Babies are as cute as they are expensive – in 2025, the average cost of a baby in the first year of life is approximately $20,384! Growing your family undoubtedly brings joy, but also adds financial and personal responsibilities you probably haven’t faced before. From big things, like finding and paying for child care, to tasks that seem more trivial, like buying diapers, parenthood is rife with change and new experiences.
So, how do you get started? Here’s what to know when financially preparing for a new baby — and some tips to help make the transition a bit easier for your family.
What to (Financially) Expect When You’re Expecting
The pre-baby budget likely won’t fit your family’s needs anymore, so it’s time to reassess financial priorities and set new goals.
Financial obligations, like housing costs and debt payments, cannot be avoided. But you may find there are some expenses that you can live without, like a subscription service you rarely use, dining out or buying a coffee every morning. You might be surprised how even seemingly small costs add up quickly.
Since you’re already accustomed to spending that money, consider putting it aside in a separate bank account as part of your saving strategy. That way, baby expenses won’t seem as overwhelming once your new addition arrives. Instead, you’ll have a little extra cash to fall back on.
Pro Tip: Our financial education expert Julie Beckham (aka Miss Money) recommends automating your savings to take something off your to-do list! Have a set percentage or amount of your paycheck deposited directly into a separate savings account.
One often overlooked area when financially preparing for a baby is health insurance. You might be entitled to financial assistance for dependents through your health insurer or employer. Programs providing daycare cost coverage, or free products, like breast pumps or car seats, significantly reduce the bill you’re footing.
To that point, if you will need daycare, start exploring your options as soon as possible to better understand both tuition costs and availability. Some employers, like Rockland Trust, may also offer childcare reimbursement to make those weekly payments more manageable.
Baby Gear: Renting vs Buying
If you’re feeling pressured to have a Pinterest-perfect nursery, remember that at the end of the day, all that matters is your baby’s safety and comfort. With that in mind, you can take the funds you’re tempted to spend on trendy items and put them aside for other necessities, like bottles, onesies and diapers.
Babies also grow fast, so your little one is bound to outgrow things quickly. Check rental options for big-ticket items to help keep you within your budget. Rents4Baby and BabyQuip offer rental gear at a fraction of the cost. Friends and family members might even have pre-owned items, like cribs, eliminating the cost completely.
If you’re planning on growing your family in the coming years, however, new items can be viewed as an investment for your next child. That way, you’re one step ahead the second time around.
Pro Tip: Facebook Marketplace or “gently used” social media pages are typically great places to explore like-new baby items sold or donated within your local community.
4 Questions To Consider As You Plan To Have Kids
The Baby is Here – Now What?
Now that your new baby is settled into their nursery, it’s time to think about their long-term needs, especially when it comes to education. Setting up a 529 Savings Plan can help give you peace of mind. Not only will this support your child financially in the long run, but there are tax advantages, too. Contributions grow tax-free, and can go toward both K-12 tuition and college expenses.
2 Financial Tools to Help Support a Child with Special Needs
While you’re thinking of a financial reassessment, consider exploring adjusted contributions to your 401K and emergency fund. Doing so can help prepare you for future unanticipated accidents or crises. With kids, expect the unexpected. An emergency fund will probably come in handy at some point.
Have Peace of Mind
Your bundle of joy will likely keep you up at night for the foreseeable future. Don’t let financial stress do the same thing! If you’re still unsure where to start, we offer a variety of tools to help your finances keep pace with your growing family. Check out our Learning Center for more tips and tricks to give your child a head start on a healthy relationship with money and finances.
