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Budgeting for a baby (and beyond): biggest expenses by age

For new parents, a new baby brings love, joy, and (of course) many unfamiliar expenses.  Knowing what costs to expect could help you take steps to save money, reduce spending, or refinance debt to make more room in your budget. Here's a look at the financial impact of your child from birth to kindergarten.

How much will you spend to raise your child?   

Figuring out how much you’ll spend in the first few years can be challenging because costs will vary from one family to another and will depend on your unique situation.  Often, parents will think about new big-ticket items like a crib, stroller, or car seat, but forget about the impact of everyday costs that you’re already spending on but are likely in increase once you have a child, like groceries, housing, and trips to the pediatrician. Ensure that you have a savings account for emergencies and unexpected expenses. A good rule of thumb is to have three to six months of living expenses set aside.

Plus, your costs could be affected by where you live, what type of car you drive, your lifestyle, whether family members can help out, and your child's individual development. Let’s take a closer look at your overall expenses and tips on how you can save money over time.

Housing will likely be one of your biggest costs. Renting a home for your growing family may be more affordable in your area, or you may live in a place where owning is generally more affordable. Either way, your housing costs could change when you have a child, and that could have a big impact on your budget. If you already own a home, research refinancing your mortgage. You could save a bundle. 

Transportation costs. A newer SUV or van will usually cost you more to buy and own than a smaller, older car. What you drive will affect your costs for insurance, fuel, vehicle maintenance, and repairs, as well as your monthly payment.

Many parents also need childcare for their children. Health insurance, healthcare copays, and out-of-pocket costs may need to be added to your budget as well. Daycare costs may go down as your child gets older, but insurance and healthcare will continue to be big budget items. The number of children you have could also affect your spending. Your second or third child may be cheaper than your first, especially if you already own a larger home or newer and bigger vehicles.

Expenses for infants (birth to 1 year old) 

Infants can be quite expensive, especially for first-time parents. However, whether you get items gently used or brand new is up to you. If you're making a baby gift registry, be sure to prioritize essential items first. That way, your basics are covered, and you can splurge on the fun things once you meet your baby.

1. Feeding

Feeding supplies will vary depending on how you feed your baby, but in general you’ll need bottles, cleaning brushes, and highchair and feeding accessories (spoons, bowls, and cups). For exclusively formula fed babies, formula costs around $400- $800 a month depending on brand and where you shop. As your baby gets older and is ready to eat like a little grownup, your grocery bill will likely increase as you purchase baby-friendly food like rice cereal or purees of fruits, vegetables, or meats.

Saving Tip: Consider generic formula instead of name brands. Breastfeed if you can to help offset some costs. Buy baby supplies and groceries in bulk, but check the price per item in addition to the total cost as smaller packages are sometimes better deals. Enroll in loyalty programs and research freebies online. Consider making purees at home and freeze them to be defrosted for quick meals or to take on the road.

2. Clothing and Diapers

At a minimum, your newborn will need diapers, wipes, and clothes. You'll probably want a changing table or a child's dresser with a flat top, plus changing pads, and a diaper bag. After the initial expenses, you can expect to spend around $80 a month on disposable diapers and $30-$50 on clothes.  Like everything else, this number can vary depending on the brand of diapers and wipes you use and how often and where you shop for clothes.

Saving Tip: Sign up for coupons from diaper manufacturers and try to buy diapers in bulk online or from big-box stores. You could also consider using cloth diapers, which are growing in popularity and provide significant cost savings.

3. Baby Gear

Baby gear ranges from necessities like a crib (with mattress), bassinet, car seat, stroller, bathtub and toiletries, and babyproofing supplies (safety gates and outlet covers) to “extras” like a swing, bouncer, play yard, baby carrier, or rocking chair.  Some of the “extras” may be essential for your family, and as always, your costs will vary depending on brand and where you shop. 

Saving Tip: Create a baby registry and prioritize the necessities. Buy secondhand baby gear and nursery furniture. Lots of parents are eager to sell items they bought new and used only for a short time. You should always buy a new car seat for safety reasons, but check out secondhand stores, garage sales, or community websites to purchase some things gently used. 

Expenses for toddlers (1 – 4 years old)

At about a year old, infants transition into toddlerhood and each year after that brings additional milestones and potential cost savings. Take those extra dollars and set them aside, because you'll need them soon enough.

1. Feeding

You may get some financial breathing room as your child transitions away from formula. At a year old, your pediatrician will likely recommend switching from formula or breastfeeding to cows milk, assuming there are no allergies or health concerns. Your toddler will also transition from purees to more solid food (and lots of snacks!).

Saving Tip: To maximize your grocery budget, combine coupons and e-coupons with sales when you shop and consider buying store brands.  Also, learn how to crack the unit price code when similar items are sold in different sizes.  Look for the unit retail price next to the item and you’ll often find that the larger item costs less per ounce or pound.

2. Clothing and Diapers

Toddlers will wear diapers until age two or three, depending on when they’re potty-trained. However, they use fewer diapers (only about 8 a day compared to an infant’s 10+) so your costs will decrease. However, clothing costs will increase as your toddler becomes more active, they’ll need more clothes like winter outerwear or “dressy” outfits for social occasions.

Saving Tip: Find local consignment shops to buy and sell some of your child’s clothes, many shops have loyalty and rewards programs to help you save as well.

3. Baby Gear

At this age kids transition from “baby gear” to larger age-appropriate toys and games. Things like a balance bike or tricycle, toddler helper stand, and educational learning games. Looking ahead, preschoolers will soon be ready for backpacks, after-school care or supervision, sports equipment, band uniforms, summer camp and more.

Saving Tip: Buy used toys or arrange swaps with other parents, and open a library account if you don't have one already. Safe household items, like spatulas and Tupperware, can also make amusing toys for little kids.

Focus on essentials

Becoming a parent is one of life’s joys, but it’s important to plan ahead for the many expenses that come with kids. Remember that few families can afford everything they want and most kids don't need that much. Throughout their lives, beyond toddlerhood and into the pre-teen years, the more often you talk about money and financial changes, you help to set expectations to create satisfaction instead of disappointment. In addition to boundless love, providing your family with a strong financial foundation is one of the most important gifts you can give.

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