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Economics of a New Baby

Having and caring for a baby is expensive. Things generally go much better if you prepare ahead of time. Review your current budget and create a new one estimating costs of new baby expenses.

If you decide to stay home and you have been a two-income family, switching to a reduced or single income can be challenging. You will need to adjust your lifestyle and budget. Be prepared for conflicts that less money may create. You and your spouse need to review the family's finances together and decide what to do. You might want to try living on a reduced or single income before your baby is born.

To help manage expenses, here are some things to think about:

  • Make sure you have health insurance and know exactly what is and is not covered. Keep up to date with well child check-ups and immunization visits. Preventing health problems is cheaper than treating them.
  • Baby formula can cost thousands of dollars per year depending on the brand. You may need to try a few different kinds of bottles until you find the right one for your baby. Buy only 2 or 3 bottles and try them out first to make sure your baby will use them. Breastfeeding is free and convenient. You will still need to buy nursing bras and may need to borrow or rent an electric breast pump.
  • Expect to change about 3,000 diapers during baby’s first year. Cloth diapers can be half the cost of disposables, even when you add in costs for doing extra laundry. If you use a diaper service, it will increase the cost of using cloth diapers quite a bit. If you use disposables, you may be able to save money by using coupons and buying in bulk when they go on sale.
  • You can save money if you make your own baby food using a blender.
  • Baby clothes, highchairs, strollers, and toys can add up. Family members and friends will most likely want to give your baby gifts. Let them know what you need.
  • Check yard sales and second-hand stores for baby clothes, toys, and other baby items. A basic setup of crib, mattress, changing table, and glider chair can cost hundreds of dollars. You might also be able to borrow from other parents you know. Make sure your baby’s crib and other baby furniture and equipment meets all current safety standards and has not been recalled, especially if you buy it used.
  • A car seat is an absolute must. You can’t drive home from the hospital without one. Some hospitals offer free car seats to new parents. If you cannot afford a car seat, contact your local fire department or United Way for help. Make sure your car seat meets all current safety guidelines. If you need to buy a used car seat, buy one that has not been involved in a crash. Any car seat involved in a crash needs to be thrown away.
  • Childcare is a big expense. If both parents work full-time, childcare is needed unless family members can help. Costs can vary depending on where you live. Usually, a group setting such as day care costs less than a babysitter or nanny. Some jobs allow you to work on a flexible schedule or work from home.
  • As new parents, you will get a lot of phone calls, direct mail, and advice about what to buy. Take your time and think carefully about what you really need.
Developed by Change Healthcare.
Pediatric Advisor 2022.1 published by Change Healthcare.
Last modified: 2020-07-09
Last reviewed: 2019-06-03
This content is reviewed periodically and is subject to change as new health information becomes available. The information is intended to inform and educate and is not a replacement for medical evaluation, advice, diagnosis or treatment by a healthcare professional.
© 2022 Change Healthcare LLC and/or one of its subsidiaries
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