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The Real Cost Of Having A Baby


How much does it cost to have a baby? Plenty, but that doesn't necessarily mean you can't afford kids.

For many of you, crying babies and babbling toddlers are the last things on your mind. If you’re like I was “before child”, when you see a family with a gaggle of kids in line at a store, you pick another register—quick. Been there.

Of course now that I’m a daddy, my 18-month old daughter Molly is my world. But becoming a parent was something I simply could not imagine before it happened. For example, if you’re still childless, you probably regularly experience:

  • Sleeping past 7:00 a.m.
  • Frequent nights out with friends.
  • Sex that isn’t scheduled.
  • Quiet time.
  • Unstained clothes.
  • Extra money in your budget.

Enjoy these things while you can, because once you have a baby, you’ll say goodbye to a lot of freedom, free time, and free cash.

THE HIGH COST OF HAVING A BABY

Not surprisingly, children cost money. Quite a bit of it.

Lots of people have a baby first and ask questions about the cost later. For example: “How will I feed this baby?” But the mere fact that you’re reading this article means you are probably putting some serious thought into the decision to have children.

You want to make sure you’re ready. That you’re with the right partner. That you’re at a good place in your career. That you can provide a good home. That you’re done traveling/job-hopping/being carefree. And that you can afford it.

When you start to look at all those factors, however, you can always find some reason you’re not ready to have kids.

Lauren and I recognized this. After we got married, we decided that there would never be a perfect time to have kids. So we decided to just do it. Nature did its thing, and Molly was born one year and three days after our wedding.

At the risk of oversimplifying the answer to a complex question, I think that if you’re even taking the time to wonder if you’re financially ready to have a baby…you are better prepared than most. Life is short, and for most people, kids are a big part of life. So you should do it.

That said, how much does raising children cost? How much does it cost to have a baby? To raise a baby for a year?

Trying to pin this down is like talking about wedding costs in terms of the average wedding (about $29,000). Some people get married for the cost of the license and a J.P.; others spend six figures. Some parents hire nannies for $180,000 a year.

One thing is for sure, if your budget is already stretched without a baby, adding one to the family will put a strain on your finances. But to help put the cost of having a baby in perspective, here are some of the costs we experienced from the first year and a half of parenthood.

HOW MUCH DOES A BABY COST?: THE FIRST 18 MONTHS

A chart showing how much it costs to raise a baby in the first year.

Prenatal care and childbirth expenses. When Lauren was pregnant she was working for the State of Maine, and we were lucky to be covered by her Cadillac health insurance plan. Our out-of-pocket healthcare costs for the entire pregnancy and childbirth totaled only $250. To put in perspective how awesome this was, in 2009 the average cost of a hospital vaginal childbirth without complications in the United States was $9,617, according to Childbirth Connection. Costs escalate if there are complications or the mother requires a cesarean. Even with health insurance, some plans may require you meet your deductible for childbirth expenses, meaning bills of $1,000-$2,000 or more.

A bigger home? What we saved on medical expenses, we made up for by taking on a mortgage payment. On the day we went to the hospital to have Molly, we put an offer on a house. We didn’t need to move because we were having a baby, but we did want more space. Our condo was cramped with just the two of us with little room for a little one to move around. The time was right to buy a home for others reasons, too, so we did. Still, it’s likely that we would not have moved if we didn’t have Molly.

Maternity/paternity leave. It’s no secret that United States employees enjoy far less vacation than our European counterparts; prospective moms might also be horrified to know that U.S. maternity leave policies are among the worst. (In Sweden, by the way, new moms and dads get 16 months paid parental leave.)

Although U.S. law mandates employers give new moms twelve weeks of unpaid maternity leave, many offer just that—the minimum, without pay.

You can plan for this time by saving accrued vacation and sick days, but realize that you may face several weeks or more without the income to which you’re accustomed. You should prepare to limit your expenses during this time or, if you must, prepare to draw on your emergency fund.

All the gear. Babies come with a lot of gear. Here’s a sample of some of the stuff we’ve acquired for just one kid in just 18 months: a crib, a pack-‘n-play, two strollers, four carseats, a Moses basket, several types of bouncy seats, a changing table, a diaper bag, sippy cups and snack traps, bottles and binkies, burp cloths and a Diaper Genie. (That last one keeps your house from smelling like poo and, like printer ink, requires pricey proprietary liners).

Total cost of all this stuff? I’ll venture a guess at about $2,000, but I’m not including clothes and consumables, which we’ll get to.

To be fair, we’re lucky enough to live comfortably and afford luxuries like a second stroller for easier travel and a carseat for each car. Obviously you can get by with less, but I would guess that any new parent is looking at about $500-$1,000 in essential baby gear.

