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When I started the creation of the “prepare for baby” challenge...surprisingly (to me) there was only one thing on most mother’s minds...
I mean I asked like five times to be sure, cause I thought mommas would be more preoccupied with cute onsies…or how to set up a birth plan…but again and again the #1 response was FINANCES.
So I heard you mommas & don’t worry I got your backs.
Below are the five steps I’ve outlined to prepare your house financially for the arrival of a new member.
I did A LOT of research for this post, so you can rest assured this will be your basic step-by-step guide to planning financially for your little kicker.
These are the categories in case you’re a read-ahead type:
Savings Accounts & Budget Cushions
Calculate Costs & Ways to Save Money
Creating a Budget & Reducing your Spending
Earning Extra Money & Finding Help
1:02 Savings Accounts & Budget Cushions, 3:24 Calculate Costs & Find Ways to Save, 10:10 Budget & Save Money, 12:38 Earn Extra Money & Get Help, 13:42 Insurance
savings & budget cushions
For this section we’re talking all about saving money & creating a little cushion for baby’s arrival.
create an emergency fund
Your first step to financial peace with your little one is just to set up an emergency fund. I’ll be talking a lot about Dave Ramsey here because I love his methods :). Usually when you’re in get out of debt mode, he suggests a 1,000$ emergency fund.
BUT if I remember correctly (and feel free to correct me if you know the answer) he generally recommends 5-10,000$ for a baby emergency fund.
Later on in this article we’ll talk about EXACTLY what you need to save for. So you don’t have to worry about that for now.
But it’s worth it to start saving money right now…as in like go to your purse and pull out any cash and stuff it in the freezer!
Ways to build your savings:
Put an automatic withdrawal on your account
Create a separate savings account so that money won’t get used
Automatically save any unexpected income
save a budget cushion
Another way to think of this is to create a “budget cushion” this would be a relatively small amount maybe 1000$ that acts as a sort of buffer to your real savings account.
For me the biggest thing I look for when budgeting saving money etc. is a sense of peace. Seriously….if you have a little extra cushion EXACTLY for that thing then (as Dave Ramsey says) it won’t become an emergency.
Why the difference between a savings account vs. a budget cushion?
You don’t really need both…but a savings account will act for things like big hospital bills whereas a cushion might act for things you didn’t plan for…say an extra trip to the drugstore at 2am cause baby’s got a toothache.
For related reading see: 15 MOMS SHARE WHAT THEY SHOULD HAVE DONE TO PREPARE FOR BABY
The article continues below…
2. calculate costs & ways to save
How to calculate the cost of a baby
The baby comes in 3 parts, pregnancy, birth, & then you know the actual baby.
Common Pregnancy Costs
Doctors visits (copays)
Extra help (ordering in, help with the house)
Maternity clothing & gear
Unexpected illnesses (mommy or baby)
Cost of maintaining baby (food, diapers, milk, etc.)
Baby gear (carseat, stroller, crib, etc.)
Saving for college
For now, your action step is just to write down as much as you can think of for each of these categories. In step 3 we’ll talk about making a budget!
Want some help?
Check out this FIRST YEAR CALCULATOR which gives you a pretty good idea of what you’ll spend on baby.
Ways to save on the cost of a new baby
Did you take a look at that calculator?
I was honestly a little bit shocked when I first calculated the cost of our baby! Definitely not something I had imagined.
So if you’re a bit worried, deep breath! There are definitely ways of reducing the cost of a baby.
Let’s dive in to some fun examples below.
get the most out of your registry
If you do have a registry and/or someone is throwing you a baby shower, here are some ways to make sure you get the most out of that registry!
Not all of your guests are going to be baby experts, they might just choose the cutest gift on your registry or whichever gift is in their price-range. What’s the best option to make sure you get those essential items first?
Prioritize your list!
Most registries have this option, and if they don’t you should consider using a different registry because this feature will help make sure your essentials get to you first. For example, I went with amazon baby registry, and they have the option of marking items as essential for buyers! Way to go amazon.
If you don’t have this option, you could consider returning gifts & using store credit to buy essentials down the road. But make sure you read the rules of your registry before going with this option.
