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Three steps to create a baby budget in 2021

How to budget for a baby before your newborn arrives.

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Shirley Liu
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Expecting a new baby is wonderfully exciting, but it can also be daunting — especially when it comes to your finances. A tiny new member of the family can mean a heap of additional costs and expenses.

The best way to avoid the financial shock of these costs is to prepare your baby budget for the changes before they arrive.

How to prepare a baby budget when you’re expecting

1. Starting point snapshot

In order to understand what your financial situation might look like after your baby is born, you’ll need to have a clear idea of where you stand right now. Sit down and write out your current household income and expenses. Include any income source that currently makes its way into the house, and be brutally honest about your expenses.

Think about what you plan to do once the baby is born. Do you plan to stop working for a time, or cut back to part-time hours? Both of these options will affect your income, so you may need to adjust your numbers accordingly.

If you’re currently getting by just fine financially, that’s a great start! But if your finances are tight each month, it’s time to look at some areas within your expenses list where you could cut back.

2. Trimming the budget

Before baby is born, it’s quite normal for many people to spend money on items they want. But once your new family member arrives, expect your spending habits to change.

Look for areas where you can trim your spending, such as weekly meals out, daily morning coffees, after-work drinks or even a pricey cable subscription. Once you’ve done this, it’s time to add in baby costs.

Think about regular expenses like diapers, baby formula, clothing and toys. Then add in the cost of larger one-time purchases, like a crib, changing table, car seat and stroller.

No matter how realistic you think you’re being with your baby costs, add a little more. Even the most frugal parents can easily end up spending a lot more than they’d planned on baby preparations.

3. Savings plan

No matter when your baby is due, it’s never too early or too late to start a savings plan — even cutting a few dollars out of your expenses each week can be a great way to get started. Compare savings accounts for your baby to find the best fit for your family.

The key to getting your savings plan right is to work out approximately how much cash you think you’ll need to buy all your baby supplies. Then work out ways you can potentially save money on your purchases and get the same items at a reduced cost.

You may be able to pay off some larger items over the term of your pregnancy. Other items may be able to wait until after baby has arrived.

Then there’s the issue of covering your regular bills and payments. If you already know you’re going to lose some of your regular household income, it’s important to start saving as soon as you can. The more you can put aside, the easier the transition will be to taking extended time off work or going part-time.

We’ll look at some expenses you might want to think about in more detail throughout this article.

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What are your baby’s needs?

When creating your budget and shopping list for baby, try to be realistic about what you’ll use regularly, what’s truly a necessity and what you could probably do without.

If you’re like most parents, you’ll want to start stocking the nursery with baby items before the due date gets close. This is a great way to be sure that everything’s ready and waiting for you the moment you get home from the hospital.

Let’s look at some of the things you’ll need in more detail:

Infant car seat

From the moment you leave the hospital, you’ll need a way to get baby home safely. This means finding the best infant car seat that meets current safety standards. These seats are designed to keep your baby safe, so it’s not always a good idea to go bargain hunting for a major purchase like this. And keep in mind that car seats do expire, so pay attention to expiration dates when shopping.

Stroller

Strollers can range in price dramatically, so choose one that best suits your needs and that will be comfy for baby. You’ll be the one collapsing the stroller and hoisting it up into the car wherever you go, so be sure it’s easy to fold and not too heavy for you to lift. Compare some of the most popular strollers to narrow down your search.

Crib

You’ll find a huge selection of cribs in a wide range of prices and styles. If you’re planning on using the crib again as your family continues to grow, you might want to invest a little more in a high-quality, durable model that’s likely to stand the test of time.

Changing table

Setting up a spot in the nursery specifically for diaper changes can make your life as a new parent a lot easier. Changing tables offer a sturdy, safe place for baby to lie, as well as ample storage for diapers, wipes and ointment.

Bassinet

Many parents prefer to have baby sleep in the same room with them for the first few weeks after coming home. If you choose a portable bassinet, you can easily move it from room to room. This allows baby to sleep in the same room as you, no matter where you are in the house.

High chair

As your baby grows, you’ll need somewhere for them to sit safely while trying solid foods. You’ll find a range of prices and types, so compare a few top high chair options to help you find the best fit for baby and you.