Diapers. This is where things start to get scary for your budget. Brand name diapers cost roughly $0.25 to $0.30 each and you can expect to use between 6 and 10 a day. You can save by buying in bulk and we switched to Target-brand to save more. Still, you’ll spend $40-$50 a month on diapers. (I know some people use cloth diapers which, if you launder them yourselves, can cut out this expense.)

Formula and food. If you think diapers are expensive, wait until we talk about formula. Again, there’s a way around this: mom can breastfeed which is supposed to be better for the baby anyway. Lauren did this for the first few months until she went back to work at which point we began buying formula at a cost of roughly $25 for a can of powder which lasted about a week, give or take. Again, we were able to find a generic brand that Molly liked that cut this figure in half, but our cost was still about $55 a month.

The good news is you only need the stuff for a year or so. Now that Molly eats real food we don’t have to buy formula, but we do buy more food. Kids may be small, but they’re growing; they eat a lot!

Clothes. Babies grow a half-dozen sizes or more in their first couple of years. What’s more, they rarely keep an outfit clean all day. So you’re looking at a lot of clothes. Fortunately it’s easy to save on clothes by asking relatives for hand-me-downs and shopping at widely available kids’ consignment shops. Still, plan to spend a couple hundred dollars a year clothing each child.

Daycare. When you have kids, working parents face an enormous choice: give up one source of income to stay home or continue working and put your baby in daycare. If you will both continue to work and are adding daycare to your budget, prepare for a shock: the cost of full-time childcare can be akin to a mortgage payment. We pay about $1,200 a month, which is high, but daycare costs can get even higher in some states. Still, the alternative can be even more traumatic to your bottom line; unless you’re already in the habit of saving one partner’s entire paycheck, suddenly going from two paychecks to one will take some adjustment.

Baby’s Healthcare. Again, this is where health insurance is oh-so-important. The best plans cover “well visits” for infants. Should your little one have special medical needs, however, you may face more out-of-pocket expenses.

Life and long-term disability insurance. You don’t need life insurance until somebody depends on your income (a non-employed spouse or a child). Should you die, you don’t want your surviving spouse to worry about paying for living and childcare expenses without your income.

Term life insurance is the least expensive and the best choice…you can buy it online or through a local independent insurance agent. A healthy, non-smoking 30-year old should be able to buy a $500,000 30-year term policy for less than $50 a month.

You may also want to purchase long-term disability insurance which can replace a portion of your income if you suffer an injury or illness that prevents you from working. Rates vary based by age, health, occupation, and “elimination period”, how many months you can live off your own savings before benefits kick in.

Babysitters. When you have a kid, dates with your partner and nights out with friends get a heck of a lot more expensive if you have to add a babysitter to the bill. On the other hand, scheduling and paying a babysitter may force you to go out less and help your bottom line. We’ll call this a wash.

And then there’s college! If you think higher education is expensive now, the projected average cost of a four-year college education in 20 years will make your head spin: $89,093 (2009 dollars) for four years according to a New York Times college cost calculator. Assuming 3% inflation, in 2032 dollars, that’s something like $161,000. So for anybody who wants to foot the entire tuition bill for a baby born today, that means saving at least $300 a month every month for the next 22 years and hoping for at least a 7% annual return.

SO, YOU STILL WANT A BABY?

Don’t let this scare you. Yes, the cost of having a baby adds up. And although nothing can prepare you for the challenges and joys of becoming a parent, you can prepare financially. Essentially, that means having something set aside and making room in your budget for new expenses. If you want kids, you don’t have to put them off until you’ve banked $100 grand. But having a stable income, health insurance, emergency savings, and room in your budget for diapers will help you spend less time worrying about money and more time enjoying your new family.

What about you? If you’re a parent, how has it changed your finances? If you’re trying to plan financially for kids, what worries you?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. Katherine says:

    You only get those awesome, unpaid 12 weeks IF your employer is big enough. If you’re lucky enough to work for a small business, you’re not entitled to anything. One way to defray the cost here is to sign up for short-term disability before you even think of getting pregnant. That way you have some income, again, IF you even get any leave.

  2. thanks for writing this article. its a very important topic and i have been wondering what the true cost of a child would be. i really appreciate your research and data!

  3. Thanks for sharing this. I am in a different category, though, as I want to have kids but plan to adopt. I’ve done some basic research on my own, but I would love to read more about the costs associated with adoption.

  4. Christina says:

    I enjoyed the article as well! :) We share similar experiences-married then pregnant within 3 months, had our baby boy exactly a year later (he’ll be 18 months on 4/8/12), and put an offer on a house about a month before he was born. What a coinkydink.

    We have definitely struggled since adding another family member-you wouldn’t think the teeny details from the extra gas to drop him off/pick him up at daycare to the extra utilities and costs of maintaining clean clothes for him would break the bank, but they add up! We are contemplating trying for another one in the near future but we are definitely more prepared, financially this time!