Another handy little tool that some registry’s offer is the completion discount. Some registries like Amazon baby registry, allow you the option after the fact, to complete the registry for a 10-15% discount.
This would be a great option especially if you have chosen very strategically (see next bullet point) what you put on your registry!
It might be a ton of fun……ok scratch that….it IS a ton of fun to build out a baby registry. It’s like Christmas in July, or you know, whatever month your baby is born.
SO get it out of your system add all the little doo-dads and cute things that every YouTuber has ever suggested…and then edit down.
Go back through and ask yourself two questions:
Does anyone I know have this item they could lend or give to me?
Does this item have to be purchased new?
Leave a fair amount on there for the guests of your baby shower and other people who might want to send you something to celebrate your new baby, but try really hard to pair down on what you consider essentials or not.
Ways to cut back on the cost of baby
The cost of a new baby is really up to you. Apart from the very essential items…you get to decide how much is spent on baby’s arrival.
Here are some ideas to cut back on the cost of a baby:
Bottle feeding is more expensive! Like a lot more expensive, so whip out your boobies and start saving money!
If you’re worried about the cost of a breast pump, in the United States most insurance companies will cover that expense partially or completely.
Reuse, Repurpose, Recycle
Think furniture…no you don’t need a dedicated changing table. The floor, or the couch, or the dresser will do just fine!
How about rocking chairs? Baby clothes? Baby gear?
Of course there are things that you do have to buy brand new (think carseats or possibly cribs) but try to ask yourself these questions before you fork out for new items:
Can someone I know give or lend me this item?
Can I buy this item second-hand?
Can I make this item? (think clothes & sheets)
Can I find this item at a thrift store?
Can I reuse this item from siblings?
Asking yourself these five questions will save you a lot of money and make you think more creatively about how & when you actually fork out those dollars.
Capsule Wardrobe for Baby
In reality people are probably going to be gifting you a lot of clothes! But why not take a page from minimalism, and create a capsule wardrobe for your baby!
The average cost of disposable diapers per month is 75$.
Yes, the cost of cloth diaper is more money up front, but the benefits way outshine the disadvantages budget-wise.
If you do decide that disposable diapers are the way to go, grab this 20% discount for my readers from amazon >>>>>>>>>.
Buy Cheap Baby Toys or Skip Them Altogether
Before you get out your pitchforks, watch this adorable video for proof that babies are just interested in exploring the world around them. As they grow older they’ll like certain toys more but just let them be themselves!
Get creative about childcare
If you’ve done even the minimal amount of research (or if you just want to take my word for it) you’ll know that childcare is by far the biggest expense concerning your baby during his or her first year.
In order to save money try to see if one of these tips could help reduce your childcare costs:
Ask a family member or close friend
Get a parttime job at a daycare center in exchange for reduced tuition
Change your work schedule to be opposite of your partners
Work from home
Receive an AuPair in your home instead of a nanny (much more cost effective)
get step-by-step instruction on how to prepare for baby:
labor & delivery & much more
3. budget & Reduce spending
create a budget
Dave Ramsey >>>>>>>>>>>>>>>>>>>>>> my homeboy for budgeting and paying off debt has an amazing tool you can use for free to create a monthly budget called Everydollar.
My husband and I use this software every month, as it’s very well-developed!
Here are some different kinds of costs that you’ll need to include in your budget:
One-time costs (think baby gear, cribs, carseats, etc.)
Salary Losses (for maternity or parternity leave how much are you going to need to maintain your monthly budget)
Ongoing baby costs (think diapers, medicines, doctors trips etc)
Hospitalization (think hospital bill for labor & delivery)
The Agency for Healthcare Research and Quality Healthcare Cost and Utilization Project says that the average birth in the US costs about 3,500$. In case that number helps you get an idea of what you might spend.
Don’t forget to check out this first year calculator for ongoing and one-time baby expenses!
Once you make a full budget, divide that number by the number of months you have left in your pregnancy…that way you’ll know how much to save & how much extra to earn.
If your final budget comes out to 5,000$ and you have 5 months left in your pregnancy you need to save 1,000$ per month.
Reduce your spending
If that number is kinda scaring you, don’t fret I have some great ways for you to reduce spending around the house & start saving that money.
