How does one prepare for a newborn child for the first time? Of course, you will need buy clothes, diapers, furniture for the baby room, and be willing to adjust your sleep schedule. But what about the impact of these new purchases and the extraordinary amount of money you may need to pay out to daycare? Nobody really wants to sit down and calculate out these costs, but you really should to make sure you are executing the best decisions possible.
Managing extra expenses prior to baby arriving
If you are changing your baby’s diaper about 8 times a day and diapers cost roughly $0.25 a piece (depending on what you brand you buy), you will be spending roughly $712 in the first year just on diapers.
Most couples get very excited about the arrival of a newborn baby and they will end up purchasing a lot of stuff they normally would not. For example, baby clothes that could cost anywhere from $20 to $50 per outfit. If you end up purchasing a few outfits for your baby, you are easily into the $100s without any real effort.
Similar to clothes, toys can add up quickly and most of the time you may not even be aware you are spending a bunch of money on stuff your baby may not even use. For toys we can add another $200 easily.
Furniture will need to be purchased for the baby room. Just a crib and nightstand, you can easily spend $500. You may also want to paint the baby room and add a bunch of decorations on the wall. This could be another $200 to $500. It really depends on what type of paint you are using, how big your room is, and how many decorations you are using.
These are just a few examples of some baby expenses you may have prior to your baby arriving. Most people have a baby shower and a lot of these items can be provided at the baby shower by loved ones. This can significantly cut your expenses, so you can save your extra money for when your baby arrives. Your baby is not going to love you any more or less based on how much money you spent on them.
Managing extra expenses after baby arrives
Medical expenses will be roughly $1,200 on average in the first year. This will depend on what type of medical insurance you have and how many times you actually visit your pediatrician.
Baby formula can cost anywhere from $80 to $180 per month. If you are breastfeeding you can save a significant amount of money. If you are not breastfeeding, in the first year you could possibly spend a total of $2,160. I am pretty sure this is more money than I spend on food for myself. That might not be true.
The big expense once your baby arrives and you need to go back to work is daycare. Price is heavily dependent on how many days you plan to drop your child off at daycare. You are likely to spend anywhere from $800 to $2,000 per month on daycare. Usually, the more expensive daycares will provide higher level of service, but it never hurts to review several daycares before you select one. In one year you are going to spend $9,600 to $24,000 on daycare. If you or your spouse do not make much more than the daycare price, then you are probably better off staying home with your child. This may be a tax benefit for you in terms of income tax and also, you get to spend quality time with your baby.
These are just a few thoughts on expected expenses for having a baby. Some of my estimates may be slightly off because my baby did not yet arrive. I do know my wife, cat, dog, and I are all very excited for the arrival of our first baby. We all get excited and in someway feel the need to spend extra money because we want to be prepared. I do not think there is a direct correlation between the amount of money you spend and the level of preparedness you are. We need to be cognizant of our budget and live within our means. At the end of the day, it will help all of us more if we are reasonable and clever in our spending. Assuming our children want to attend college one day, you may be better off spending extra money by putting it in a 529 plan or other investment fund for your child’s future college expenses.