Guide To Planning and Budgeting For A New Baby

by Guest Contributor · 15 comments

Are you planning for a child or expecting one soon? Perhaps this guest post will help.

When you find out you are going to be parents, it can be a very exciting, yet stressful time- especially financially. However, if you stay calm, budget, and create a sensible financial plan, you can eliminate your fears and move on to actually enjoying your precious’ arrival.

I remember my first experience all too well. There I was quietly downstairs watching the soccer results one Saturday afternoon, when my name was called from the bathroom upstairs.

My partner sounded very startled, and as I climbed the stairs I half expected to see a giant spider in the bathtub. What I was greeted with was initially much more frightening than that! My fiancee was standing there holding what was obviously a pregnancy test. Positive!

We had not planned to have a child yet, and a wave of fear, worry, and anxiety swept over me. I was going to be a father.

The Reason For My Fear

After the initial tears, hugs and excitement of the news, I gathered my thoughts and questioned my first feelings of fear. Growing up in a family who did not have much money, I realized I felt financially unprepared for fatherhood. My biggest fear was that I would not be able to provide for my child.

At that point I knew we had to sit down, come up with a financial plan, and budget for this baby.

Many people worry about the cost of having a family, and it is natural, and admirable to be concerned whether you can provide substantially for your new addition. But don’t worry. If you create a sensible, realistic financial plan and a workable budget, then starting a family need not be so financially draining.

Here are some tips:

1. Start a War-Chest

Starting a family can throw up some very unpredictable situations. This is why it is vital that on discovering your pregnancy you open some sort of savings account (preferably a high yield online savings account). Some women have a harder pregnancy than others, and although you may want to work as long as possible, if there are complications you may have to give up work sooner than you hoped.

Budget for a certain amount of your wages to be transferred straight into savings. This way there will be no temptation to spend the money, and you war-chest will increase in size.

2. Increase Your Earnings

If it is at all possible try to increase the amount you are bringing into the house in the months before baby arrives.

Mummy-to-be could try and get some overtime at work. As she will not be working once further into the pregnancy, it is a good idea to get as much as possible out of her earning power while the situation still allows. Do not let her take on more than she can manage physically though, so a thorough assessment and discussion is necessary.

As for daddy-to-be, you could consider taking on a part time job temporarily just to increase the amount you earn during your pre-baby months.

Another good idea is to sell some of your clutter. The chances are you will need to clear some space in your home to make space for the new arrival, so now would be the perfect time to bring down some of those old records from the attic, and put them on eBay.

You will end up with a clutter free home, as well as bring in some dollars for your new family.

3. Do Not Buy More Than You Need

One of the mistakes that we made when our first child was on the way was spending every other weekend at baby stores.

We ended up spending much more money than we needed to, and eventually found we were given many of the items we had already brought. The best approach to take is to budget, and buy the very basic things you will need as you need them.

Things like romper suits, vests, mitts, socks, baby bath, and changing mats are all important items that you want to make sure you have when the baby arrives. Many of the other luxuries can come later.

In fact it is a very good idea (and traditional) to throw a baby shower. Not only does this give your family and friends a chance to make a fuss of mummy-to-be, but it also gives them a chance to buy some presents for your baby.

Often times, the gifts will be vital things that you may well have brought yourself, so it is worth waiting until after your baby shower before hitting the baby stores.

4. Other Ways to Budget and Save

You should also think ahead of ways to save money after baby arrives. Some of the largest costs involved with bringing up a new baby is feeding, diapers, and consumables. Here are a few ways to save on some of that.

If it is possible, then breastfeeding is great for your baby, and your wallet. Not only will you be giving your baby the best possible start nutritionally, you will also save a packet on milk.

Instead of disposable diapers, consider the savings if you used reusable cloth diapers. As far as things like toys go, use your imagination. Babies are just as happy rolling around a plastic bottle filled with rice, as they are playing with a very expensive flashy rattle.

Entertaining your newborn does not mean you have to go out and buy the most expensive toys available. A baby will enjoy listening to music with you, hearing you read to it, and generally just exploring their new surroundings with you.

5. Clear Out Debts

One of the last, yet most important parts of your budget will be to pay off any existing debts before your baby is born. The sooner you can pay those debts off the less interest you will pay, and the more money you will have free in case of any emergency purchases, or expenses.

As financially apprehensive as you may be about having a child, a sensible financial plan in advance can ensure that your money won’t be stretched too far, providing the quality of life you desire for your baby.

Having a baby budget will leave you free to enjoy parenthood, and the pleasures of bringing up your child.

This article was written by Timothy Ng who is a regular personal finance writer and part of the team at Credit Card Finder, a 100% free Australian credit card comparison and application service. Visit the Credit Card Finder website for more information on family finance tips.

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{ read the comments below or add one }

  • novatedlease calculator says:

    Big obligation comes along with having a new family member. The financial needs are certainly beyond our initial expectations that is why preparation may be our foremost defense in order to cover up for the upcoming expenses. Having to manage as early as possible of the expenses that may be coming your way and the outsourcing of your means will help ease your way out of a financial struggle. After all, having a baby must be a life’s phase to be totally enjoyed.

  • I know here (Queensland Australia) the Ambulance service rents baby capsules AND installs them, their way of both raising money and preventing infant mortality.

