Budgeting for Baby

Financial tips to help you save a bundle for your new bundle of joy. 

How much does it cost to have a baby? The answer is “it depends,” but you could just as easily say “quite a bit.” For many parents-to-be, their joy can quickly be overwhelmed by financial questions. But with good financial planning, you can prepare for the upcoming expenses and ensure your baby has the best possible start in life. Here are three tips to get your family and finances baby-ready:

Start planning for childcare now. 

If both parents work and your family relies on two incomes, it’s essential to have a plan in place for childcare well before the baby arrives. Since the pandemic, licensed childcare providers have decreased by 13 percent, and the number of childcare professionals working decreased by 16 percent, according to a report by ChildCare Aware of America. That means even more competition for available spots and possibly higher costs for care. 

Get a good start by making arrangements before you give birth: shop around, visit providers, get on waitlists, and begin saving and budgeting for the associated costs—the average price for infant care is around $990 per month, but in larger cities that soars to $1740. 

Estimate your medical care and delivery costs. 

It’s hard to worry about money when your focus is on having a healthy baby, but all those prenatal care doctor visits and that hospital trip add up to a significant expense. 

The average price of having a baby through vaginal delivery is between $5,000 – $11,000 in most states, (according to data collected by Fair Health), which include the total duration of care, the obstetrician’s fee (including prenatal care), the anesthesiologist’s fee and the hospital care fee.

The good news is that federal law mandates that insurance cover prenatal care and labor and delivery expenses. Even so, factor in co-pays and high deductibles, and the average family will need to set aside up to $5000 in medical expenses. 

Check in with your insurance plan or provider to estimate your costs, and then work backward from your baby’s due date. From the moment you find out you’re pregnant, if you can set aside $625 a month over 8 months (use an automatic transfer to a separate account to keep you going), you’ll have $5000 by the time the baby is born. Even better? Begin saving as soon as you decide to start a family vs. waiting until pregnancy. 

Evaluate your will and your insurance. 

Planning for your future family means protecting them from the unexpected. As tough as it is to contemplate anything happening to us, a will ensures our spouse and children inherit our assets without costly probate battles, confusion, or delay. Have your attorney review and update your will to include your spouse and baby-to-be. 

You’ll also want to make sure that you check in with your employer’s HR staff or your insurance provider about adding a spouse and/or your new baby to your benefits. Having a baby is considered a “qualifying event” that allows you to make changes and additions to your insurance plan, including switching plans and adding coverage. 

You’ll need to wait until your baby is born to enroll, and have their birth certificate and social security documents ready when you enroll them. Most insurance plans require that you enroll your baby within 30 to 60 days of their birth. 

Having a baby is one of life’s most exciting and rewarding experiences, but financial worries can add stress to what should be a joyful time. To help get your financial ducks in a row, consult with one of our financial planners at Aspen Wealth Strategies.

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