Later on in this post I’ll also give you my favorite ideas of how to earn extra money from a little side-hustle.
use cash not credit
The biggest tip I can give you when making your budget, is to take everything out in cash. This helped my husband and I imensely because we could actually see where our money was going.
This is one of the main things that Dave Ramsey also suggests. You can read the whole book here.
start saving money from home
Coupons: A lot of coupons are even online now! Find your normal grocery store and search their website for coupons, you can either print them out or some even let you load them directly onto your grocery store card.
Meal Plan: This will help save your family a lot of money! My number one tip with this is, start in your pantry & fridge when meal planning, instead of starting on Pinterest. This perspective will actually help you save a lot more because you’re starting with what you already have at home!
Stop Eating Out: If you look at your bank account from last month, and total up the amount of times you ate out, and the amount of money you spent on it…you’ll likely be shocked! When you’re in savings mode, get rid of the extra costs. Try fancy recipes at home, and ditch the almost 100% markup on restaurant food.
Stop Your Starbucks Habit: Another big no-no when you’re trying to save money. You’ll probably be shocked at the amount of money you spend on coffee every month.
Stop Leaks on your Account: If you’ve ever tried a free month trial of something, chances are you are still paying for it. Even if you’re not still using it. HBO? Only good when Game of Thrones is out, Hulu? I mean do you really need more than Netflix? How about that app you downloaded last year that you’ve been paying 5.99$ for every month. Go through and clean these out of your account.
Stop Spending: Just for a while, get serious about whether or not you really need another pair of jeans, or that babymoon you’ve been planning. Just focus on what’s important right now…your financial peace of mind so you can enjoy those first few months with your baby.
4. Earn Extra Money & Get Help
earn extra money
You can find A LOT of help with this on the internet! But I’ve shared some ideas that have worked for me below:
Online Tutoring: Some great places are Vipkid (teaching English) on which I make 20$ per hour. Some other great sites include iTalki (teaching languages) where you can make between 15-25$ per hour, and basically anywhere you can do online tutoring…classgap is a good one I’ve heard.
Translating: If you know more than one language, try out rev.com they have lots of translating, and even transcribing jobs!
Blogging: This is certainly not your make fast money option, but it’s a good one for the long term. I, for example, made about 1000$ during my first year blogging. It’s gone up since then but it’s totally doable!
Dog Sitting: My hubby and I actually made a pretty penny doing this! It’s a lot of hard work, but with websites like dogbuddy.com you can make some nice cash! This month alone we made an extra 330$. You could also walk dogs!
Ebates: If you’re going to be buying lots of baby stuff & maternity stuff online this is a great way to earn money as you do it! I especially love doing this for airline tickets as the return is higher!
Sell Unused Items: Take inventory around your house of things you no longer use! Sell them online.
Apps & Side-Hustles: Apps like Task Rabbit, Uber, Uber Eats, & much more can make you some side cash! Nowadays the options are almost endless so take advantage of that!
There are a couple of different ways you can find help if you’re not sure you can pay for everything yourself.
Might not be totally comfortable, but asking your parents for help could get you out of a tight spot.
Check into goverment subsidies
Some goverments, like here in Spain, will give you disability during the four-month period after your birth. They also give a stipend of about 2500$ when you have a child.
The US government isn’t quite to generous, but they still have lots of programs you could take advantage of. Things like WIC (women infants children) will give you a monthly stipend.
You can also apply for food stamps or disability.
Get private help
Even if government help isn’t available to you, you can always connect with local foodbanks and charities to see if you can get extra help.
I used to volunteer at a privately-owned social services office where we had a foodbank in the building and gave out help to struggling families like rent stipends, and help finding gainful employment.
research what’s covered
This is huge! Figure out what is going to be covered by your insurance and what is not covered. That way you know going in, more or less, the cost of your birth.
It’s also helpful to know what extras you can get with your insurance. For example, most insurances cover breast pumps, and pre-natal classes.
Look into the benefits of your insurance!
Every little bit helps!
YOUR STEP-BY-STEP GUIDE TO PREPARING FOR BABY:
Tell us in the comments sections below…if you could put only 5 items on your baby registry, which five items would you put there?