Money·3 min read

Adding a Bundle of Joy to Your Family? Here's How to Build a Baby Budget

accessibility, baby budget
Design: theSkimm | Photo: iStock
April 22, 2022

A new baby is an exciting addition to any family. And any budget. Which is why it’s helpful to plan ahead for new expenses.

What’s the first major baby expense I should plan for?

Definitely delivery. You can expect labor and delivery — and all the related medical care before and after — to be among the biggest expenses you’ll have to pay as a new parent.On average, it costs about $4,500 to bring a new bundle of joy into the world. That is, if you have insurance.

But the exact amount can vary widely. Depending on where you live, your insurance carrier, and a number of other factors.If you’re planning for parenthood, take a look at your policy for out-of-pocket costs for prenatal care, delivery, and postpartum care. (Psst…here are a few tips for choosing the right employer-backed insurance plan.)  

The bright side: Delivery is a one-time cost.

And how should I budget for parental leave?

Another big factor to consider for your new baby budget. 

Under the Family Medical Leave Act (aka FMLA), your employer is required to allow you up to 12 workweeks of unpaid leave. But the rule doesn’t apply to small businesses with less than 50 employees. And only about a quarter of workers have access to paid family leave.If you're not among the lucky few, here's how you can DIY your maternity leave.

PS: Here are a few tips on how to talk to HR about family leave, for when you’re ready to make some noise about paid leave.

What other new baby expenses should I plan for? 

You’ll have to buy new baby gear. And not just onesies. If you plan on being out and about, you’ll have to invest in a car seat. Because it’s the law.Tip: A carrier-and-stroller combo can be a good money saver.Though opting for second-hand baby gear can save lots of money (and waste), experts recommend getting a new car seat. Because safety first.

Psst…here are a few more buys to make parenting easier.

Noted. What else does a new baby mean for my budget?

Major changes. Because aside from the one-time costs, a new baby also comes with new ongoing expenses. Hint: Who’s babysitting? And don’t forget formula.

But a new baby doesn’t mean your budget approach has to change. You’ll still need to cover expenses, debt, and savings. One strategy: 50/20/30. Baby expenses would go into the 50% for basic needs. New long-term goals would need to be added to your savings plan. Hint: The sooner you start a college fund, the better. Which means you’ll have to make more room in your budget. Baby steps.

How do I know if my budget can handle a new baby?

Start with a little practice. Try limiting your budget more than usual to see how a new baby would impact your finances. Think: Would you have to take unpaid parental leave? If so, how much would you need to downsize your budget?Then do your research. How much does it cost to add a baby to your health insurance plan?How much is childcare in your area?


Practicing with a new budget can help you prepare (and your finances) for a new baby. Try working with a smaller budget to see how new expenses might impact your bank account. And do your research on your employer’s family leave policy.

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