New Baby Expenses
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New Baby Expenses |
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The arrival of a new baby can be exciting - and financially overwhelming. A
tiny new 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 he or she arrives.
If you considered only the financial implications of having children, you might
end up childless. There's no two ways about it: having a child is very
expensive. Financial experts say a home is the biggest investment most people
will ever make, but they're forgetting about the cost of raising children, which
far exceeds the average home price in the US.
You should plan for out-of-pocket pregnancy, childbirth and first-year baby-care expenses. According to a 2007 March of Dimes report, the average cost for routine maternity care (prenatal care, labor, delivery and post-partum care) was $7,737, $7,205 of which was paid by health insurance; cesarean delivery was an average of $10,958, $10,324 of which was paid by insurance. Review your policy to find out how much you have to pay out of pocket for prenatal care, hospital stay, tests and post-partum care. No matter how great your baby shower was, you are probably going to wind up scrambling for something. Your son might quickly outgrow the newborn diapers you stocked up on, or your daughter will hate her bouncy seat but sleep like an angel in her cousin’s swing. And there’s a good chance the stroller or baby carrier that seemed ideal in the store won’t work for you after all. Probably the biggest expense you'll incur once the baby is born (excluding a college education) is for child care, which is especially expensive for infants. Even when your child is old enough to go to school, you'll have after-school care, summer camps, and other related expenses. Check out day-care providers well in advance of the birth of your child in order to find one that you feel comfortable with and that you can afford. If you want to be able to deduct your child-care expenses from your taxable income, you'll have to choose a licensed provider because you have to report his or her social security number to the IRS when claiming the deduction. New Baby Needs: Here are some categories to consider for the first year:
To get out and about you will most likely want to purchase a stroller, an infant car seat (required by law), a diaper bag, portable play pen and baby carrier. You can expect to spend about $400 or more. Don't forget if you are a two car family, you will want a car seat in each vehicle. Besides baby gear, you may incur additional costs with becoming a new parent. Consider some of the following for your budget:
Be sure to factor in any potential loss of income if you and/or your spouse take unpaid leave. Under the Family Medical Leave Act, your employer may grant you up 12 work weeks of unpaid leave for your baby's arrival – check to see what type of leave you may qualify for. If you take unpaid leave, calculate your regular expenses during that period (i.e. mortgage, utilities, insurance, groceries, etc.) and determine how you will meet those costs |
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