Family Finances

How to Prepare for a Baby Financially | Five Tips to Plan For a Baby

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    • FNBO

      Nov 06 2019

How to Prepare for a Baby Financially

Five Tips to Plan For a Baby

If you’re thinking about starting a family but not sure you can afford it, you’re not alone.  The economic impact of raising a child is one of the top reasons people decide not to have children at all.  According to the US Department of Agriculture, the cost to raise a child from birth to the age of 18 is estimated to be $233,610. This includes food, shelter and other necessities but does not include the cost of college education. And of course, the more children you have, the greater the expense.

For many, the benefits of having children far outweigh the cost to raise them: experiencing unconditional love; creating a greater meaning in life; and carrying on family names and traditions; just to name a few. Whether you want to start a family now or a few years from now, these five tips will help ensure you are ready to handle the financial impact of having children.

1. Pay down debt and build an emergency fund.

Two of the most important steps in embarking on any financial journey are making sure you pay down any existing debt so that you can make the most out of your money and build your emergency savings fund. Job losses happen, medical expenses pop up and cars break down. It’s important to ensure your growing family will be taken care of when unexpected expenses come up.

2. Understand what it costs to bring a child home.

Before you even get to the everyday costs of raising a child, you will likely incur costs just to bring your child home. FAIR Health reports that the average childbirth costs range from $5,017 to $14,258 depending on where you live and the type of delivery.  Your health insurance provider may pay a portion or all of these costs. It’s a good idea to understand which portion of childbirth costs are covered by your health insurance before starting a family. Similarly, Adoptive Families Magazine reports that the average cost of a domestic adoption is $43,000. Bottom line, if you see the birth or adoption of a child in your future, start saving now to cover out-of-pocket expenses in order to lessen the burden on your finances.

3. Decide which parent(s) will continue to work.

One of the biggest decisions you will make upon the birth or adoption of a child is who will care for the child during working hours. Gone are the days when it’s automatically assumed that mom will stay home with the kids while dad works. In fact, according to a recent study by the Bureau of Labor Statistics, 63 percent of families with children had both parents working. Deciding whether both parents should continue to work or if one parent should stay home is dependent on several factors including: 

    • Parenting Philosophy: You and your partner should decide what your parenting philosophy is. Do you feel strongly that a child should be home with their parent in their early years? Or, do you feel that is better for both parents to continue to work? The latter will require some form of childcare during working hours whether it is a friend, family member or daycare facility.
    • Affordability: If one parent decides to stay home will you be able to maintain your lifestyle? If not, are you comfortable with finding ways to cut back on expenses in order to live on one income? Likewise, if both parents continue to work does the dual income more than cover the cost of daycare or will one parent essentially be working just to pay for daycare?
    • Personal Growth: If one parent decides to quit working, how will that effect their personal career growth should they try to get back into the workforce later on? Is that a chance you are willing to take? If not, you could explore part-time or work-from-home options to help bridge the gap.
    • Long-term Savings Goals: Having dual incomes provides the opportunity for both parents to save for long-term goals such as retirement. If one parent decides to stay home, it could impact your long-term savings goal.

4. Choose a childcare provider.

If you’ve decided on being a dual income family, it’s important to understand what your childcare costs will be. For many, it can consume a good portion of a family’s income. According to a study by Child Care Aware of America, the average annual cost for one infant to attend daycare ranges from $9,321 to $11,959 per year. That equates to approximately $180-$230 per week. The costs do tend to go down as a child gets older.  For example, in the same study the annual cost for a four year old to attend day care ranged from $8,617-$9,170, or $165-$176 per week. Regardless, sending your child to daycare may have a considerable impact on your budget.

5. Create a post-baby budget.

The best way to make sure you remain on sound financial footing as you start a family is to create a post-baby/post-adoption budget. This budget should include all of your previous fixed expenses (housing, car, utilities, etc.) as well as the new items that come with the new addition to your family (diapers, formula, daycare, clothing, doctor visits, etc.). Don’t forget to pay yourself first by determining a comfortable amount to put into savings each month. If at first your budget leaves you with less expendable cash than you desire, look for ways to cut expenses by eating more meals at home, cutting the cord on your cable and any other monthly subscriptions that aren’t a necessity. If you still come up short, you may need to reconsider whether both parents should work or consider additional income sources to make ends meet (for either parent) such as a part-time or work-from-home job.

Starting a family will have an impact on your finances but you may feel the joys of raising a child are more than worth it.  Whether you’re ready to start your family now or in a few years, making a plan now and saving for your bundle of joy will help you enter parenthood with peace of mind.  A personal banker at FNBO can help set up your savings account and start saving for the future.  Visit a branch today or find us online at

The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.