Are You Ready for a Baby … Financially?

You may not be ready for a baby today, or even in the next five years. But, theoretically: Could your finances handle a little one? It's hard to answer a basic question like, "How to budget my money?" And it's even harder to set up a budget for a big expense like a baby.

Take a deep breath: According to the U.S. Department of Agriculture, a baby born today to a middle-class family will cost about $221,000 by the time she turns 18—not counting college! For more info, look at a detailed breakdown of child-rearing costs. Before you fall into a dead faint, remember that you won’t shell out that whole sum at once.

RELATED: The Ultimate 50/20/30 Guideline for 'How to Budget My Money'

To give you an idea of how this cost breaks down check out our handy info-graphic:

We can’t know whether you’re ready for a baby emotionally, but you’re probably ready financially if you can answer “yes” to at least 4 of the following 6 questions:

Do You Have At Least $20,000 in Savings?

First, you’ll probably have to pay some out-of-pocket expenses for your pre-natal care and delivery, even if you have insurance. A normal pregnancy typically costs between $6,000 and $10,000—much more if you need special care or a procedure such as a C-section. Next, your baby’s first year will cost approximately $8,000 to $10,000 (more if you live in a high-cost-of-living urban area). Plan to have at least $20,000 in the bank at the outset.

RELATED: How to Set Up a Budget for Emergencies

Do You Have Debt Under Control?

If not, aim to get your debt to manageable levels before embarking on parenthood.

Are You Saving 10% of Your Pay?

(Hint: You should be, whether you’re planning for a baby or not.) We’re big fans of automatic transfers from your paycheck to your savings account. You’re saving specifically for a baby, so this saving should be in addition to your 401(k) or other retirement savings.

Will Your Loved Ones Help With Child Care?

One of the biggest expenses is child care once you return to work. Having a partner or close family and friends who can share in the care of the child will make the situation much easier.

RELATED: How to Budget My Money for Savings

Will Your Friends Throw You a Shower?

Outfitting a nursery and buying things like car seats, strollers, and bouncers can easily add up to more than $1,000. A baby shower will probably offset a large portion of that, especially if you register at an online baby store.

Are You a Disciplined Shopper? Do You Have Friends With Babies?

If buying clothes for yourself is hard to resist, it’s doubly so when shopping for an adorable baby. Develop that discipline now, since baby clothes—even lovely ones—will likely fit your newborn for three months or less. Nabbing used clothes and toys from friends’ and siblings’ children will save big money.

No matter how hard you try, you can never be fully prepared for the life change that is a baby. All the same, getting your finances in shape beforehand will give you one fewer source of anxiety as you start out on this massive adventure.

  • Alexa

    what an AMAZING LearnVest Daily… wow!

  • Alicia

    I agree, this is one of the best I've seen!

  • Pauline

    Eh. I have a one year old and this article is a little inaccurate and totally makes it seem like it's an overwhelming, almost unmanageable experience. Yes, there is a period of transition when you have a baby, but that's what adults do — they adjust. My husband and I both work and we have a great little life in Manhattan with our boy. Every city is different when it comes to baby expenses — Manhattan is different from Des Moines. You guys usually do great work, but this one really isn't helpful to anyone who has a baby or may want one.

    • http://twitter.com/amkade Allison Kade

      Hi Pauline,

      Thanks for your comment! You're definitely right, in that parents face a whole lot of adjustments, which can include rethinking their exact standards of living and cutting back in various ways. In this article, we're just hoping to spark the conversation about how much babies cost; although this will vary from family to family and location to location, we want to open up the channels of conversation about whether someone's ready for a baby financially, since so many of the people we know approach the situation from an emotional standpoint and aren't sure how to size up the game plan financially.

      Do you have any advice for our readers, since you are a new mom who's been there/done that? We're compiling reader tips on ways to SAVE on children rather than simply scaring people off from the whole thing. We'd love to hear your thoughts!

      Additionally, we really appreciate your comments!

      Best,
      Allison Kade
      Editor

  • Gee

    Tip #1 is utterly ridiculous. in fact, this post on a whole is lacking in substance and comes across as quite shallow. Did an actual parent write this? There are many things that parents should do to prepare financially for a child, but the most important ones are missing from this article.

