Budgeting for a new baby 

How much does a baby cost per month?

There are two things to consider when you’re pulling together a new-baby budget: one-time costs, and ongoing costs after that. While upfront costs will cover things like maternity care and the delivery of your baby in a hospital, thereafter you’ll be facing monthly ongoing costs on items like clothes, diapers, food, toys, clothes, and wipes. The list goes on, and there will always be additional costs that you might not think of — which is why it’s always helpful to add a little extra to your budgeting.   

Your first month after having a new baby is likely to be the most expensive because of the one-time costs. Of course, costs will vary massively depending on where you live and whether you have medical insurance, but it’s estimated that the average cost of your first month will be around $10,000.  

The couple of months after that you may see costs drop off, since most babies won’t require much aside from breastmilk, formula, and diapers. Along with vaccinations and other minor necessities, you can expect to pay an average of around $300 in months two and three.  

Beyond that, costs vary from month to month depending on the stage your baby is at. Things like childcare, new clothes, or babyproofing your home, will bring the cost up and down from month to month. Making a set plan for the things you think you’ll need on a monthly basis, and then multiplying the amount by 1.5, is a good way of covering off general expenses alongside any additional, unexpected costs.  

Average cost of diapers per month

Diapers can vary in cost depending on the brand you buy, and where you live. But generally, experts advise a budget of at least $1,000 for diapers and $450 for wipes in the first year — so around $120 per month. For context, your baby is likely to use around 3,500 diapers in his or her first year.

How much does a baby cost in the first year?

Everyone’s circumstances are different, which is why putting a number on the cost of a baby in the first year is so difficult. Alongside things like where you live, and the types of medical bills that you accrue, you should think about whether you, as parents, will be headed straight back to work, or if one of you will stay at home. While the latter will no doubt reduce the family’s income, it will mean a reduction in childcare costs. Whether this makes viable financial sense will vary from family to family.  

Varying studies suggest that a baby’s first year can cost parents between $20,000 and $50,000, depending on the above factors. After this though, the cost will begin to reduce. 

What about after that expensive first year of raising a baby? Without the first-time costs, you can expect to be paying a little less each month. The 2022 Brookings Institution research estimates that a child will cost around $17,000 a year until they are 18, though this includes the higher-end payments of the first year.  

But do you live in a leafy Midwest suburb, or deep in an urban epicenter? Are you both working, or is one of you staying home to look after the baby? The answers to these types of questions will have big implications on how you budget for a new baby.  

Average cost of raising a child

What about after that expensive first year of raising a baby? Without the first-time costs, you can expect to be paying a little less each month. The 2022 Brookings Institution research estimates that a child will cost around $17,000 a year until they are 18, though this includes the higher-end payments of the first year.  

But do you live in a leafy Midwest suburb, or deep in an urban epicenter? Are you both working, or is one of you staying home to look after the baby? The answers to these types of questions will have big implications on how you budget for a new baby.  

List of monthly child expenses

What are the brackets that you’ll find yourself spending money on for your child? Obviously, variables depend on things like your income and the age of your child, but generally your spending will cover: 

• Housing 

• Education 

• Food 

• Transportation 

• Health 

• Clothes 

• Other miscellaneous costs 

This calculator, created by the Washington Post, offers a great insight into the sort of costs you can expect to pay each year depending on your income and your child’s age.  

How to prepare for a baby financially

What’s clear is that having a baby is going to cost you. And not just in the short term, either. With such a large chunk of your finances needed for your baby, it’s helpful to implement strategies to help you reduce expenses and ensure you’re prepared for the unexpected. These can include: 

• Forward planning: This may go without saying, but making sure you have a genuine financial plan to cover all of the key costs will be crucial to managing your new lifestyle.  

• Prioritize: Always make sure that first and foremost, you are buying what your baby needs. Make sure you can buy the essentials first — like formula or food, new clothes or vaccinations — before looking at any luxuries.  

• Rainy day fund: Approaching your new child’s costs on a month-by-month basis is viable, but you also have to be prepared for the unexpected. If you have money set aside, you’ll still be able to manage if you encounter a one-off cost, such as a medical bill, without it eating into your monthly budget.  

• Research additional saving methods: Whether you’re putting money away for your child’s education in a 529 plan, or reducing your tax liability through the Child Tax Credit, make sure you are consistently making the most of all financial aid methods available to you.  

Making sure your family is financially secure is many people’s top priority. Find your perfect financial advisor to support you in your saving journey now.