How Much Money Do I Need for a Baby?

How Much Money Do I Need for a Baby? thumbnail
Babies are expensive, but you can cut costs.

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

  1. Costs Vary

    • How much it costs an individual family to raise a baby varies based on the choices you make, your income, your marital status and where you live, according to the United States Department of Agriculture. These figures vary widely, but to give you a rough example, figure on spending somewhere between 12 percent and 25 percent of your annual pre-tax income on raising your child. People with higher incomes tend to spend more money, according to NPR, but people with lower incomes tend to spend a bigger chunk of their income on the baby. Also consider child care, a wildcard that has a big effect on spending. Costs vary depending on whether you need full-time child care and where you live. MSN Money reports that, as of 2007, fulltime child care costs for a year vary from a low in Mississippi of $4,542 to a high in Massachusetts of $14,591. The USDA provides a calculator to estimate how much it will cost you annually to raise a child.

    Average Cost

    • Redbook magazine provides a chart from the USDA that gives you an idea in actual dollars. To get your baby through her first year, as of 2011, expect to spend $7,250 if your yearly annual income is less than $41,700; about $10,140 if your annual income is between $41,700 to $70,200, and $15,070 if you income is more than $70,201. After 10 years, using the same income breakdown, the first group will shell out $9,750; the second group, $13,380 and the third, $19,540.


    • Your first step when planning financially for your new baby is to start saving. You need to have a cushion in case an emergency arises, such as one of you getting sick or injured. Or, you or your partner may decide to stay home from work longer. Your goal is to have three to six months worth of living expenses in a savings account. Make a budget to determine where your money currently goes compared to what you bring in. Include all your expenses, such as mortgage or rent, food, entertainment, clothing and transportation. You might need to cut certain areas, and having a budget allows you to see where you might be able to do this. Look into opening a 529 college savings plan, which allows you to save for education tax-free.


    • Parents need life insurance. Consider your income combined with your partner's, and purchase enough life insurance to ensure that your family can maintain a comparable lifestyle in the event of a death. Consider disability insurance, too, in case you have an accident or illness that prevents you from working. Update your health insurance to include your baby.

    Buying Stuff

    • You have to buy special items for your baby, but you don't have to buy everything the baby stores recommend. It's essential to get a safe crib and car seat, but you may be able to borrow these items. It's nice to have a changing table, but you don't have to have one. You can set up a changing area on top of a dresser instead. You also don't have to buy brand-name clothing for a baby. Wait until your child insists on this, which typically happens soon enough. You don't need a diaper pail; use a regular lidded trashcan. 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. Redbook magazine reported that brand-name diapers cost about $220 more a year than a store-brand version.

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  • Photo Credit family with baby in shop image by Pavel Losevsky from

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