Top 5 Ways To Budget For A Baby
If you think your home is the largest expense you'll ever face in your lifetime, think again. Some estimates show that raising a single child from birth through college runs the typical middle class family around $1.1 million. Now, that's some serious coin. So, if you've got a bun in the oven, you had better start pinching your pennies.

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Fortunately, there are some steps you can take to ensure that this new member of your family doesn't completely bust your budget. Here are the top five baby budgeting tips for cash-strapped parents.

No.1: Steer Clear of Pricey Stores
In a child's first year, the USDA estimates that the average family spends a whopping $8,000 to $10,000 on baby supplies. This massive price includes everything from tons of diapers and baby clothes to furniture, doctor's visits and day care costs.

However, you can greatly cut down on those first-year expenses if you steer clear of designer baby gear. Resist the urge to buy your baby diva the hottest fashions and top-of the-line strollers from the hippest baby boutiques. Unless you're Tom Cruise and Katie Holmes, you should probably stick to more affordable baby retailers, or even buy some supplies second-hand. If you have other friends and family with children, you may also be able to reuse some of their clothing and other gear for free.

No.2: Make the Most of Tax Breaks
Uncle Sam realizes just how expensive raising a child can be and that's why he offers parents some much-needed tax relief. For each dependent child under the age of 19 (or full-time dependent student 24 or younger), parents receive a reduction of taxable income of $3,650 in 2010. To top it off, parents who earn a combined adjusted gross income of $110,000 or less ($75,000 or less for single filers), receive a tax reduction of $1,000 per child.

While these are the most well-known tax breaks for parents, there are many others, including the child care tax credit, tax breaks on 529 plans, college tuition deductions and more. Do your homework and talk to a tax pro to take full advantage of these well-deserved parent tax breaks. (To learn more, see Choosing The Right 529 Education Savings Plan.)

No.3: Save Up for Maternity Leave
Of course, one or both of you will want to take time off from work to care for your newborn baby - but you'll still need plenty of cash to pay the bills and cover those pricey baby expenses. Depending on your company, you may or may not receive paid maternity or paternity leave. If you do, it's probably not as much as your regular salary.

That's why you should plan ahead for the income reduction you may experience during maternity leave. As soon as you learn you're expecting, start stashing funds in an easily accessible savings account. Try to find an account with a high rate of return, and your savings will pile up more quickly. Even if you set aside just $100 or $200 per paycheck throughout your pregnancy, you'll reap the benefits when baby arrives. (To learn more, see Budgeting For A New Baby.)

No.4: Sign Up for a Childcare FSA
By now, you've probably heard that day care is phenomenally expensive and the price seems to climb each and every year. Right now, the average U.S. family pays $8,150 a year ($680 a month) to send their baby or toddler to day care. Some families pay up to $15,000. Yikes!

Luckily, you can offset these extraordinary costs by signing up for an employer-sponsored flexible spending account (FSA). You fund the FSA with pretax dollars and then tap into that account to pay for your child's day care. In the end, an FSA can slash your day care costs by up to one third. (For more tips, check out 5 Ways To Save On Child Care Costs.)

No.5: Start Saving for College ASAP
In 2010, the annual in-state cost for the average state university skyrocketed to more than $15,000. That's nothing compared to private colleges, which cost up to $35,000 a year on average. As if those prices aren't shocking enough, get a load of this: those numbers will likely be exponentially higher by the time your rug rat graduates from high school. Over the past 35 years, the cost of college has mushroomed by 1000%.

Before you launch into a full-on panic attack, it's important to remember that this is just the sticker price for college tuition. In other words, if you play your cards right, your child could qualify for financial aid, and you won't have to pay full price. Believe it or not, even middle class families can score financial aid in this day and age.

Plus, it's never too early to start planning and saving up for your child's education - even if he's still a bump on Mommy's belly. As soon as your baby is born, start contributing to a 529 College Savings plan or a Coverdell Education Account. Not only will these plans help you save up a bundle for your child's college education, but they also offer valuable tax advantages.

Talk to a financial professional who specializes in college planning. He or she can help you save for your child's college education today without sacrificing financial aid tomorrow. (For more, see 5 Ways To Fund A College Education.)

Avoid the Baby Blues
Before you come down with a case financial baby blues, take a good look at that precious bundle of joy cooing in your arms. Yes, a baby is expensive, but he or she is also absolutely priceless.

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