  5. I was very worried about my finances before I had my daughter. I think it is important to try to prepare yourself for a child, but you never really know what to expect. Every kid is different and has different needs that will have an impact on your bank account. I do think that having a child forced me and my husband to think more seriously about our future. We couldn’t play with our finances any more and had to stop pushing off savings goals because now we had someone relying on us.

  6. Be blessed you had a healthy baby and had no issues getting pregnant. My wife and I have been struggling with fertility issues and we are at the point where we are looking at adoption ($30k) or egg donor IVF ($30k). We wish we only had to worry about diaper and food costs..

  7. I’ve been absolutely fed up with people telling my husband and I “You’ll NEVER have enough money… just go ahead and get pregnant!” But really seriously, we do not overspend on anything. We do not go out. Perhaps he might buy a camera lens, or I might enter a race (I run) which is a couple hundred over the course of a year. There is nowhere for us to currently cut back. We have exactly enough for our own expenses. Nothing more. I cannot pull $1000 per month out of thin air.

    I wish I could glue this article to the forehead of every person who has been telling us to just do it anyway.

    It’s very frustrating, because at 31 my clock is going absolutely crazy. We’d like kids. Just in this economic environment, until something changes with my husband’s line of work. It cannot happen.

  8. This is why I had a vasectomy. I value my income, mental health and well being associated with the peace and carefree lifestyle that comes with not having a child to look after.

  9. Overall this is a great article! Thank you. I do however have a question on why you call finding a babysitter for date nights a “wash”? How do you not find time to plan cheap ways to spend quality time working on your relationship apart from your children with your wife? Or even more importantly a healthy relationship with yourself? If you have a strong enough support group (grandparents, friends with kids, sisters with kids) you can find a way to take a night off by offering a babysitting trade.
    Just a few things to think about from a woman’s perspective: new maternity clothes, cost of pads and feminine hygiene products for after the birth, breast pump and liners, check-ups after c-section births, postpartum depression therapy and medication.
    You’re right, it all depends on your insurance, and it sounds like your wife has pretty good coverage. But you forgot some very important things before and after in terms of your wife’s needs. I’d be interested to see someones itemized list after a hospital birth cesarean or natural, with or without healthcare and follow up visits foe the mother and child.

    • David Weliver says:

      I called a babysitter a wash because although we now have to pay a babysitter to get out alone; we can’t go out to dinner nearly as much as we used to pre-kids, so while we pay a babysitter, we don’t spend that money on dining out anymore.

      Unfortunately we live two hours for the nearest family, so while grandparents help out on special occasions, it’s not as common as we might like. The babysitter trade is a good idea and I’m sure as our daughter gets a bit older we’ll do that more often!

  10. Ugh…add this to the pile of reasons why even the thought of having kids goes farther and farther out of reach.

    It _seems_ like a good idea on the surface, but between all of these costs (not to mention the emotional, physical, and spiritual costs), plus the costs of a wedding (and 50% chance of divorce), plus the chance that they’ll wind up running with the wrong crowd and turn out doing the wrong thing (or throwing you in jail by falsely accusing you of stuff), it just doesn’t seem worth it (especially in this economy).

    Oh well, it is what it is! Good article! Will have to keep this handy to show to people who are thinking about having kids ;-)

  11. David Weliver says:

    Correction: This post originally stated that, according to a New York Times calculator, the projected average annual cost of college tuition in 18 years would be about $90,000. That was the total cost in inflation-adjusted dollars, not the annual cost in actual dollars. This section has been corrected and the table will be updated as well. Thanks to Greg for bringing this to my attention.

  12. The maternity leave is the big one from my ranch. We just decided to let my wife stay out a second year.

    Other than that, we really haven’t seen a large increase in costs. We taken a lot of hand-me-downs. I’d say now that my oldest is 3, we are just starting to see the grocery bill get a little more expensive, but nothing to write home about.

  13. And these are all costs for a healthy baby. If you have a child with a disability or a chronic illness, all bets are off. I’ve read stories of families with good jobs, good insurance, and good savings who were just wiped out by something like that. It’s quite sobering.

  14. Move to a country with more human-friendly laws, raise a child and then consider if you even want to go back? There are countries in the EU with guranteed 12 months+ paid maternity leave, free healthcare for both mother and child, good public transport (so you can just use one stroller (or even a baby sling) everywhere), free education (including college, even up to PhD, if the kid is smart at or above average), free daycare and also a state monetary support (both one-time support and child birth and some monthly payments for the first 12 month). But yes, you will have to pay a few percent more in taxes, so there are tradeoffs.

