What to expect financially when you’re expecting

Congratulations on your little bundle of joy! The arrival of a new family member is a momentous event that comes with both new responsibilities and additional expenses. According to the most recent Expenditures on Children by Families report from the United States Department of Agriculture (USDA), the average cost of raising a child up to the age of 17 is $233,610. While it’s important to celebrate the great news, it’s also wise to familiarize yourself with the additional costs so that you can better prepare yourself and start building a financially secure future for you and your growing family. 

Housing - A newborn won’t take up much space, but a baby won’t stay a baby forever. The dream of white picket fences may be on your list but it’s your budget that will determine the size of your home. Remember to consider all of the expenses that come with a new home like a mortgage, utilities, maintenance, and home insurance. 

Food - A growing child will require proper nourishment and eating healthy can be expensive.  According to the USDA, food prices have gone up and high-quality foods (meats, fresh fruits, and vegetables) see an even bigger increase in cost. If your child has any food allergies, you’ll want to include any special food requirements in your budget as well. From healthy sources comes vitamins and with vitamins, your child will sprout with the need for new clothes. Clothes can be expensive, account for about 6% of the total cost of raising a child. 

Childcare - One of the biggest expenses when it comes to raising a child is childcare. The average family can expect to pay around $216 a week, which makes up 17.1% of the national median household income.

College - While it’s not an expense you’ll need to take care of right away, it’s definitely one you’ll want to start saving for. Parents who will pay for their child’s education can expect to pay anywhere from $18,500 to $54,880 for undergraduate full-time tuition according to a report from College Board. 

Health insurance - If you’re employed and covered by employer health insurance, you’ll want to make sure you add your new child to your health insurance plan. Talk to your human resources department and/or health insurance provider to learn more about what’s covered for childbirth and other family coverage costs. It’s important to keep in mind that while some costs may be covered by your provider, there could be out-of-pocket costs that you could be responsible for.

Parental Leave - The United States does not provide universal child care nor does it provide paid paternal leave but if you’re employed, your employer may offer paternity leave or some other type of paid assistance to help you with your new child. Talk to your human resources department to learn more about your options. Remember, the Family and Medical Leave Act allows employees to take up to twelve weeks of unpaid leave after the birth of a child.

Clothes, toys, blankets, toiletries, the list for baby items you’ll need can go on forever so it’s important to ask for help when you can and a baby registry at some of your favorite stores can help those closest to you contribute. A baby shower is a one-time expense but it can help you collect some essential items friends and family are happy to provide. Think about going secondhand on some items that don’t necessarily have to be new. Toys and some clothing items can easily be cleaned and reused to help cut down on costs. 

Saving as early as possible is key when planning for your future and it’s no different when it comes to saving for your child. Open a separate account for the additional monthly baby expenses and consider setting up automatic transfers to help keep you on track. 

Review your old budget and build a new one taking into consideration all of your new future expenses. Factor in big decisions like a parent staying home and take a look at your income and expenses to determine where some items can be adjusted if extra income is needed. 

Having a plan in the case of a parent’s death will ensure your family is taken care of if the worst happens. If you haven’t already, consider purchasing life insurance to help cover any costs and to help make up for any lost income.