenty of others, including burp cloths, a nursing pillow, nursing bras, bibs, a bottle warmer and more.

Baby Gear

There’s lots of other baby gear you can choose to purchase. While some of this gear is necessary, most of it is optional. The good news is many of these purchases are one-time costs and you can make them as affordable or as expensive as you want them to be.

• Diaper bag: $30 – $260
• Baby monitor: $25 – $400
• Playard: $40 – $300+

Clothing

Clothing is one of the most important spending categories to consider for your new baby. You’ll need to buy several different types of clothing, including onesies, sleepers and everyday clothing. You may also need sleep-related clothing, including swaddles or sleep sacks.

When you’re planning for baby clothes, also consider seasonal needs. For example, if you have a baby in or before winter, you’ll need coats, booties and other items to keep your baby warm.

According to BabyCenter, you can expect to spend a minimum of $20 – $50 per month on clothing, though you could easily spend more, especially during the first year when your baby will outgrow clothing quickly.

College And Education Savings

Saving for your child’s college education isn’t necessary, but it will be a major benefit to your child in their young adult years. The average cost of a 4-year degree from an in-state public university is $104,108, according to Education Data. And that’s based on 2024 numbers. If you’re having a baby in 2024, you can assume the cost will be far higher by the time your child heads off to college.

It would be challenging for most families to save enough to pay for their child’s education in cash, especially if they have multiple children. However, an investment account can help your money grow more quickly, making saving for college more achievable.

There are plenty of options available to help you save for your child’s education. One popular account is a 529 plan, which is a tax-advantaged account that allows you to invest for college. Other options include custodial accounts and your own personal brokerage account.

The Bottom Line: Budgeting For A Baby Invests In Their Future

Welcoming a new baby is an exciting time, but it’s also an expensive one. You can prepare for the arrival of your new baby by starting the budgeting and saving process early. Not only will you be able to save enough to cover all of your upfront expenses, but you’ll also feel confident in your budget and know that you’ll be able to cover their ongoing costs.

If you’re a parent or will be one soon, download the Rocket Money℠ app to help track your spending and create your baby budget.