Budgeting for a Baby: One-Time and Ongoing Expenses

The arrival of a baby can be both exciting and financially overwhelming. A baby can mean big changes and major expenses for new parents. How much money can you expect to spend on your little one in the first year? What financial tools should you consider creating? Here we’ll show you how to financially prepare for your family’s newest addition before they arrive.

Key Takeaways

• The cost of the delivery largely depends on the location of the facility and the health insurance policy.
• One-time costs include a stroller and nursery furniture.
• Other things to consider include the cost of child care and college savings plans.
• It’s important to have an emergency fund, especially if one parent stays at home.

One-Time Expenses

With a first born, you’ll be starting from scratch, from nursery furniture to a stroller to toys. There’s also the one-time medical expense of delivery.

Medical Bills

It is important to remember that the cost of routine birthing care is highly variable based on your location and insurance coverage.

In the United States, a woman with insurance coverage can expect to pay an average of $2,854 in out-of-pocket costs from pregnancy to postpartum, which includes labor and delivery. That’s according to the Peterson-Kaiser Family Foundation (KFF) Health System Tracker. Delivering via cesarean section had a higher average out-of-pocket cost ($3,214) than a vaginal delivery ($2,655).

According to a 2022 research article published by the Healthcare Cost Institute, the average price of labor and delivery was $13,393 in 2020 (an average of $17,103 for a c-section, and an average of $11,453 for a vaginal delivery). Prices varied by state and by hospital. The state with the lowest average price was Mississippi ($7,639) and the highest was California ($19,230).

If you have an insurance policy, review it to determine your out-of-pocket costs for prenatal care, hospital stay, tests, and postpartum care. Unfortunately, it’s nearly impossible to accurately predict how much you’ll pay without reviewing the health coverage you have available to you. Then, call the hospitals to get pricing information. Compare the hospitals against one another.

Important

An insurance policy and location are important factors when determining how much the delivery of a baby will cost. If you lack a private insurance program, Medicaid or the Children’s Health Insurance Program (CHIP) could be options for you and your child.

Travel

To get out and about you will most likely want to purchase a stroller, an infant car seat (required by law), a baby carrier, and a diaper bag. Like many of the things on this list, there is a wide range of costs.

Some brands of strollers come with a $1,000 price tag—or even higher. On the other hand, more modest options can be purchased new for under $150. Used equipment can be even more affordable.

At the very least, it’s worth buying a new infant car seat, because there’s no way to ensure that a used one hasn’t been compromised in an accident.

Home

At the very least, you’ll need a bassinet and/or crib with a mattress and sheets. Other fixtures are for convenience and comfort: a changing table, a rocking chair, a monitor, and a diaper pail. To keep your child occupied, you may want to consider a portable swing, bouncer, and play mat. The costs for these items range based on your budget, and all of them can be bought second-hand.

Feeding

Feeding costs will vary based on your particular situation. A mother who has no issues breastfeeding around the clock will see very minimal costs for months before a high chair and dishes are required. A breastfeeding pillow may be helpful. Perhaps nipple balm, as well.

If the mother will be pumping and storing breast milk, then a range of items will be needed: a breast pump, bottles, cleaning equipment, and storage bags. The cost of formula will also add significant costs to your first year of parenting.

Adoption

Adoption comes with its own set of expenses. The costs vary but can go as high as $50,000 or more. Some employers offer adoption benefits, such as time off or financial assistance. There are also government programs that may be worth exploring.

Ongoing Expenses

Once your baby arrives, the regular expenses to care for your little one kick in. Factor the following costs into your budget.

Child Care

Your single biggest budget item may be child care. Your child care costs will vary by where you live, how much care you require, and what type of care you use.

The Care Index pegs in-center child care costs at just under $10,000 per year. The average cost of a nanny is around $28,350 a year, but again, that can be higher or lower based on your location.

Some costs might be offset by a tax credit: the child and dependent care credit. Be sure to confirm if you are eligible.

Food

Once you begin feeding your child solid food, you can expect to spend roughly $100 a month. The early food costs for children are relatively small compared to what you will see from a teenager.

Clothing and Diapers

According to the USDA’s most recent The Cost of Raising a Child report, new parents should estimate clothing costs at around $670 up to $1,110 for the first two years. The amount ranges greatly based on personal preference and budget, but the lower end falls around $56 a month.

Diapers also vary in cost, but experts advise that you should budget at least $1,000 for diapers and $450 for wipes for the first year alone. That’s approximately $120 a month. Parents who choose to use disposable diapers should also expect to go through as many as 3,500 diapers in their child’s first year alone.

