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MintLife Blog > Family Finances > Money Milestones: Affording a Baby

Money Milestones: Affording a Baby

Family Finances


Guess how much it costs to raise a child these days (not including college costs).

The latest government figures show that for a middle-income family, parents can expect to spend close to a quarter of a million dollars to raise one child through high school. This includes food, housing, health care, and basic necessities. (To estimate your own costs based on your state and lifestyle check out this site.)

I’m trying to not let this figure get in the way of my sanity, as I welcome baby #2 (a girl) this month. One way we’re planning to save is by giving her many of her brother’s hand-me-downs. Yes, she’ll wear bibs that say, “Handsome like Daddy.” And she’ll never know the difference.

Of course, it’s critical to have some savings (about six to nine months tucked aside) and be clear of as much credit card debt as possible before this expensive person comes to live with you.

Even still, whether or not you can afford a baby is not always an easy or simple calculation. There are many moving parts: Who will take care of the baby? Will you nurse or formula-feed (something that may change after the baby is born)? Will your health insurance cover most of the baby’s medical needs? The sooner you can plan and anticipate these scenarios, the sooner you can calculate your true baby-related costs.

As a second-time parent, I have some additional advice on how to navigate the expenses of raising a child and save as much money along the way.

What to Expect (and How to Save) in the First Year

A recent survey of moms by, a site for new and expecting parents, found that providing for a new baby in the first year costs families, on average, roughly $13,000. This doesn’t include childcare, which can run from several hundred to thousands of dollars per month, depending on whether you opt for a day care provider or a personal nanny.

Not to mention, a babysitter (because mom and dad need a date night once in a while) may run you another $600 a year, according to BabyCenter. Add in a stroller ($180) and baby room décor ($150) and you can see how quickly expenses can add up.

A few suggestions for saving on the little things during the first year:

  • Bank on hand-me-downs from friends, family, and everyone. Join list-serves and Facebook groups where neighboring families may be giving away free baby clothes. Free stuff is out there. You just need to find it!
  • If you choose to nurse, see if you qualify for a free breast pump through your insurance provider, a savings of $200 or more.
  • Ask for freebies from medical providers. Before we left the hospital with our first baby, we stocked up on diapers and formula from the nurses that lasted us weeks. They were happy to give it to us. Just ask. Your pediatrician may also have samples and freebies in stock.
  • Prepare your own baby food. Yes, it’s more time consuming than giving your baby prepared food from a jar, but not THAT much more time. Pureeing apples takes a few minutes. That’s instant apple sauce with no preservatives that costs a fraction of what it would be at the grocery store. Spend an hour making a week’s batch and freeze for later.
  • Stay put. Expectant parents sometimes buy into the myth that they need more room to provide for the child. False. Living in New York City I know parents with three children living in a two-bedroom apartment (Don’t ask me how, but the point is it can be done!) An infant can usually sleep in a bassinet in the mom and dad’s bedroom for the first six months.

For more help with budgeting that first year you can head to the Baby Center cost calculator for a ballpark estimate.

Save on Child Care

The average cost of childcare has been climbing over the years. Day care, for example, now costs an average $200 a week, according to A personal nanny can be $15 to $18 an hour in some areas.

As an alternative, you may save by opting for a nanny share. Many neighboring parents are reaping the savings of splitting the cost of one caretaker for two children.  And if you have more than one child attending a day care center, ask about sibling discounts.

Don’t forget to take advantage of your tax benefits, too, namely the Child and Dependent Care Tax Credit where you can claim up to $3,000 worth of child care-related expenses for one child (or up to $6,000 for two or more children under the age of 13).

Eliminate Debt

I touched on this earlier, but just to elaborate, it’s so important to start parenthood debt-free, since you’re likely to incur a heap of additional costs preparing for and raising a child. Don’t compound your stress levels and existing lack of sleep with the thought of your credit card bills piling up.

Another reason having little to no credit card debt is important is because if you find yourself needing to take on any loans over the next few years, banks prefer borrowers with strong credit scores and a clean bill of financial health. Your debt to income ratio will play an important role then.

Planning for College: Start Early

For both our kids we opened up a 529 “qualified tuition” plan before they were born, knowing that college costs are escalating each year, faster than the rate of inflation. The 529 is a state-sponsored tax-advantaged savings plan that’s a popular way to start saving for your little one.

Many states offer state income tax deductions for all or part of the contributions made by the donor although state-specific tax rules apply.  I like the site where you can compare each state’s plan.

You can use your withdrawals for school expenses including tuition, room and board, textbooks, supplies, fees, etc. You can establish a 529 plan either directly from your State Department of Education or through a financial planner. And remember that you can choose any state’s plan, not just the one provided by your state.


Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

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