  • Guest

    I agree with some of the other posters – this article seems highly inaccurate and also does nothing to show where you could save money with children – things such as breastfeeding instead of formula feeding, not buying commercial baby food, using cloth diapers, and utilizing a midwife and birthing center instead of hospital or OB. Also worth mentioning is that many of the typical baby products really aren't needed – we just sold over 100 of our baby things that we never used and won't use in September when I am due. While I realize these things may not work for everyone, they are worth mentioning. My husband and I were discussing this just the other day, and we are an average income family, and we are able to afford our little boy and our other baby on the way completely fine (and we at this moment don't have to rely on government services). While I do stay home, and we are saving on child care, I did work for over the first year of his life. What we are spending is way below what we thought it would be and what others say about children. I think a better article would be tips on how to SAVE when you have children instead of making it seem like this horribly expensive venture.

    • http://twitter.com/amkade Allison Kade

      Thanks so much for your input! With this article, we were trying to talk predominantly about what goes into the decision itself to have a baby. That said, you're totally right–it's super important to address ways to save on babies, rather than simply telling people that they are expensive. We do have some articles currently on frugal parenting under the “LV Moms” subheading of LearnVest Living, but we're always looking to create more!

      So, as we speak, we're compiling tips from our readers and working on new content around how to save money on parenting. Keep your eyes out, as we're hoping to run it within the day or so!

      In the end, we're not saying that you can't be a parent if you don't have $20k in the bank–what we are saying, however, is that the decision to become a parent is a big one, and we want our readers to go in with their eyes open.

      If you have any other comments, don't hesitate to give me a shout!

      Best,
      Allison Kade
      Editor

  • Guest

    And just to clarify, by “and we at this moment don't have to rely on government services,” I just meant that we don't rely on government services, but we are not against government services. I didn't mean that we might have to at some point – we are not anticipating this. We are lucky enough to be able to afford our own health insurance (even though we are not using our health insurance to pay our midwife for this next birth – which is only $1500).

  • Mbrlists

    If everybody followed step # 1, you'd not only eliminate teenage pregnancy but likely also the entire next generation.

    • http://twitter.com/amkade Allison Kade

      Hey Mbrlists,

      Haha, funny point! Although we get what you're going for, there might actually be a kernel of truth buried in here: We DO want to try to help readers go into parenthood with full disclosure and planning, to the greatest extent possible. Although $20k may sound intimidating, it's simply a benchmark–parenting costs will vary from city to city, but the most important thing here is less the exact dollar amount you need and more the fact that future parents really need to plan and think everything through!

      Best,
      Allison Kade
      Editor

  • Pauline

    Also: Most insurance covers a C-section. I didn't pay out of pocket for mine. Docs are very clear in medical records when you need a c-section so that it's billed appropriately. Seriously, who wrote this piece? Keep the interns away from the editorial.

  • C A Haralson08

    I really hope this article doesn't discourage or delay anyone from having a baby.Our baby is now 9 months old and I know we haven't paid anywhere near this $20,000 estimate for the first year. With insurance, the pregnancy and delivery totaled about $3,500 out of pocket. And I know we haven't spent more than $5,000 on everything else since then. I'd say have around $6,000 to $8,000 ready up front and an income to support expenses of about $300/month. Also, to help cover some of the costs of your child, you get at least a $1,000 credit on your taxes each year for every child (other credits as well if your income is below certain thresholds). Our baby's just been awesome and certainly not half as expensive as this article makes it seem.

    • http://twitter.com/amkade Allison Kade

      Hey CA Haralson08,

      Thanks so much for writing in and sharing your experiences! It sounds like you've really mastered the art of living frugally while raising a baby. In response to this article (and also in general), we're compiling our readers' best tips on how to save money on baby expenses. It sounds like you might have a lot to contribute…what are some of your best tricks?

      As far as the $20k estimate, this is a ballpark (which also varies wildly depending on your insurance). I think it would be really interesting if you could share some of your tips with us, plus maybe even enlighten us on your individual breakdown of expenses. I bet we could all learn a lot from you. :-)

      Best,
      Allison Kade
      Editor

  • Mathpro

    This is SUCH a BS!!!!!!!!!!!!!!!!!!!! Too bad that some people can write this kind of nonsense and to scare otherwise responsible people from having the babies in healthy but financially unstable age! To the writer – if you do not know what you are talking about – just shut up. You do not need to have 20 grand in the bank to have a good healthy baby. Just in case you want to show for onesies at Neumann Marcus

    • http://twitter.com/amkade Allison Kade

      Hi there Mathpro,

      Thanks for participating in the debate. Of course you can have a healthy, happy, and impeccably beloved baby for no money at all–but we think it's important to think the decision through if someone is (as you say) “financially unstable.” Although it's true that there are ways to raise a baby on way less money, we want to point out that a baby is one of the biggest financial commitments you can make in your entire life (not to mention emotional commitment!). As a result, you should go in with a game plan on how you'll support this investment, the same way you would with any other tremendous financial commitment.

