Becoming a Parent

There is no greater responsibility than becoming a parent. You have so much to do and so little time before your baby arrives. You need to decorate the nursery. Buy a stroller. Childproof the house. But getting a handle on post-baby finances tops your agenda. Use the checklist on the left to get help.

Calculate baby’s impact on your budget. You may be surprised.

Whether you’re having your first child or adding to your family, you should include child-related costs in your budget.

According to the federal government, a husband-wife family earning just under $60,000 before taxes will have $10,600 to $11,660 in extra expenses, depending on the age of their child. You also may incur big expenses such as moving to a bigger house or buying a larger car.

Until your child arrives, it will be difficult to accurately estimate how your monthly expenses will grow. But it’s important to try. Here are some guidelines.

Additional annual costs* over the first two years will include:1

  • Housing - $3,890
  • Food - $1,230
  • Transportation - $1,360
  • Clothing - $410
  • Healthcare - $750
  • Childcare - $1,890

 *Assumes child born to couples with average income of $59,300.

Before you start buying things for your baby, know what you need, how much you’re willing to spend, and where the money will come from. Pick up a copy of Baby Bargains by Alan and Denise Fields for reviews on hundreds of baby products. Avoid going into debt while outfitting the nursery. Your goal is to create a stable and nurturing environment for your baby—not to incur crippling debt that will weaken your financial prospects.

Be sure to budget for other startup costs, including paying for the hospital delivery and accounting for any unpaid leave at work. And if your spouse or partner plans to stay home, make sure you can afford to live on one income and adjust your spending habits accordingly—preferably before the baby comes to give the arrangement a test run.

After baby arrives and life settles down, make sure there’s room in your monthly budget for things like diapers, formula, clothes, toys, doctor visits, photo developing, and babysitters. One way to free up cash: Pay off your high-interest debt. Use the money you save on interest and monthly payments for your baby’s needs. Plus, you'll probably be spending more time at home than going out on the town, so your entertainment expenses should decrease, freeing up more cash.

1Expenditures on Children by Families, 2006, U.S. Department of Agriculture, pg. ii


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