Making homemade cloth diapers out of repurposed fabrics (either fabrics you have on hand, or inexpensive fabrics found at thrift stores) is an option that would reduce diaper costs significantly.

Medical Bills

Plan on six wellness visits the first year for evaluations, immunizations, etc., and a few additional visits for illnesses. Check your health insurance policy for your rates.

If One Parent Stays at Home

If you become a stay-at-home parent, there are important budget changes to consider. First, you’ll have a reduced family income. You’ll also lose your benefits. And if you eventually decide to try to re-enter the workforce, your earning potential may not be where it once was.

Under the Family Medical Leave Act (FMLA), certain employers must grant you up to 12 work weeks of unpaid leave for your baby’s arrival. (Note: Small businesses do not fall under the FMLA.) Check to see what type of leave you may qualify for with your employer. If you take unpaid leave, calculate your regular expenses during that period—mortgage, utilities, insurance, groceries, etc.—and determine how you will meet those costs.

It’s a good idea to practice living on one income before the baby arrives. And work hard to try to build up an emergency fund of three to six months’ worth of living expenses.

Financial Tools to Consider

With your child’s arrival, you’ll want to create financial tools to help provide for your child’s future. Determine your priorities to begin budgeting.

College Savings Tools

According to the College Board Report, the average cost per year for college in 2024 to 2025 ranged between $11,610 to attend a public four-year in-state school and $43,350 for a private four-year education. Start saving now through one of several college education investment tools, such as a 529 plan, a Coverdell Education Savings Account, or an UGMA/UTMA account.

There have been some changes to the way some accounts can be used—namely the 529 plan. The Tax Cuts and Jobs Act (TCJA) of 2017 and the Setting Every Community Up for Retirement Enhancement Act (SECURE) of 2019 have expanded the use of 529 plans to include K to 12 education, apprenticeship programs, and the ability to pay down student debt.

The SECURE Act 2.0, passed in January 2023, offers another newly expanded benefit for 529 plans. It allows beneficiaries of these plans to roll over up to $35,000 from any 529 accounts in their name to a Roth IRA in their name over the course of their lifetimes.

Life Insurance

If you do not have life insurance, now is the time to buy it if you can afford to do so. For just a few dollars a month, you can be assured that your child will have financial resources if you and/or your partner were to die unexpectedly. Talk to your employer or an insurance agent for options on both life insurance and disability insurance. 

Health Insurance

Without health insurance, just one serious accident or illness could deplete your savings and put you in significant debt. Investigate your insurance options if you don’t already have coverage, or budget for the increased monthly premium to add your child to your policy.

Flexible Spending Accounts (FSAs)

Flexible Spending Accounts (FSAs) enable you to use pretax dollars to pay for important family budget items, like child care and healthcare expenses. Talk with your employer or financial advisor about setting up a dependent-care FSA and/or healthcare FSA. 

Ways to Save Money

No matter your income, there are numerous ways to meet your new baby’s needs without breaking the bank:

• Consignment/Thrift Stores: Babies grow quickly. Instead of paying full price for their clothing, check out gently used and even new items at your local consignment or thrift store. Many stores will also buy back items after your child has outgrown them for cash or store credit. Online swap groups and parent networks can also provide quality goods for little money—and sometimes, it’s free. 
• Family/Friends for Back-Up Childcare: Instead of having to take a day off (possibly without pay) when your child is sick, make arrangements for family or friends to help out with emergency back-up daycare.
• Borrow Items from Friends: Ask friends with young children if you could borrow items—particularly big-ticket items they’re not using, like a crib, high chair, or rocking chair.
• Baby Shower Gifts: Register so party-goers can buy what you really need and avoid ending up with what you don’t.
• Downgrade Your Lifestyle: Having a child is going to change a lot of things, including your financial priorities. After reviewing your new budget, you may not be able to make the numbers add up. Consider closing the gap by downgrading in a few key areas. For example, think about trading in your vehicle for a more affordable model, shopping at less expensive stores, or buying more generic items.

How Much Does It Realistically Cost to Have a Baby?

From pregnancy to postpartum care, it costs an average of $18,865 to have a baby, according to the Peterson-Kaiser Family Foundation (KFF) Health System Tracker. That includes childbirth. For families with health insurance, the cost is much lower, with out-of-pocket costs averaging $2,854.

How Much Does Daycare Cost?

On average, daycare was $343 per week in 2024. (In 2023, it was $321 per week.)

How Expensive Is a Nanny?

In 2024, a nanny cost an average of $827 per week. (In 2023, it was $766 per week.)

The Bottom Line

Children are a wonderful gift—but an expensive one. Good health insurance can protect you from hospital bills for the most part, but only planning and budgeting can help you handle the rest.