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How Much Do I Need to Save For a Baby?

According to the U.S. Department of Agriculture, parents in 2015 paid an average of $233,610 to raise a child to the age of 18. That averages about $13,000 per year, but you may spend more or less in any individual year. It also may vary based on your finances, help from family members, or your child’s interests and hobbies. 

While you likely will be saving – and spending – throughout your child rearing years, you can start saving and creating a financial plan before your baby arrives.  

A 2020 CBS News report stated a Colorado family pays an average of $15,627 to give birth in a hospital. The cost may go up if there are complications. Your cost may also be lower if you have health insurance that helps offset the cost of prenatal care and delivery. Your health insurance provider or your Human Resource department may be able to help you understand what your insurance will and will not cover if you have a baby. They also will be able to share the additional, if any, increase to your health insurance premiums after your baby is born. 

How much you spend on providing for your child in the first year is largely dependent on your personal preferences, but New Parent suggests that families can expect to spend about $7,000 for basic baby and nursery items. If you need childcare, the U.S. Department of Agriculture reports that the first year of daycare will cost about $12,000. 

Here are some tips from Best Money Mom on budgeting for that first year: 

Make a baby shopping list. Knowing what you need will help you manage spending on what is needed most. It also may come handy for a baby registry if a friend is throwing a baby shower for you. 

Only buy the essentials. Clothing, diapers, and food are essential. Gadgets, toys, and other items may not be needed immediately. 

Plan for parental leave. If you plan to take time off work without pay, consider how you can reduce expenses and how much money you need in savings to offset your income during that period. If your employer provides parental leave, know when you qualify for the leave and what percentage of your income it might replace. 

Once you know your estimated costs for that first year, add your baby savings plan to your budget. The more you save before the baby arrives, the more financially prepared you will be and able to focus on the biggest priority – your new baby.