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How much to save for a baby
Learn to prepare for unexpected expenses when you’re expecting.
Having a baby is an exciting and fulfilling time in your life. But it can also be expensive. From diapers and formula to cribs and strollers, the average American is projected to spend more than $10,000 in the first year of raising a child. But with a little planning, your little one can make a more gentle dent in your budget.
How much should I save for a baby?
The costs you can expect when introducing a new baby into your life depend on your parenting style, your lifestyle and safety nets like family and insurance.
Birth and health
Without insurance, you can expect to pay up to $7,000 in costs related to the birth alone, according to 2014 stats from the government’s Healthcare Cost and Utilization Project.
- Uncomplicated birth: $2,900 to $4,700
- Birth with complications: $3,800 to $6,500
If your child comes to you through adoption, Adoption.org suggests budgeting for higher costs.
- Private agency: $30,500 to $48,500
- Intercountry adoption: $20,000 to $50,000
- Home study fee: $2,000 to $4,000
If you plan to return to work, you’ll need to factor in the costs of child care projected from $3,500 to $18,000 a year, according to a 2015 report from ChildCare Aware of America.
Everyday baby items and care
Beyond medical bills and care, other baby-related expenses you’ll want to budget for include items for safe travel and sleep, food, diapers and clothes.
Baby and safety gear
- Car seat: $50–$250
- Stroller: $100–$500
- Crib and mattress: $200–$500
- Baby carrier: $50–$150
- Rocker: $200–$600
- Swing: $75–$125
- Baby gates: $50–$150
Food
- Nursing: $50–$350
- Formula: $1,750
- High chair: $50–$250
- Bottles, pacifiers, etc.: $50–$250
Diapers
- Cloth: $250
- Disposable $850
Clothes
- New: $700
- Used: $350
How to save for a baby
Financially prepare for your newborn and beyond by leveraging your savings early.
1. Estimate your first-year expenses.
When you budget for your baby, you may want to set aside up to $12,680 for the first year, according to USDA data reported in 2017.
There’s a good chance you’ve already registered for a car seat, stroller and other must-haves. But be sure to speak with your insurance company about how much you can expect to pay out of pocket for delivery and well visits. Then factor in the everyday items you’ll need to budget for, like diapers and formula, as well as expenses like child care. Your loved ones may be planning to contribute gifts or cash, which will help with your expenses.
2. Pick an account and start saving early.
High-yield savings accounts can help you earn interest on your baby fund before your baby even arrives. If you’ve already built up a nest egg, consider investing it in a money market account. They may require higher minimum deposits, but you can find one that comes with a debit card to help cover expenses as your due date approaches.
3. Schedule regular contributions.
Stashing away money before baby arrives positions you to pay for immediate expenses as you navigate parenthood. But you’ll want to keep up your nest egg to ensure savings to fall back on as your little one grows into toddlerhood.
Consider autopay to meet your monthly deposit goals. For additional help, look into apps that round up your purchases and automatically deposit the difference into your savings.
4. Open an FSA.
A flexible spending account (FSA) allows you to set aside pretax income to pay for eligible health expenses. Contact your employer to see if you can open up this account, so you can start taking advantage of the tax benefits that come with it.
5. Clear the clutter.
Sell any items that you won’t need once baby arrives. Your city or neighborhood may even support a list-serv to help you put up baby’s outgrown or old gear and clothing for extra cash.
How to compare accounts for a baby
When comparing accounts, don’t focus only on the interest rate. Other factors can make saving easy and motivate you to keep going, including:
- Fees. Monthly and administrative fees can eat into your savings. Look for an account with low fees or a way to waive them.
- Access. If you find saving difficult, weigh accounts that limit your access or lock away a portion of your balance. For more convenient access, narrow down accounts with debit cards and wide ATM networks.
- Account features. Autosave, roundup, bill pay and other features can help you make a habit of socking away money.
- Deposit and balance minimums. Read the fine print to be sure you can meet opening requirements and any other minimums that can help you skirt regular fees.
- Rewards and bonuses. Get a head start with accounts that offer rewards or bonuses for merely opening an account.
Compare accounts to help you save for a baby
High-yield savings accounts are probably your best bet to save the most before baby arrives, but a money market account could be handy if it comes with a debit card you could use to start spending that money as your due date nears.
Bottom line
With parenthood on the horizon, you’re in for one fun and wild ride. Keep your eye on the adventure by setting up a firm savings plan and budget as early as you can.
Find the lowest rates and strongest terms you’re eligible for by comparing a range of savings accounts.
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