Baby bath

As soon as your baby’s umbilical cord heals up properly, you’re able to start bathing them in their own tub. A baby bath is practical enough to move to wherever is convenient for you. It’s also much safer for baby — and easier on you — than trying to wash in an adult-sized bath.

Clothing

Babies do grow very quickly, so think about buying only what you need in tiny infant sizes. Besides, some babies grow much faster than others, so you may find you need larger sizes sooner than you’d expected.

Baby linens

Baby is going to need several changes of linens handy, so consider stocking up on crib sheets, a quilt or blanket, swaddling blankets and baby towels and washcloths.

Baby supplies
The more necessities you can buy before baby comes, the easier your life will be once you have a newborn to tend to. Consider stocking up on these items before baby comes home.
  • Diapers. Disposable diapers can be incredibly convenient, but are also very expensive. Start out with a few different brands and fits to see which work best for you and baby. Avoid filling your nursery with one specific kind of diapers, only to find out later that your baby needs a different fit.
  • Diaper disposal bags. You’re going to go through a lot of these, so there’s no harm in stocking up. While you’re at it, think about a small garbage can with a lid to put next to the changing table.
  • Changing table supplies. You’re going to need a handy supply of baby wipes, diaper rash cream and baby powder.
  • Bottles and formula. Start with four to six small bottles for the first few months. As baby grows, you’ll need to upgrade to larger ones. If you’re not sure where to start, check out some of the best baby bottles on the market.
  • Pacifiers. Have a few pacifiers on hand for when baby comes home, but let them decide which brand and type they like best before buying in bulk.
  • Bath supplies. Stock up on bath time supplies like baby shampoo, baby soap, baby oil, a healing salve — like Vaseline — and moisturizing cream.
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What parents can do to minimize baby expenses

The more you can reduce your baby costs, the more money you’ll have left over to pay for other necessities or extras. This could mean the difference between taking a bit more time off work to spend with baby, or it could mean less of a financial struggle in those first few months.

Here are a few tips to help you save on baby essentials.

Diapers

While disposable diapers are convenient, you can save a fortune by using cloth diapers instead. These days, they’re made with Velcro sides or buttons, so there’s no risk of sticking baby with a sharp pin. Yes, you’ll be spending a bit more time washing dirty diapers, but the cost of a little extra laundry detergent is no match for the price of disposable diapers.

Use coupons and samples

Regardless of what’s on your shopping list, ask your hospital, doctor and any company or store you regularly shop at for coupons, discounts or samples. A small discount can go a long way on large purchases or things you purchase frequently.

Go second hand

Rather than buying new clothes for your quickly-growing child, look for hand-me-downs from older siblings, friends or family to cut costs. And this approach doesn’t just apply to clothes. Aim to buy as much used baby gear as possible. Cribs, strollers, rockers and most other equipment works the same whether it’s new or used.

Nursery necessities

Trying buying a few nursery items each time you shop, so you can stretch out the cost over a period of months, making it a little more affordable for you. If you’re going to stick to disposable diapers, avoid buying a bunch of the same size or brand until baby arrives to reduce waste.

Other items like wipes, diaper rash cream, bath products, books and toys can be purchased before baby comes without much risk of them not working out.

Baby books and toys

There’s no shortage of books and toys for babies on the market, but it’s easy to get carried away when shopping. If you’re planning a baby shower, you might be gifted with all the books and toys you need for a long while. Remember that babies quickly grow out of toys, too, so try to gradually add new items to the nursery as baby grows.

Check what benefits you’re entitled to

Once your baby is born, you may be eligible for some government-assisted benefits, such as food stamps, Welfare, Temporary Assistance for Needy Families (TANF) or Children’s Health Insurance Program (CHIP). Look into your options and see which ones you might be able to use.

Put spare change to good use

You can manage to save quite a bit of extra cash by putting your spare change into a jar. It might sound trivial, but you can accumulate a nice amount of cash this way.

Just be sure you take your change into the bank and deposit it into an interest-bearing account regularly. It’s better in the bank earning interest than sitting in the jar, tempting you to spend it.

Buy in bulk

For items like diapers or baby food that you know you’ll be using for the foreseeable future, buying in bulk can save a lot of money.

Child care

Take advantage of any free childcare you can get. Daycare can be expensive, so having your close family watch your child can help you save money. And while it’s a huge decision, you could avoid spending a lot of money on daycare if you or your partner are able to take time off work to stay at home.

