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Financial Planning Tips for New Parents

Then comes baby in an $899 baby carriage. Yes, if you want to be strolling around town in the UPPAbaby Vista then that’s what it will cost and that’s before the rain shield, snack tray and cup holder. 

Having a baby is expensive any way you look at it. In major metropolitan areas like New York City, the cost of raising a child can be upwards of $455,000 not including college. Having kids isn’t for everyone but for those of you that do want to have kids, I’m going to breakdown the costs and give some tips for first time parents. I want to try to prepare you as best I can, but one thing I have learned is that no one ever feels truly prepared - financially or emotionally - for having a child. (For more, see: Budgeting for a New Baby.)

What It Will Cost

The statistics for what it costs to have a child can be scary. You may wonder how you can possibly afford to have a child but if you know what the costs are going to be, you can do your best to plan for them. Let’s break it down:

  • $30,000 - average cost for standard delivery and newborn care without insurance.
  • $3,400 - average cost for standard delivery and newborn care with insurance.
  • $25,844 - average cost in the state of New York of having your child in a day care facility, according to Child Care Aware.
  • $21,105 - average cost in the state of New Jersey of having your child in a day care facility, according to Child Care Aware.

Those are just a few of the major costs for having a child, but there are smaller ones out there (think diapers, lots and lots of diapers). If you can spend a few months planning, you can make small changes now to prepare your budget more strictly for when the baby arrives. If you keep putting it off because you think can’t afford it, there will come a point when you then don’t have kids at all. Just understand that it’s normal to feel uncomfortable with the costs associated with having a baby.

Financial Planning Tips for New Parents

1. Set Goals: If you had that goals discussion when you got married, it’s time to revisit. Your priorities are going to change when you have a child. You may feel torn between competing goals such as down payment on a house, retirement and college savings. Take some time to prioritize those goals and don’t try to stretch yourself too thin. (For more, see: 5 Costly First Year Baby Expenses.)

2. Create a Budget:  Also take a look at your income versus expenses and get a handle on your budget. Your monthly budget will soon include a lot more ongoing costs, such as diapers, formula and child care, plus one-time costs such as furniture, a stroller and a car seat. You probably won’t go out as often as a new parent making saving on entertainment easier. Family will often want to buy the bundle of joy gifts, so take them up on the offer and create a gift registry. It will make it easier for them to know what you really need. Now is also the time to figure out the cost for child care in your area. Do some research and see how that will fit into your budget. Mastering cash flow takes time so give yourself at least three months once baby has arrived to adjust to the new budget.

3. Increase Emergency Savings: Everyone should have a cash reserve for emergencies, but you may need to increase it now before the baby arrives. See if there is room in the budget to set aside a little extra each month. You may need to tap into that if your job does not offer paid leave or if the new mom has to stay out of work longer due to medical complications.

4. Plan for the Future: Once baby arrives, you should do a few things to make sure your child will be taken care of if you are no longer around. Consider some life insurance. Compare costs and what type of coverage is right for you. Draft a will. If you didn’t do it right after you got married, do it now. Seriously, call an estate attorney and make the appointment. Once you have a child you must be prepared.

I hope these tips make you feel more financially confident about having a child. It is a big step for anyone but you can do some things to prepare and have one less thing to worry about once there is a bun in the oven. And one last pro-parent tip: for those baby blow-out occasions, don’t hesitate to throw out that Carter’s onesie. It’s not worth saving. (For more, see: New Baby, New Tax Break.)