  • Kelli says:

    Have you ever thought of doing a post on infertility? We are struggling with that right now and have drained all money we thought we could use when we did get pregant to cover me not working. Now we are at the stage when we may have a chance to get pregnant, yet financially we are not where we want to be anymore.

  • Jamie says:

    i a perfect world you would be completely debt free and have money saved for when your child is born this most of the time is not the case.

    that said, let the excitement give you energy and motivation to get all your finances in order and really start to plan and budget accordingly so you start out on the right track.

  • Tracy says:

    One thing to help calm your nerves is that your lifestyle will likely change once the baby arrives and some of the things you spent money on won’t be as big of a part of your life. We stay in much more now that we have kids and spend less on toys for ourselves – sounds a bit grim but we do enjoy family life and it doesn’t seem like we spend much more now than we did when before all the kids came along. Getting rid of a couple of $100 nights out a week will buy a lot of baby food.

    You will need to keep a bigger safety net once you have children. As a single adult, I could scrape through a tight spot by eating ramen and drinking water for a couple of weeks. That’s not something I’d ever want to do to a growing child.

  • KM says:

    I think people should never put themselves in a situation where they can’t raise a child should they suddenly have one. I mean, if you are not financially prepared, don’t play with fire, or at least take precautions. Although my pregnancy was not completely planned, I was in a good financial situation, or could easily get there. Sure, I lived in another country and didn’t have a stable job, but I could always come home (and I did, but not for financial reasons), where I had a car and a condo paid off, or I could live with my family as I do now since my condo is rented out.

    But I agree with not spending too much for the baby. Some people seem to get too excited and start buying everything that looks cute. I bought the big things, like crib, car seats, stroller, high chair, etc, but the rest will come as I need it and likely also at the baby shower. I am also knitting some baby blankets and clothes, which will save a lot of money because it’s something you can take apart and knit in a bigger size as the baby grows. My mom did that too when she was raising me and my brother. Also, I am going to knit all the toys for my baby – not only is that much cheaper, but I can customize and theme it (I am going to make a toy of planets around the sun), and it can be taken apart and recreated if it’s no longer necessary or gets torn. There are a lot of ways to save, one just has to be creative and not get sucked into the baby buying craze.

  • Jenna says:

    Also having a wish list of things you know you’ll need when the baby comes is always helpful. This way when friends and family ask how they can help you have a couple of quick answers. Then you get stuff you need rather than too many cute clothes (not that this is a bad thing).

  • Cd Phi says:

    In terms of buying things for your baby, if you go to neighborhood yard sales people tend to sell their old baby clothes. I personally don’t think there’s anything wrong with buying used baby clothes because babies grow out of their clothes very fast and you’ll end up just purchasing new clothes every other month.

    Another alternative that we do in my family is to pass on baby clothes. It seems like every year someone in my family has a child so often times we’ll share the clothes until the next person has a baby. There’s no point in keeping it locked up in the attic. Swapping clothes is a great way to save money when a baby comes along since you’ll probably be spending lots on other things like a crib and stroller as well.

    • KM says:

      Yes, garage sales are great for baby things. It’s worth it to shop around though because some families are neater than others and I ended up getting 2 car seats and a stroller from a family that had 3 kids, but everything looked completely new, despite costing 20-25% of what you would pay in the store.

      • MS says:

        As a general note, buying a used car seat from a person you do not know and trust implicitly is not recommended.

        Hopefully you got it from somebody you knew and could trust. Just didn’t want people to read this and think that buying as important of an item as a car seat from a stranger at a garage sale could be a good idea.

        Here’s an article that details more:

        http://babyproducts.about.com/od/carseats/f/used_car_seats.htm

        Kids are important, and there are some things too important to cheap out on…

        • KM says:

          I wasn’t aware it was that dangerous to buy used car seats. The person I bought them from recommended going to the fire department to have them installed safely, which I was planning on doing, but I don’t know if they would be able to tell me if it was structurally unsafe or if any parts are missing. A lot of these things are really new to me since I grew up in a place where most people didn’t drive and therefore didn’t need car seats, so no one in my family has any experience with this.

          • Tracy says:

            Another thing many people aren’t aware of or dismiss is that car seats do expire. It’s not just so manufacturers can sell more seats, but because over time the plastic degrades, etc. Generally it’s 6-7 years after date of manufacture.

            That said, there is nothing inherently wrong with using a used seat. In fact, those baby bucket style seats get so little use I think it’s a shame if they don’t get passed down. Just do a bit of research first and only buy/borrow from people you trust to tell you the truth.

    • MoneyNing says:

      I would sterilize / clean EVERYTHING thoroughly before you let your baby be anywhere near what you buy in a garage sale. You never know where those things have been.

      Especially with a baby, I would be really careful.

      • KM says:

        Of course. Even though it looks clean, sterilizing everything is a must. There are some things I wouldn’t want to get used because of the sterility factor, but everything that I did buy has been thoroughly cleaned before being stored.

  • kt- lifedividend says:

    this is the right thing to do; preparing for a baby before getting it. Most people i have seen just wake up one day and realise that they are becoming parents while at the same time they are struggling financially and are probably in school. I agree that preparing for the baby makes parenting easier and more enjoyable. Most parents i have seen did not enjoy bringing up their kids because they were always out looking for cash to keep the babies alive

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