Adding a little bundle of joy comes with real costs — from delivery to college. Here’s what to expect financially, plus simple steps to prepare before and after your baby arrives.
BILLSHARK would never suggest that you postpone having a baby solely—or even primarily—because of the costs involved. But because we’re all about looking out for your money, if you’re considering adding a little bundle of joy to your life, we would like to let you know what you can expect to experience financially.
1 What a Baby Really Costs
Here’s the bottom line, according to Business Insider: “The average cost to have a baby in the U.S., without complications during delivery, is $10,808—which can increase to $30,000 when factoring in care provided before and after pregnancy.”
Fortunately, the Affordable Care Act now requires all insurance companies to cover maternity care. You will still have to pay your deductible and co-pays, of course, along with any care that isn’t covered in your policy. These sums can add up to thousands of dollars in out-of-pocket costs.
Of course, these are just the costs of labor and delivery. Other impacts to your budget down the line will include:
necessities such as diapers and personal care items
babysitting/daycare
medical care
clothing
furniture
the increased grocery bill once they are weaned
a bigger home
a bigger car with child-safety features
schooling, including books and incidentals
costs associated with extracurricular activities
toys, smartphones, books, etc., as well as other entertainment expenses
increased insurance costs, including when they start driving
college
In 2017, the U.S. Department of Agriculture estimated that such costs would amount to approximately $233,610 on average from birth until a child’s 18th birthday.
As we said earlier, however, the financial aspect shouldn’t stop you from having a baby. There are steps you can take before you become pregnant, as well as before the baby’s born, to help you better prepare for these costs.
2 Start Saving Now
Having a child, as we’ve seen, entails both immediate and long-term expenditures. Your lifestyle will change radically, and not just with the demands of child-rearing. You need to begin to look for savings every place you can, and start putting money aside now.
If the pennies and dimes still keep slipping through your fingers, look for additional ways to earn more: a new job, a side gig, selling unneeded possessions.
3 Investigate Leave Options
Find out ahead of time what type of parental leave policy your company has in place. Will you be paid all, some, or none of your regular salary while you’re gone? A second option is short-term disability leave, which normally only replaces part of your salary. In addition, you may have to pay taxes on this income if you pay your disability premiums with pre-tax dollars, such as through a health savings account (HSA). Talk to human resources to find out what your options are.
If your company provides neither of these options, you will need to depend on the Family and Medical Leave Act (FMLA). This law entitles you to take 12 weeks off for medical reasons, including having a baby, but you won’t be paid during that time.
Once you have an idea of how much income you will—or won’t—have during maternity leave, you’ll have a better idea of your overall budget picture.
4 Revise Your Budget
We hope you have a budget already in place that tracks where your money comes from and goes. Assuming you do, you need to revise it now to begin including upcoming baby expenses.
Start gathering baby supplies, including diapers, clothing, furniture, and a (mandatory) car seat. Tip: don’t spend a fortune on these items; instead, look to thrift stores, consignment shops, and friends and relatives for hand-me-downs.
Then begin budgeting for out-year expenses, including upgrading to a larger home and car, if necessary. Don’t forget that you need to add your baby to your health insurance policy within 30 days of birth. You should also buy or add to your life insurance policy, and amend your will to name a guardian for your child, and—if you can afford it—open a 529 account to help pay for college.
We hope this information hasn’t left you feeling discouraged. Instead, it should help you plan better for your new arrival and be better off financially as a result.
And if you need extra cash for a new baby or any other reason, be sure to let BILLSHARK’s expert financial negotiators review your bills for free. We save our clients hundreds and even thousands of dollars every year!
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Frequently Asked Questions
How much does it cost to have a baby in the U.S.?
According to Business Insider, the average cost to have a baby in the U.S., without complications during delivery, is $10,808. That figure can increase to $30,000 when you factor in the care provided before and after pregnancy. Even with insurance, you will still owe your deductible and co-pays plus any care not covered by your policy, which can add up to thousands of dollars in out-of-pocket costs.
Does insurance cover maternity care?
Yes. The Affordable Care Act now requires all insurance companies to cover maternity care. However, coverage is not the same as free. You will still have to pay your deductible and co-pays, along with any care that isn’t covered in your policy. These out-of-pocket sums can add up to thousands of dollars, so it’s smart to review your plan and budget for them before the baby arrives.
How much does it cost to raise a child to age 18?
In 2017, the U.S. Department of Agriculture estimated that the cost of raising a child would amount to approximately $233,610 on average from birth until the child’s 18th birthday. That total covers ongoing expenses such as diapers, daycare, medical care, clothing, food, a bigger home and car, schooling, activities, and increased insurance costs — not including college.
What parental leave options should I look into?
Find out ahead of time what parental leave policy your company offers and whether you’ll be paid all, some, or none of your salary. A second option is short-term disability leave, which usually replaces only part of your salary and may be taxable if premiums were paid with pre-tax dollars. If neither is available, the Family and Medical Leave Act (FMLA) entitles you to 12 unpaid weeks off.
How can I prepare financially before the baby arrives?
Start saving now and look for savings everywhere, and earn more through a new job, side gig, or selling unneeded items. Revise your budget to include baby expenses, and gather supplies cheaply from thrift stores, consignment shops, and hand-me-downs. Add your baby to your health insurance within 30 days of birth, buy or add life insurance, name a guardian in your will, and open a 529 account for college.
