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What You Need to Know When Planning for a Baby Financially

January 03, 2020 | 6 min. read

Follow these money-saving tips to prepare for your new family member.

Millennials are waiting longer than ever to have children, and some are putting it off altogether. According to a report by the CDC, the U.S. birthrate is the lowest it has been in over 30 years. The report’s findings show that millennials are hesitating due to financial reasons.

Although the U.S. economy is doing well, young adults fear they won’t be able to afford a child due to high insurance costs, childcare expenses and lack of parental leave. According to a 2015 survey by the USDA, a middle income family will spend nearly $13,000 annually per child. 

With the expense involved, it makes sense that millennials are waiting to start a family. However, when the time is right and you find yourself planning for a baby, it’s important to know that it’s possible to welcome a new addition without going into debt. Planning for a baby financially is one of the most powerful things you can do for the future of your family. Here’s how to begin.

Things You Need to Know When Planning for A Baby Financially

  1. Examine your Health Insurance Plan

Now is the time to take a good look at your health insurance plan and see if what you have is the best option for your growing family. Babies require a lot of medical care, especially in the first year, so it’s important to have good coverage. Without it, you may have to pay out-of-pocket costs that can quickly send you into debt. Because the birth or adoption of a child allows you to qualify for a special enrollment option, you can make changes outside of the annual enrollment period. Remember to take into account prenatal costs before the baby arrives, too.

2. Buy Secondhand

One of the best ways to stick to a budget while preparing for a new family member is to buy gently used items. Babies grow quickly, especially during the first year. Buying clothing secondhand is a great way to save money on items you know they will only wear a handful of times before they outgrow them. While thrift stores are a great option, you can also get free items by asking friends or family members whose little ones have grown if they would like to get rid of any old clothes or other items.

3. Identify Necessary vs. Frivolous Expenses

When it’s your first baby, new parents often think everything is necessary. It’s hard to separate what you need from what would be nice to have when you’ve never had a child before. Ask some of the parents you know what their essentials are and sort online shopping by most frequently purchased to pare down necessary expenses. A car seat, a safe place to sleep, clothes, sanitary items and food are the main categories you should focus on.

4. Buy Items in Bulk

You can buy items in bulk at big box warehouse clubs like Costco or Sam’s Club, which can save you money in the long run. Buying diapers, wipes and formula in bulk is usually cheaper than individually purchasing items. But wait to stock up until you know what brands your baby prefers. Each child is unique, and you won’t know if they have an allergy or sensitivity until you introduce them to a product.

5. Think About Longevity

When prepping for a baby, think about how much use you will get out of the items you are purchasing until your child is too old for them. Cribs are often pricey, so look for one that converts into a toddler bed. Research other big-ticket items like car seats and strollers to make sure your baby will be able to use them for as long as possible. Conversely, the short lifespan of items your baby can only use for a few months might cause purchases such as a bassinet, swing or infant bathtub to move to the bottom of the list.

6. Call Your Insurance for a Breast Pump

You can easily save hundreds of dollars by getting your breast pump covered through your health insurance. Call your insurance company to see if they cover any breast pumps and take advantage of this cost-saving resource. Formula is expensive, so breastfeeding can save you hundreds in the first year alone.

Adding a new member to your family is a time of joy and discovery but planning for a baby financially can be tricky. Let us help. Being prepared for your new addition will give you peace of mind as you begin your journey into parenthood. To speak with one of our Financial Advisors about planning for this next adventure, visit

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