Budgeting for Baby

I’m about halfway through my pregnancy, so it’s time to turn my thoughts to baby gear. I still haven’t come to terms with the idea that I will actually have a baby in five months, but I can at least be prepared. We started with a budget. I will be having baby showers and getting hand-me-downs, but I’m also budgeting for the things we need to buy or spend money on that first year.

What You Really Need

If you walk into a baby store and ask them what you need, they will give you a very long and very expensive list. So here’s what you really need:

Dresser/changing table (combo to save space/money)
Changing pad and cover (to go on the dresser and keep baby from rolling off)
Crib sheets
Crib mattress
Clothes (get as many hand me downs as you can)
Car seat
Car seat stroller, or travel system
Diaper bag
Breasts or formula (note, breasts are free unless you’re adopting)
Receiving blankets
Baby wash, diaper cream,
Rectal thermometer
Baby nail clippers
High chair

That’s the bare minimum. As your baby gets older, you’ll likely want things like pacifiers, baby spoons, a baby tub, sippy cups, and toys. But your baby will survive bathing in the sink and not having a million toys or a bouncy chair or any of that other stuff you see in the stores. A rocker/glider is highly recommended to soothe an upset baby, but not required. That’s not to say I won’t buy those things, they’re just not totally necessary.

Other things are completely unnecessary and you should not buy them or let someone buy them for you. These are items like crib bumpers, diaper stackers, crib pillows, and crib blankets/quilts. You’ll notice the stores sell fancy baby bedding sets, but most of the components are not recommended for use with babies. All you need is a crib, mattress, mattress pad, and sheets. If you live in a cold winter climate, you can use a light blanket, but it’s better to put your baby in a warm sleeper suit or sleep sack.

How Much to Budget for Baby Gear

Baby magazines often mention a figure around $10,000, just for gear and food, for the first year. That doesn’t include child care. The Baby Bargains book estimates you can do it for $4000.  The latter is a lot more reasonable, especially if you stick to the simpler, more affordable stuff. Obviously, don’t skimp on a car seat, but you don’t need a $600 crib or $1800 stroller system. A $125 crib that meets current safety standards and a $100 stroller are just fine. A fancy (useless) baby bedding set can cost as much $400. A crib sheet costs $15.

However, there are times when you might want to spend a bit more to get something that will last longer. I looked at a cheap Ikea baby dresser for $100, but I hated it. Instead, I plan to buy a nice $400 dresser that will last for several years.

My budget for first-year gear is around $4000. My baby will eat homemade food and breastmilk. If you opt for formula, factor in another $700 for the year. I will also be cloth diapering, but if you use disposable diapers, add another $1000 to your budget.

How Much to Budget for Child Care

The biggest budget item is child care, and this varies by region. In our area, day care and nannies are very expensive. Infant day care is sometimes MORE expensive than a nanny, and very hard to find in some areas! I will be adding $12-$18,000 to our first year budget for child care because I live in Los Angeles, which child care is pricey (but cheaper than New York City.)

How Much to Budget for Healthcare

You also have to factor in costs for healthcare. Assume your baby will visit the doctor 10-12 times that first year, so that’s 10-12 co-pays. Your newborn is only covered under the mother’s coverage for 30 days following the birth. You need to have coverage in place for the baby after that. My employer has a very generous dependent benefit, but many employers don’t. Compare your plan with your spouse’s, then factor the additional cost into your monthly budget. Typically, it’s deducted from your paycheck. If you find the dependent premium is over $150/month, consider buying a child-only individual plan through a health insurance provider like Blue Cross or Kaiser.

The birth will also cost at least a couple thousand dollars, depending on your insurance coverage and out-of-pocket max. If you have an FSA, you can save a bit of money by using the FSA funds for those costs. Yes, it’s still out of your pocket, but it reduces your taxable income, so it will ultimately cost you a little less.

If you’re looking at the total for all these costs, you’re probably freaking out. Remember, you’re not spending all of it at once. The initial outlay for baby gear can be spent gradually before the birth. The hospital bills will come in a month or two after the birth. Things you need as your baby grows will also be purchased over time, and you can shop for deals. Child care is also paid monthly, not all at once.

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