How to Budget for a Newborn

Rearing a child can cost as much as one-quarter of a million dollars from birth to age 18.

Having a baby is an exciting life change. Between shopping for rattles, researching cute baby names, and painting the new nursery, don't forget to prepare your wallet for the arrival of your new little bundle of bills.

Instructions

1. Examine your household's current spending habits. Place items into categories based on need and want. Prioritize spending and cut out frivolous or unnecessary costs to free up funds for the baby's monthly needs.

2. Factor in one-time expenses like strollers, car seats, and cribs. Plan a baby shower or register some of your larger baby needs at baby supply stores to help cover some of these more expensive items. Ask friends and family with children for gently used items to help you care for baby.

3. Compare child care options. Shop around for daycare rates to determine whether it is more economical to pay for daycare or have one parent stay home with the child. Depending on age, location, and your individual salary, in some cases it may be more cost effective for one parent to stop working.

4. Make a list of items your newborn will need on a daily basis. Your list should include items like baby formula, diapers, wipes, clothes, shampoos, soaps, etc. Ask friends and relatives or visit stores to determine the cost of these items and what quantities will be needed to care for a newborn for a month. For example, the average newborn uses between 10 and 15 diapers per day or around 400 diapers per month. You may be able to find a pack of 100 diapers for about $20. So, you should budget no less than $80 for diapers alone and consider budgeting more to be safe. Repeat this process for all the baby's daily needs to create an accurate budget.

5. Set money aside for medical expenses during the first year. This will include money for doctor's visits and co-pays, prescription medications, and savings in case of emergency.

6. Begin saving for your baby's college fund. Look into prepaid college programs, CDs and trust funds. It's never too early to begin investing in your baby's future.

Tips & Warnings

• Buy baby items in bulk from wholesale stores like Sam's, BJ's, and Costco to save money.

• Consider breast feeding to reduce food related expenses.

• Start setting aside money for your baby even before pregnancy so you will be used to the added expenses long before the due date.

References

• Babys Story; How Many Diapers Does a Newborn Baby Use Per Day?
• Babycenter Forums; How Many Diapers Does A New Born Use?
• WebMD; Raising Baby on a Budget
• Babies R Us: Pampers for Newborns