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Wondering how to budget for baby when money is tight? You’ve come to the right place!
I know it’s easy to get stressed out when you’re desperately trying to figure out how to budget for baby.
Pre-baby financial planning is an important part to have a solid plan for — so it’s an understandable concern to have.
But what makes babies expensive? Is it the outrageous cost of trying to use natural diapers?
Is it how because they are drinking baby formula? What is it?
Well, although babies CAN be expensive, they don’t always have to be.
To better help cover this specific topic, my friend Sahirenys Pierce, a millennial-financial professional, mom of 2, and Founder of Poised Finance + Lifestyle is here to share her TOP 3 Tips on how to prepare your finances for a new family addition!
But first, check out this video to learn how you can start building an emergency savings fund for big events (like having a baby, needing a new car, etc…)
First things first, how much does it cost to raise a baby?
According to a USDA Expenditures on Children by Families report in 2015, a married, middle-income, two-child family (earning around $59,200 and $107,400 annually) will spend $12,350 – $13,900 annually in the first year of their younger child’s life.
If those numbers make you uncomfortable, let’s take a deeper look at how we can better prepare.
You can try to use an online calculator to try and estimate the cost of raising a baby, however, there isn’t a calculator that can truly estimate every single thing related to baby-racking expenses.
Instead of trying to look up every single item from every single store, pick one place that will be most convenient for you to shop at whether it’s online or in-store and use those costs as a baseline to prep for your estimated baby-budget!
But before we jump straight into the budget building, let’s hear what Sahirenys from Poised Finance + Lifestyle has to say!
How to prepare for a baby financially – 3 Tips from a millennial finance mom:
According to Sahirenys, “The top three tips I would advise families to prepare for a baby financially are:
- Add baby expenses to their budget for diapers, baby wipes, formula, and other small needs. It is no surprise that these baby items cost a lot when bundled all together. The best thing to do is be realistic with the new expenses the baby will add to the family budget and pick how you’re going to buy it. For me, it was easiest to do a monthly subscription with Amazon Prime to have my baby items mailed to the house every month. It helped me stay clear from running out and being tempted to go to other stores to buy other items.
- Add some play money for your lifestyle budget for your little one. Your little one will still need clothes, shoes, and some fun money for activities. Make sure you’re realistic with how much you need to save for any big adventures or shopping sprees. I know I had to budget to buy clothes every 3 months to keep up with the growth spurts of my little ones.
- Add a First Aid Kit to your budget for unexpected expenses that might arise. This is pretty much for unexpected doctor visits, medicine, and any small expenses that are less than $100. Having this money just in case is very helpful when you have a tight budget because unexpected situations are going to be very common with kids. I remember constantly going to the doctor freaking out because I didn’t know what was wrong with my baby. Come to find out it was an ear infection that just needed some medicine to cure. All of that ended up costing $60 that I didn’t expect to spend or necessarily have in my budget.”
To get more information on the First Aid Kit Budget mentioned by Sahirenys in her tips above, visit The Poised Lifestyle – First Aid Kit
Now that we know her Top 3 Tips, let’s look at how we can apply these tips to our budget building as we prepare for baby!
How to prepare a budget plan for your family?
First things first, you can’t prepare a budget if you don’t know where your current money is going.
So if you don’t already, make sure you have a RELIABLE CHECKING or SAVINGS ACCOUNT in place.
If you’re looking to establish one, I personally use & recommend CHASE BANK.
Not only do they have some of the best accounts with many benefits to offer, but they have some of what I consider the best customer service around! Don’t forget to set up your account if you haven’t already.
The goal here is going to be to try and figure out your income to expense ratio. This means we will add up all your income and subtract your expenses.
If your expenses exceed your income, we need to make some major adjustments. If you’re breaking even, still need to make some adjustments. Now if you have a lot of money left over, you’re ahead of the game and we can really focus on setting aside some money for a rainy day aka your new baby!
Step 1 – Track your current spending habits for at least 2-3 months.
You will want to account for ALL spending when you are tracking. This means any quick Starbucks runs, a cheeseburger fix, and those TJ MAXX hauls – yep, those ALL count.
Once you have a better idea of where your money is going, you can cut back on excess spending. You can also consider lowering some of your monthly bills if you’re currently living beyond your means.
Once you’ve tracked all your spending, you can organize and add it up into the following categories below:
Step 2 – Organize your monthly expenses
Organizing your budget will have 2 parts: MANDATORY expenses & VARIABLE expenses.
Mandatory expenses will be ALL your bills that are a FIXED part of your day to day living. Meaning, you don’t pay this bill, there are some serious repercussions!
- Phone Bill(s)
- Car Payment(s)
- Loan Payments (student loans, personal loans, etc…)
- Renters Insurance
- Homeowners Insurance
- Trash Bill
- Water Bill
- Other Utilities
Variable expenses will be ALL of your non-fixed expenses (NON-NECESSITIES). This includes traveling, going out to eat, shopping, etc…
- Entertainment add-ons (Netflix, Sling, HULU, HBO, Disney, etc…)
- Beauty care (nails, hair, makeup)
- Recreational Parks
- Vacation Expenses
- Video Games
- Movie Outings
Step 3 – Calculate & write down your average monthly income.
