Babies are as cute as they are expensive – in 2022, the average cost of a baby in the first year of life was approximately $18,270! Growing your family undoubtedly brings joy, and 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 a time rife with change and new experiences.
So how do you get started? Here’s what you need 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.
A good place to start is “needs” versus “wants.” Financial obligations, like housing and debt payments, cannot be avoided. So instead, consider the expenses that you can live without, like dining out or buying your coffee every morning. Those are “wants,” not “needs,” so they should be the first to go.
But since you’re already accustomed to spending that money, consider putting it aside in a separate bank account as a saving strategy. That way, baby expenses won’t seem as overwhelming once your new addition arrives because you’ll have a little extra cash to fall back on.
One often overlooked area when financially preparing for a baby is health insurance. You might be entitled to financial assistance 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 as soon as possible to better understand both tuition costs and availability. Like Rockland Trust, your employer 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 (beige, anyone?), 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 those incoming “needs,” like bottles, onesies and diapers.
Plus, babies grow fast, so your little one is bound to outgrow things quickly. Check rental options for big ticket items. 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.
But if you’re planning on growing your family in the coming years, 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.
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, as well. Contributions grow tax-free, and can go toward both K-12 tuition and college expenses.
While you’re thinking of a financial reassessment, explore adjusting 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.
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.
Get the latest financial tips and advice by signing up to receive our emails.
Rockland Trust Online Banking gives you a variety of services that help you use and manage your accounts, whenever and wherever you want.
* indicates a required field.
Rockland Trust makes it easy to manage all of your accounts with our simple online portals.
Rockland Trust gives you a variety of services that help you use and manage your accounts, whenever and wherever you want.
* indicates a required field.