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How to financially prepare for a baby


Raising a child is one of the most rewarding experiences life has to offer. But the cost may be higher than you realize.

As the price of childbearing continues to soar, you may be wondering how you will pay for it all. Here are the steps you should start taking to get your finances in order before your bundle of joy arrives.

Adjust your monthly budget 

When your little one arrives, you’ll need to spring for baby gear, furniture, a new wardrobe, diapers and child care. Some mothers are unable to breastfeed even if they plan to, and that can cost a lot! Formula feeding can set you back $900 to $3,000 over the first 12 months.

Since many of these expenses are ongoing, it’s wise to make room in your budget before the baby is due. Review your monthly budget and look for ways to cut back. You may be surprised to discover how much monthly subscriptions and other costly habits actually impact your finances.

Most families spend anywhere from $12,350 to $13,900 on child-related expenses before their baby’s first birthday. From nursery furniture to travel essentials, you'll need to make room in your budget for an entire catalog of child rearing products. Taking out a small personal loan to cover baby expenses can help make parenting more financially manageable.


Create a baby registry 

Just like a wedding registry is used to gift newlyweds things they need for married life, a baby registry helps parents-to-be gather essentials for their little bundle of joy. Having a newborn is hard, so there's no shame in asking people to help make it easier for you.  

When it comes to creating a baby registry, be mindful of other people's budgets. Include a wide-range of prices for items you'll actually need. Requesting luxe items from people who don't have luxe budgets will be disappointing for everyone.

Here are some baby registry sites that offer enticing perks:

Set up a savings account for your child 

Since your recurring expenses won't magically disappear when your pregnancy test comes back positive, saving up for a kid can feel overwhelming when stacked on top of all your other financial obligations. Make it more manageable by opening a separate savings account for your baby.

Opening multiple accounts is free and won't hurt your credit score. You can automate these savings by setting up a monthly transfer from your paycheck or checking account to your “baby account.”

Estimate prenatal care and delivery costs 

While exact amounts vary by state and by insurance provider, prenatal care and delivery can cost thousands of dollars. This includes out-of-pocket expenses, co-pays and insurance deductibles. Prepare for these expenses by saving up or allocating a large windfall, like your tax refund or work bonus, toward prenatal care and delivery.

Start saving for college 

Take it from older generations: kids grow up fast. It's never too early to start considering how you'll put your children through college. 

With college tuition now averaging $41,411 at private colleges, $11,171 for state residents at public colleges and $26,809 for out-of-state students, you should start planning now for the small fortune that awaits. Putting money aside for college while your kids are young will give your savings a better chance to grow, thanks to compound interest.

Continue saving for retirement 

While it may seem reasonable to cut monthly savings or to lower your 401k contribution when your family is strapped for cash, it's important to stay the course with your retirement goals. One day you'll be old and gray. How you prepare for that now will determine if you become a financial burden for your kid when that time comes.

Write a will 

It sounds morbid, but preparing your will — and purchasing life insurance — is invaluable for your children if the unthinkable happens.

Welcoming a new baby into the world will mean big changes for your finances, but that's not necessarily a bad thing. With a little focused preparation you can rest easy knowing you're financially prepared for your baby’s arrival.

If you have a big expense looming in the horizon, a personal loan can help you cover the cost. With no fees and competitive interest rates, you'll save thousands of dollars and reach your goals faster.


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