Family Baby — and New Finances — On Board

by Cheryl Lock | November 05, 2019

As a personal finance writer, I had covered many stories about the expenses that come with having a child, and thought I knew all the angles.

Then I learned I was pregnant — and everything shifted.

I was thrilled, but almost immediately financial worries began to creep in. Could we all fit in our studio apartment? What would childcare cost? And how would that decision impact my career?

And those were just the immediate needs. How would we cover funding a college savings account or healthcare for another family member?

Now three years — and a second child — into parenthood, I’ve learned that with a bit of research and some (ok, many) deep breaths, the money worries of parenthood can be managed, if not overcome. Here are some pointers to consider.

We need more space!

What to consider: You don’t need to move right away.

Pre-babies, my husband and I lived in tiny apartments. The thought of owning a home with multiple bedrooms had never occurred to us. However, once I became pregnant, I worried we needed more space, but we weren’t financially prepared for a big move.

Thankfully, a friend, pregnant with her second child, reminded me that I had plenty of time before I needed to move. There was the remainder of my pregnancy, followed by the months our baby would bunk with us in our bedroom. Rather than rush into something, we took some time to save up for a down payment and closing costs, and consider the factors that were important to us in a first home.

How to budget:

Experts generally recommend keeping housing costs capped at around 30% of your gross monthly income, but there’s more to it than that. “Be diligent in making sure your other financial goals are met first, like your emergency savings,” said Ashley Dixon, CFP®, associate planner at Gen Y Planning. “There are a lot of unpredictable expenses with children and homeownership.”

If you are looking at a bigger house, take into consideration additional expenses such as a larger mortgage payment, more property taxes and insurance premiums. Dixon recommends setting aside these additional expenses before you move to see if you can swing them. If not, readjust your expectations. Once you have a better handle on what you can actually afford every month, you can start looking toward a move with more confidence.

There are a lot of unpredictable expenses with children and homeownership.
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How can something so small need so many things?

What to consider: A thoughtful registry will help get you through the first year — and then some.

One thing I found to be extremely helpful when it came to curbing first-year costs was creating a strategic baby shower registry. Sure, onesies are extremely cute (and you'll be gifted quite a few), but it's also easy to find gently used free or cheap items through places like Little Swappers or by connecting online with area parenting groups to find discounted items (infant bathtub, bouncy seats, activity mats) used for short stages. And, if you’re lucky enough to have friends and family who already have kids, hand-me-downs are a new mom’s best friend.

Consider adding big-ticket items like car seats, cribs, strollers and infant swings to your registry. People can go in together on expensive things, and many registry databases offer discounts when you purchase items off your registry other people didn’t end up buying.

How to budget:

Talk to other people with kids to help you curate a registry of items you’ll actually use. I quickly learned that wipes and bottle warmers weren’t essential, but boxes of diapers and an easy-to-move infant chair were. Also: You don’t need everything at once. If no one buys you the toddler car seat from your registry, there’s no need to get it right away.

And, think outside the registry. Alyssa Blask Campbell, founder of parenting support company Seed and Sew, suggests adding services on your registry, as well, like a lactation consultation, sleep consultation, postpartum classes — say, yoga or a local parent’s group — or a meal delivery service.

A woman's hand with black nail polish holds a baby's tiny feet

What does a baby mean for our healthcare costs?

What to consider: There are simple things you can do to help curb healthcare costs.

As a freelancer who pays for her own health insurance, I stressed a lot about how much adding a dependent would cost. Infants require a lot of doctor visits. My husband has his health insurance through his employer, so that seemed like the logical place to start. We did as much research as we could ahead of the birth, from finding out the cost of adding a dependent to what the copays and out-of-pocket maximums were, to which doctors were in the network. We also opened a health savings account, or HSA, as a way to help pay for additional healthcare-related costs, such as dental care for our girls.

How to budget:

If you are planning on starting your family in the near future, Dixon suggests researching what your current healthcare plan actually covers — prenatal care coverage will obviously be key here — to see if you should make any changes during the next open enrollment period.

We also opened a health savings account, or HSA, as a way to help pay for additional healthcare-related costs, such as dental care for our girls.
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How will we add childcare to our budget?

What to consider: Be strategic about your childcare options.

According to a recent survey by, the average weekly cost for an infant child in a daycare center is $213. By comparison, it’s $199 for a family care center and $580 for a nanny. As a freelancer, I’m lucky to have the flexibility that some other full-time jobs don’t afford, but I was still going to need childcare.

Luckily, there are a few things that can help curb the costs: According to a Zenefits survey, 67% of respondents reported that their small business workplace offered some degree of flexibility with regard to scheduling, hours worked or remote days. Pooling resources with nearby parents is another way to save. My neighbor and I are considering going in on a nanny share when she returns to work, which could help us cut the costs of childcare for our combined three children.

How to budget:

While everyone’s situation is different, if childcare costs are eating up a majority of your income, Dixon suggests looking at alternative options. “Look at the percentage of income that will be going to childcare,” she said. “Is it worth the expense for both parents to work if all of one parent’s income is going to childcare?” If the answer is yes, at least you might have some choices, listed above, to reduce some of the cost.

How can I possibly save enough for college?

What to consider: Saving for college is a big expense, but there are benefits, too.

According to the College Board’s 2018 Trends in College Pricing Report, from 1988 to 2018 sticker prices tripled at public four-year schools and doubled at public two-year and private non-profit four-year schools. Don’t panic, though. You have 18 years to save, and there are scholarships and work-study opportunities available. Also, there is the powerful option of starting a 529 college savings plan for your child; notably, the investment income earned within a 529 plan is tax-deferred.

How to budget:

Consistently saving even a small amount now can make a big difference in the future. “If you start a 529 college savings plan when your baby is born and begin saving just $50 a month until they turn 18 years old, your child could have almost $20,000 saved for college, assuming [for example] a 6% rate of return,” said Dixon. Remember, friends and family can contribute to your child’s 529 plan as well — so don’t hesitate to suggest they do so in lieu of yet another outfit.

Pregnant woman in a striped dress stands in a field with her hands on her pregnant stomach.

Having a baby is one of life’s greatest, most gratifying gifts. By finding ways to reduce some of the financial stress of parenting, you’ll have time to focus on the cuddles, coos, first smiles and all the other things that are truly priceless.

Cheryl Lock

lives in Denver with her husband and two daughters. She covers parenting and personal finance and her work has appeared in Parents, Woman's Day and Business Insider.