Having a baby is a life-changing experience. Every aspect of your life will change, especially how you spend and save money. A recent BabyCenter survey found that parents should expect to spend almost $10,000 in their first year with baby.
With some forethought and careful budgeting, you and your family can moderate some of the costs associated with the first year of your baby's life. While you can't foresee every cost, being proactive will minimize surprises and increase peace of mind and enjoyment when your beautiful new addition arrives.
Giving Birth
Labor and delivery costs vary wildly. Location is a big factor. Where you are in the country and where you choose to give birth (home, hospital or birthing center) can alter your plans and budget.
According to the U.S. Agency for Healthcare Research and Quality (AHRQ), the average cost of a normal (no C-section or complications) birth in a hospital is around $3,200. Add in the costs of pre- and postnatal care and you're looking at thousands more added to your hospital bill, and this is after insurance. If there are any kinds of complications, such as low birth weight or jaundice, you can realistically expect to pay more.
When you find out you're pregnant, it's a good idea to contact your insurance company to find out what kind of coverage you have, and if you have it, what your health savings account (HSA) or flexible spending account (FSA) will cover. If you're insured through your work, you may want to talk to your human resources department. You will likely have several conversations in their office, especially if you plan to take parental leave.
Taking Time Off
Finding out what kind of family leave your company offers (or doesn't offer) will affect your budget. It may be surprising, but only about one-third of all working women in the United States are offered any sort of maternity leave. If your company offers leave, find out if you get the full amount or only a percentage of your regular paycheck. This may affect how long you take. If your company doesn't provide leave, they're still required to honor 12 weeks, unpaid, under federal law. Fully understanding your own benefits will give you a clear idea of how to create a feasible budget for your growing family.
Budgeting for Baby
Once you have a clear idea of how much money will be coming in, you can begin creating a budget for the months leading up to, and after, giving birth. You may use a "first year" calculator to figure out what you'll need to save. The numbers may surprise you, so expect to make some adjustments in your spending. Curious about how to start making cuts? Start by figuring out where your money is going now. To do this, you can track your expenses in Excel, or if you're more comfortable on your phone or the computer, you can try using an app/program like You Need A Budget.