  15. Sarah Davis says:

    I probably shouldn’t be reading this during one of the few naps that my 7 week old is taking. Yikes! But what a great article. I’ve found it to be even tougher for the self-employed. My OBGYN was so excited to tell me that I’d be getting 8 weeks of disability instead of 6 due to my C-section, except I really ended up with 0 instead of 0. But self-employed is the life I enjoy. And I agree, overall definitely worth it!

  16. This post is on a subject very much on my mind these days. I have a 3-month-old and before she was born I did my own blog post on the cost of all the items purchased leading up to her birth. Fortunately, the vast majority of the items purchased were given to us as gifts (people love to buy baby gifts!), and several items were hand-me-downs, so we have been fortunate to not have spent much on her so far. We’re using cloth diapers (nearly all given as gifts), breastfeeding, and trying to resist the urge to buy lots of baby products in general. I agree with the above poster who mentioned the need to factor in items you may not think of as typical baby expenses, such as maternity clothes, renting a hospital breastpump (better deal for me than buying one), nursing bras/tanks, prenatal vitamins, baby-related classes (childbirth class, childcare class), etc.

    Because health care costs were mentioned several times in the post and comments, let me say that while I had a 100% “normal” pregnancy, I did wind up having a c-section and our daughter was in the NICU for seven days following her birth. The total cost of my care and my daughter’s care in the hospital? At least $17,818.81 for me, $48,217.12 for baby, making that a grand total of $66,035.93 (I say “at least” because we just got another statement in the mail yesterday). But because we have awesome health insurance we only paid $100 for my entire pregnancy, including labor and delivery and the NICU. It makes me feel so fortunate to have this amazing plan and simultaneously sick to my stomach for anyone who doesn’t have insurance and, god forbid, must deal with a child in the NICU like we did.

    No matter what, don’t let money scare you away from having children. Just be well prepared financially. My husband and I spent five years saving for our baby (and both working part-time jobs in addition to our full-time jobs), and because of that hard work I now have the privilege of taking a year off work to be at home with her. It can be done. And children are pretty great.

  17. I can’t believe that you have to pay upwards of 10K to have a baby in the States (if everything goes smoothly). I am really grateful that I live in Canada for that reason.

  18. I worked at a bank for three years, and qualified for 12 weeks PAID maternity leave. It was 80% paid for the first 6 weeks, and then I believe 55% after that. My employer paid a percentage and the state of California paid a percentage under disability (which I ceased to qualify for after my 6-week postpartum check up checked-out).
    Our daughter is 17 months old at the time I write this, but she hasn’t really made a dent yet in our finances. I am still breastfeeding (WHO recommends a min of 2 years), and her solid meals are generally food shared off our own plates.
    We’ve been lucky to get hand-me-downs for nearly all her clothes and several of her toys.
    My health care (again, through the bank where I worked as a teller- the lowest level job offered), paid for all my prenatal care and my labor and delivery with the exception of $1000, because I decided to stay at the hospital an additional 2 nights (at $500 per night) as the nurses advised me. Pricey, but I thought it was worth it to have my food brought to me three times a day, my bleeding checked on, and help with breastfeeding whenever I had a question.
    Baby gear is mostly optional. We spent $160 on a car seat (NOT optional), and a mere $50 on a stroller at Target, which we use for about an hour a day, 5 days a week (part of my exercise). That cheap-o stroller has gone for over 250 miles since we got it, and has carried a full basket of groceries nearly 5 days a week for over a year.
    My parents gifted us a crib, but she still sleeps in the bed with us.
    We’ve lived in a one-bedroom apartment most of her life, but are going to upgrade to a 2 bedroom this coming January. We live in the bay area, where it’s far more common for small or young families to live in apartments, so it’s no big deal to us.
    The most expensive things have been shoes (which she outgrows every couple weeks), and diapers.

  19. David Cole says:

    Good article for sure. Me and the wife really want a kid. But I am afraid that it will make us not be able to save as much or have all the freedoms we have now. We currently live off just my income as my wife is going to school and part time jobs are hard to find where I am located. I am military so all hospital bills are paid for and the baby would have good coverage for insurance. Right now we are doing good and have 3.5 months of emergency money. So I am not sure what other goals I should have before trying to have a baby. I max out the controbutions of $5,000 to our Roth IRA. We only have $8,300 in debt for my wife’s car and it is a 2008. After all in all we still have around $400 a month of money that we just put aside for things in the future we might want/need like cars or a house. So really do you guys think im financially ready for a baby? We have a 3 bedroom house now that we rent on base that is less than half a mile from my work. I own my car and am going to start paying more on the wifes. I’m shooting to pay it off in the next 2 years. Once i do that will free up the car payment of $220. There is only one more thing, I might be getting out in the next 3 years. This is still not certain but an option. Any input or opinions would be great for us.