How Much Money Do I Need for a Baby?


If you are asking the question about how much money it costs to raise a baby before you have one, you are on the right track. As you probably already expect, it’s expensive to raise a kid. But there is an upside; you can control your expenses by planning ahead. Make a plan before the baby arrives for smoother sailing later.

Costs Vary

  • The money you need to raise a child varies based on your income, how many children you already have, your marital status and where you live. While these figures vary wildly, plan on spending between 12 percent and 25 percent of your annual pretax income to raise your child. People with higher incomes tend to spend more money, but people with lower incomes tend to spend a bigger chunk of their income on the baby. And for two-income families, there's the cost of child care. These figures vary depending on whether you need full-time child care and where you live.

Average Costs

  • CNN estimates that it costs a total of $241,080 to raise a child born in 2012 to age 18. The money covers housing expenses at 30 percent, 18 percent for child care and education -- not including the cost of a college education -- 16 percent for miscellaneous expenses and healthcare, 6 percent for clothing, 14 percent for transportation and 16 percent for food. If you want to save money, move to a rural area where it only costs $190,290 to raise children to the age of 18.

Financial Planning

  • Your first step when planning financially for your new baby begins with establishing a savings account. You need to have a cushion in case an emergency arises, such as if either of you lose your job or get sick. Plan to have three to six months of living expenses tucked away. Track your spending habits and create a budget to harness spending. When you know your spending trends, you can readjust them by reviewing your budget. Look into opening a 529 college savings plan, which allows you to save for your child's education tax-free.

Get Insurance

  • Parents need life insurance. Combine your income with your partner’s to purchase enough life insurance to ensure that your family can maintain a comparable lifestyle in the event of a death. Think about short and long-term disability insurance to cover accidents or illnesses that prevent you from working. Update your health insurance to include your baby.

Secondhand Rose

  • While your baby needs special items, you don't have to go hog wild. It’s essential to get a safe crib and car seat, but you can borrow these items from family or friends with older children. It’s nice to have a changing table, but you can retrofit a thrift-store dresser instead for a lot less. Secondhand stores offer children's clothing at inexpensive prices, which can work until your child goes to school or becomes socially aware. Don’t shop the baby furniture stores for any furniture other than a crib; shop consignment stores or garage sales for other furniture items. You can find toys this way, too. Save money by purchasing store-brand diapers, which can represent a significant savings over brand name products.


  • Photo Credit Tye Carnelli/iStock/Getty Images
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