Depending on how you get paid, you will need to add up ALL your net income. Obtaining an average monthly net income will help us determine where our budget needs to be.
Step 4 – Find the difference between your Income & your Expenses:
You’ll want to subtract your Total Expenses from your Income.
Example: Income – Total Expenses = _______________
If you end up with a negative number here, that means you should reevaluate your expenses as there’s probably some debt involved or actively accruing each month.
How? Subtract your fixed expenses from your income, if you have a negative still, you’re living above your means with JUST your fixed income. If you have some leftover money, you have some room to adjust your variable expenses.
If you end up with a zero or close to 0 balance, you’re probably just getting by each month. you should still reevaluate both fixed and variable income in the step above.
When you end up with excess monies, then you’re doing a great job staying ahead. This means you can likely look into adding a “PREPARING FOR BABY” savings fund!
Step 5 – Putting it all together and building your budget:
The way I have personally been advised and live by is to always make sure my husband and I have 6 months worth of our MANDATORY expenses set aside in an emergency fund.
Why? If my husband and I ever lost our jobs or something unfortunate happened, we want to make sure we could survive with enough time to get back on our feet! Being parents, it’s 100% crucial for us to always be prepared for anything.
Once you are able to adjust and determine your mandatory expenses, work towards slowly building up your savings to reach that number.
The cool part is you can 100% include baby expenses in your mandatory expenses – I mean at least for the first year you won’t be able to live without certain items for baby, so you might as well consider it a mandatory item.
If you have significant debt, I would highly suggest checking out Sahireny’s Get Debt-Free In 6 Steps Article – it is laid out to help you pay off your debt step-by-step, making it an easy plan to execute!
Other ways to financially prepare for a baby:
Accept hand-me-downs for baby when applicable.
One way to make things a little easier if to accept hand-me-downs. I know for us, we have SO many brand new unused clothing for our son because he just grew so quickly. Depending on whether or no we have another son, we will likely give our current clothes away or donate them.
In addition, I think it’s perfectly fine to accept gently used baby gear such as baby swings, rocking chairs, etc…
However, the one thing I would personally steer away from is car seats. Sometimes they get recalled or become outdated or just the cushions become thinner from the use, so for safety purposes, I’d opt for a new one.
Start meal-prepping weekly!
Meal prepping can save you a ton of money on your grocery bill. As long as you aren’t meal prepping extravagant 10+ ingredient dishes every day, you can easily save $50+ on your next grocery bill!
Personally, I enjoy making simple dishes. They aren’t always the most flashy or fancy, but they’re cheap, convenient, and really easy to whip up for my week! Not to mention, they’re generally pretty healthy and macro-friendly!
When preparing my meals I make sure I have a lean protein source, some carbs, 1 serving of vegetables and healthy fats per meal.
I’ll prepare all the meat in bulk. For example, if I get 4lbs of ground turkey, I’ll prepare 2lbs with one flavor and the other 2 with a different flavor. This way I can have some variety in the meals I’m eating.
I use that basic concept with every food category to keep my meals easy and cheap!
Look into baby companies that send free stuff!
When we were expecting, one of the first things I did was look up ‘how to get free baby stuff’.
I soon found there were some awesome (and easy) ways to score some free baby supplies!
I compiled an easy list below here for you to snag some baby freebies:
- Amazon Baby Registry – simply sign up & follow the instructions to qualify for a free baby welcome box!
- Target Baby Registry – Target will give you freebies JUST FOR SIGNING up for their baby registry, pretty rad right?!
- Noobie Box – Pay $5 for shipping and get a full box of baby goodies/samples for your little baby!
- Enfamil – sign up for the Enfamil samples and you’ll snag some great coupons + free baby formula!
- BabyBoxCo – sign up for some free parenting courses & get rewarded with freebies for watching them!
- Similac Strong Moms Kit – similar to Enfamil, just sign up and snag your goodies!
- Amazon Family Prime – Sign up for a FREE 30-day trial and get awesome savings such as 20% off diapers/wipes so you can stock up on what you need for baby at a discounted rate!
Lastly, if you’re a pregnant mama to be wondering how you can balance life with a baby or maybe how you can work from home, you should check out the TOP 100 WORKING MOM BLOGS for some inspiration (FitMommyStrong is also proud to be apart of that list)! You’ll find tons of mamas sharing their stories, advice, and tips to help expecting moms just like you!
What tips would YOU share about how to budget for baby when money is tight?
About the expert: Sahirenys Pierce
Sahirenys was born and raised in San Diego, CA where she resides with her husband and 2 babies. She’s passionate about helping spread the knowledge of personal finance & wants to make sure every family has a plan for success. She holds her degree in finance & financial planning from CSUN.