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Managing the Expenses of Bringing Up Baby

Feb 12, 2021 3 min read Ilana Polyak

Key Takeaways

  • Child care will run a pretty penny. Find ways to avoid full-time care to protect the budget.
  • The baby’s stuff can overwhelm more than the baby itself. You don’t need it all.
  • Embrace health coverage, but expect a big leap in monthly costs.


Corin Coyle knew babies were expensive, but she didn’t think diapers would be the thing that threw her budget into a tailspin. While her family helped her with big-ticket items such as a car seat, stroller and crib before the arrival of her son, Jack, in February 2016, diapers were a whole other story.




“That was the most surprising thing,” Coyle, 34, of San Antonio, says. “Just the amount of diapers you go through. You don’t actually do the math until you have a baby.” 

Since becoming parents, Coyle and her partner, Tim Buffington, have been forced to tighten their financial belts to free up money for Jack’s care. They don’t eat out as often, and, when they’re hankering for a movie, they head to the closest Redbox rental kiosk, not a theater.

Like new parents everywhere, Coyle and Buffington are getting a crash course in baby finances. 

A recent study from financial website NerdWallet Opens in a new window found that more than half of people hoping to become parents thought the baby’s first year would cost only $5,000. The study then analyzed spending in the first 12 months among households earning $40,000 and those making $200,000, and found that even the lower-income parents spent more than $21,000 on average — well above the $5,000 non-parents think they’ll spend. 

In the first year alone, parents can expect to shell out for necessities including cribs, strollers, car seats and, of course, diapers. Child care for working parents adds even more to the tab. 

But a little planning before the baby arrives can go a long way toward ensuring you enjoy your tiny bundle instead of worrying about how much parenthood costs.



Child care is the biggest expense

There are a wide range of child care costs, depending on the setting and the quality of caretakers. NerdWallet estimated that an at-home nanny would set the average family back over $26,000 per year, more than the cost of in-state tuition at a four-year public college. It’s something only higher-income families can afford. 

Coyle was able to lean on her partner’s mother to care for Jack when she went back to her job as a location scout for a scavenger hunt company, following five weeks of unpaid leave. “That was great to have, especially when I first went back to work,” Coyle says.

After nine months, Coyle and Buffington were ready for Jack to go into daycare. They knew they could afford to pay $1,000 a month, but the center they found charged less.

To tame the costs of child care, keep these ideas in mind:

  • Double up: If you’re hiring a nanny to come to your home, ask if that person will watch another family’s child of a similar age at the same time. You’ll pay more for two children, but likely not as much as each parent would pay individually.
  • Wait a minute (or a year): The older your child is when he or she starts daycare, the more affordable it will be. Infant care is the most expensive, because centers need to hire more staff to keep up with all the diaper changing, bottle feeding and rocking, according to Child Care Aware   PDF Opens in a new window. Care for toddlers is less pricey, and pre-school is even more affordable. 
  • Shuffle your schedule: If you and your spouse or partner have some flexibility in your schedules, you may be able to get away with part-time child care.

Bring on the stuff

Between carriers, diaper pails and bouncy seats, babies come with a lot of gear. And it may seem like you need it all to give your baby the best start. Make sure you know the difference between a must-have and a must-not. 

  • Hand-me-downs are your friend: As a new parent, you will quickly discover parents of older children who are all too happy to pass off clothing and toys their children have outgrown. Even if there are some items in the piles that have seen better days, used clothing can help you save major bucks. If you’re lucky, you can ride the hand-me-down train well into the elementary school years.
  • Work it double duty: Don’t buy a piece of baby equipment that only serves one purpose. Emphasize items you can use for years to come, such as a changing table that sits atop a dresser or a crib that can later convert into a toddler bed. 
  • Think before you buy: People were having babies long before wipe warmers became “obligatory.” Resist the urge to gorge on baby items before you know what you really need.

Raise healthy children

While it’s fine to skimp on a stroller, health insurance is another thing. Even if you get your insurance through work, it may not offset the entire cost of coverage for your growing family. According to Zane Benefits Opens in a new window, the average employee contribution for family coverage is $4,800 vs. $1,080 for single coverage. How will you make this big leap to provide your baby with health insurance?

If adding your baby to your health insurance policy proves too expensive, explore state and federal insurance programs for children.

For example, Coyle buys her health insurance on the federal health exchange because, as an independent contractor, she’s not eligible for her company’s plan. Because of her income level, Jack qualifies for coverage through Medicaid, a relief for Coyle, given Jack’s multiple doctor’s visits for frequent ear infections and eventual surgery for tubes.


What you can do next

A new baby can throw even the most meticulous budget planner for a loop. But planning carefully before the baby arrives will help you see which expenses are necessary and which ones you can forgo. 


Ilana Polyak is a freelance writer who specializes in personal finance and the financial advisory industry. Her work has appeared in The New York Times, Barron's, Kiplinger's Personal Finance, Bloomberg BusinessWeek and CNBC.com, where she is a frequent contributor.


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