      How much do you think is a reasonable amount? Whether it's $20k or another amount, we DO want to show that there is such a thing as an amount to aim for, and that there's more planning that goes into the decision than simply wanting a baby.

      Best,

      Allison Kade
      Editor

  • Guest

    “but you’re probably ready financially if you can answer “yes” to at least 4 of the following 6 questions”

    Keep in mind, the article isn't saying you must say yes to all these questions to qualify as financially ready to have a baby. If you can say yes to at least 4, then you are probably ready. Of course, everyone's financial situation, comfort, and stability varies. This article is just trying to point out some steps you may (note: may) want to take in order to prepare.

  • Guest

    People take general advice too literally. No one is demanding you steal $20,000 before you have a kid, it is just a good idea to be prepared.

  • Guest

    $20,000?! Geez, I better just pay $10,000 (when I get to that point) to freeze my eggs and keep saving up ;)

  • Molly

    I totally disagree with the other posters. I think that $20,000.00 is a reasonable goal to have before you have a baby. Before anyone jumps all over me, I am NOT wealthy. I'm the definition of middle class.
    Yes, saving 20,000 is hard. But so is getting behind on doctors bills, imposing on family because you can't afford things, etc. I've seen far too many of my friends get swept up in having kids and end up with a mountain of credit card debt.
    It might take us a couple years to get there, but to my husband and I it's absolutely worth knowing that we're prepared for the worst case.

  • Janet

    Looks like the author is taking a lot of heat for the $20,000 figure but not really being acknowledged for the rest of the quite sensible advice. Shame. Rather than nitpick at the number she's settled on, I think it's the sentiment that counts, and it's right on — it's important to simply have a figure you're expecting to spend. Having a figure at all means you've sat down, looked at your finances, predicted your upcoming costs, etc. That is, you're probably at least on track with the other five points.

    As for the actual cost, I've got an eighteen month old and we've easily spent upwards of $20,000 on her. Granted, it's been a year and a half, but my pregnancy was 100% covered by insurance, and we've barely spend a dime on clothes etc because we inherited so many hand-me-downs from friends and relatives. For us, the real kicker has been the cost of childcare, which I think is too easily overlooked when first-time parents in dual income families think of “having” a baby. But not only do you have to “have” the baby, you also have to provide care for it during that first year (and beyond, of course).

  • Parent of 2

    Preparing for a worst case scenario is a great way to live if that's what makes you comfortable, but for many, it's simply added stress to an already stressful life. I, like many others who have responded, believe that putting a $20k price tag on having a kid is just bizarre. I have 2 kids under 3, and yes, I've spent a lot of money on them. I do have savings, but not $20k (everyone has different money priorities and we are paying back huge student loans, saving for a 2nd house, and paying for private school for one of us and our 3 year old). My health insurance covered everything except $1000 for our first birth and for our second birth with a different health insurance plan everything except $230 was covered. We received lots of gifts from family and friends, and spent thousands on baby supplies, clothes, cribs, etc. Instead of tapping into our savings, we REALLOCATED money that we were accustomed to spending on things for ourselves, like our own clothes, vacations, etc. to spending for the babies. For us, this was the perfect ideal to accumulating a huge amount of savings, which would have been very time-consuming and difficult. Kids are expensive. Keep in mind that for many waiting until some huge arbitrary monetary goal is achieved is a huge disincentive to have children and extremely impractical considering that the window of opportunity to have children isn't open forever. I realize that the author may have been hoping to alert potential parents to the realities of financing a baby, but people need encouragement, not scare tactics, when it comes to their finances and family planning. LearnVest needs to use better judgment and retain its credibility by posting more sensible fare for its readers or risk alienating those who don't enjoy websites that employ sensationalistic tactics to attract readership.

  • Okiah

    I'm a single mom and I spend over $1,000 a month on childcare alone. Granted that's a bit more expensive than most pay but even if you spend half that, when you take into account medical deductibles, saving for your child's college fund, vacations, plus all the things you can't do without (food, shelter, etc.) $20,000 is not at all unreasonable.

  • Alicia

    I wrote a similar blog post on being financially prepared for starting a family :) nnhttp://blog.heaps.co.nz/how-to/how-to-financially-prepare-for-starting-a-family/

  • Kelley Worley

    I might possibly think about having a baby.  I have two children that are 14 and 12 now.  It would be nice to have them to babysit. :) Who knows!!! Maybe! :) I’m not saying definitely no.

  • Kelley Worley

    I got tons of used baby clothes from my cousin when my daughter was a baby. It was so good to not have to spend tons of money on baby clothes when they will outgrow them quickly. :)

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