Cost of Having a Baby

The Cost of Having a Baby

Having a baby is not for the faint of heart, and that applies in a variety of situations.  For now though, we’re just going to talk about the financial repercussions of having a baby.  Of course, this doesn’t mean that every couple that has a child can or will spend this kind of money.  These are averages, and some will spend much more, while others will spend far less.

Let’s start off with some figures that were reported by the USDA in 2010.  This report states that the average middle income family in America will spend about $12,000 in the first year of their child’s life, on different child related expenses.  That same report states that that number grows to more than $12,500 per year by age 2.  So either way, we’re roughly talking about thousands of dollars a month on your newborn.  That’s a lot of money.

First, let’s look at the obvious expenses.  On the basics, things like baby food diapers, formula, and so forth will cost you about $50 a week.  So you mothers that breast feed, pat yourself on the back because you get to save a little money.  Now we start tacking on the more expensive things like furniture for the nursery, or at the very least a crib or bassinet.  There’s a variety of different equipment you’ll need, things like car seats and strollers, high chairs, and so on.  Obviously, you’ll need to clothe your child.  Let’s not forget the medical expenses incurred during delivery, whether you have a normal delivery or a caesarean section.  And if you plan on going back to work, you’re also going to have to think of the cost of childcare, which is typically quite steep.  And if mom was working, and takes maternity leave after giving birth, all these expenses come at a time when the family income is at least temporarily depleted.

But since lots of average, middle income families continue to have babies, clearly having one doesn’t mean that you are automatically going to face a financial crisis.  Even if this baby is coming as a surprise, you still have some time to plan your expenses.  And there are even several ways to curb your expenses.

So what can you do to save money?  Here are a few ideas.

Be Health Care Conscious

When I listed some of the expenses above, I talked about the medical expenses that are incurred when you deliver your child.  The average fee for a typical normal delivery is around $9,700, and that number jumps up to $12,500 for a caesarean section.  If there are complications, the cost could jump up to an astronomical $300,000.  Note that these numbers only cover the actual birth, not prenatal appointments, and common tests such as ultrasound and amniocentesis.  The good news here is that 75% of Americans are privately insured and belong to some sort of managed care plan.  If your obstetrician is part of the plan’s network of doctors, you’re likely only going to have to pay a standard copayment fee for your prenatal visits, and nothing else, as most of these care plans cover nearly all of the medical costs that are associated with pregnancy and delivery.

Consider Your Spending Habits

Alan Fields, co-author of the book entitled Baby Bargains, states that a lot of new parents will spend around $6,000 on a crib, car seat, stroller, clothes, and any of the other typical gear that seems to be necessary for a baby.  However, according to him, the average family should be able to do all that for around $4,000 — so we’re talking about a $2,000 savings here.  He states that the mistake most first time parents may is that they go out and purchase the absolute best version of every product that they need.  Instead, what they should be doing, is purchasing the top of the line, or at least the best they can afford, only of the products that will take a great deal of wear and tear — things like your stroller.  The other place you don’t want to compromise is any product that is there to protect your child, such as their car seat.  Once you’ve paid for the best quality you can afford in those areas, look for less expensive versions for your other purchases.  He also recommends taking a seasoned parent with you when you go shopping, as they’ll be able to point out what’s absolutely necessary, as opposed to what’s being marketed as necessary when it really isn’t.

Depending on your budget, you may also consider looking some second hand purchases as well.  I don’t recommend doing this for things like strollers and car seats, but for things like baby swings in high chairs and play yards.  You might want to take a look at consignment shops, or asking around of friends to see if they have any things that they haven’t offloaded yet.

Paperwork and Taxes

The following will in no way reimburse you for all the money you spent on your child, but at least it’s a little bit of a break.  After the birth of your child, most hospitals will give you a card for you to request your Form SS-5 from the Social Security Administration.  This is the form that allows you to apply for your child’s Social Security number, and with that you will be able to claim a tax deduction as well as check for your eligibility on tax credits for children under 17 years of age.

And if you have health insurance, you’ll need to make sure to officially enroll your child in your medical plan within 30 days of their birth.  This is to ensure that their health care costs will be covered as well.