A solid financial plan can take some of the stress out of having a baby.
By Emily Sherman, U.S. News and World Report featuring Cecilia T. Williams, CFP®, AIF®, COO/CCO at Halbert Hargrove
The cost of raising a child is high, especially in today’s inflationary environment. Budgeting for this expenditure can be a daunting prospect, but doing so is crucial to maintaining your financial security throughout the process.
“Your first step is fighting that initial urge to start buying cute baby clothes and get that budget together,” says Cecilia Williams, chief operating officer and chief compliance officer at Halbert Hargrove.
Here’s what to know about budgeting for a new baby.
What Costs to Build Into Your Baby Budget
A new baby can be expensive at the outset. Many of these costs – such as new clothes, food and diapers – are ones you’d expect. But you’ll also need to factor in child care, education savings and other purchases into your baby budget.
“Be sure to factor in all expenses that come with having a baby. That may take a little research and planning on your part to determine what you’ll really need. Some studies say baby-specific expenses can total $20,000 to $50,000 in that first year,” says Tanya Peterson, vice president for Brand at the digital personal finance company Achieve in San Mateo, California.
In 2017, the U.S. Department of Agriculture published a report that projected parents would spend $233,610 to raise a child born in 2015 from birth to age 17. In 2022, the Brookings Institute published a commentary that estimated the cost to raise a child born in 2021 as close to $310,605 – thanks to inflation.
Here is a list of four common costs associated with having a child:
- Health care
- Food, diapers and clothing
- Child care services
- Education and college savings
Read on for more information on each expense.
Health Care
Before you welcome a new child into your home, be sure to consider the health care costs involved – for you and the child.
Nowadays, new parents can end up paying thousands of dollars in health care costs, including doctor visits and other service charges throughout the birth parent’s pregnancy.
“For example, if you have a high-deductible health plan, you’ll likely be responsible for paying in full for many health care services until you reach the stated deductible and your insurance coverage kicks in. Research what’s fully covered and what’s not,” Williams says.