Avoid add-ons

Hospitals tend to charge for every little thing like turning on your TV, opting for a private room, staying an extra day and so on. Be sure to avoid any unnecessary extras and consider speaking to the billing department before you go home to find out if any charges can be reduced or removed.

Reduce debts

One of the biggest expenses in almost every household is making repayments on outstanding debts. If you’re serious about keeping your expenses down to a minimum before baby arrives, look at ways to reduce your debt.

Think about this: Your credit card repayments are calculated as a percentage of the balance owing. If you can reduce that balance, the repayment amounts also drop accordingly. This can be a great way to extend your budget before baby comes home from the hospital.

Look for ways you can make as many extra payments on credit cards, personal loans or mortgages before the big day.

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How family and friends can help you budget for baby’s needs

It’s quite normal for friends and family to start buying baby gifts the moment they hear the exciting news. But if you really want to minimize your baby expenses, perhaps a subtle suggestion or two about things you need could help.

You can suggest that friends limit gifts to baby supplies you know you’ll need, or ask them to put together gift baskets filled with smaller items, like pacifiers or bottles. This will help to cut down how much you spend on those items.

You also have the option of throwing a baby shower, or perhaps even a friend or family member will arrange one for you. This is a great opportunity for them to help you out with lots of baby goodies and toys. While you’re at it, creating a registry can allow family and friends to pitch in for your essentials directly.

How to stick to your budget when having a baby

Let’s be honest: Sometimes the most sensible and frugal parents-to-be can get carried away decking out a nursery for a new baby, even after taking the time and effort to create a budget. Now it’s time to work out how you’re going to stick to those plans.

1. Keep the budget with you

There are some really handy smartphone apps that help you control your budget. If you develop a habit of entering in everything you spend while you’re out and about, you can be free from remembering or guessing how much you spent later. You’ll be able to see your tally right away, which will show you how much you have left to spend for the week.

2. Pay yourself first

If you’ve worked out your budget and you know exactly how much you should have left over to put into savings, pay this amount of money into your savings account first. The rest of your income goes towards your bills and expenses. Don’t fall into the trap of using up your allocated savings on added unnecessary expenses.

3. Challenge yourself

If your goal is to put away $50 in savings every paycheck, challenge yourself to find ways to increase that amount. This might only be a few extra dollars for the change tin.

It might mean cutting out a cup of coffee and adding an extra $5. No matter how much it is, make it fun and find ways to challenge yourself to exceed your goals.

4. Cut costs

Develop some valuable cost-cutting habits and use them to help reduce your expenses. Think about how much you pay for the things you already use and see if other providers are offering a better value for the money or have cheaper alternatives. Keep an eye out for coupons and watch for sales on items you normally buy.

5. Cash only

If you know your budget only allows for $150 for grocery shopping, withdraw that amount of cash and leave the credit cards at home. You’ll be surprised how much more careful you are with your grocery choices when you know you’re stuck with a cash-only limit.

6. Remove temptations

One of the biggest killers for any budget is the availability of easy credit, so remove that temptation. Leave the credit cards at home when you shop. Make a deal with yourself that you’re only going to pay for things with cash or from your savings. Make it hard for yourself to give in to those impulse purchases.

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Compare budgeting software

NameAvg. price per year (USD)Free version?Platforms
Personal Capital
FreeYesPC
Mac
iOS
Android		Go to site
CountAbout
CountAbout		$9.99NoPC
Mac
iOS
Android		Read review
Mint
Mint		FreeYesPC
Mac
iOS
Android		Read review
You Need a Budget (YNAB)
You Need a Budget (YNAB)		$84NoPC
Mac
iOS
Android		Read review
Quicken
Quicken		$35.99NoPC
Mac
iOS
Android		Read review
Goodbudget
Goodbudget		FreeYesPC
Mac
iOS
Android		Read review
EveryDollar
$129.99YesPC
Mac
iOS
Android		Read review
BudgetPulse
BudgetPulse		FreeYesPC
Mac
PocketGuard
PocketGuard		$3.99YesPC
Mac
iOS
Android
Wally
Wally		FreeYesiOS
Android

Bottom line

Bringing home a new baby can be a blow to your budget, but some careful planning can help you to make gradual changes so your new bundle of joy is as affordable as possible.

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