Baby Expense Budgeting – Family Style

September 10, 2007

Who spends the money on kids your family, mom or dad?  If you’re like us, it’s the mom who buys the baby what they need.  If the mom’s spending the money, why does the dad often make the budget?

Baby Expense Planning
I have a friend who’s expecting a new baby next spring.  He has his finances planned down to the minute detail for the next 30 years so this baby has forced him to re-evaluate all his plans.  He’s so obsessed about it that we’ve gotten a chuckle at work over this wrench in his plans. However, unlike many worried fathers to be, myself included, he didn’t sit down and work out projected expenses for the new baby.

Instead he asked his wife to do some research and figure out the reoccurring expenses the child would introduce.  I like this idea because it gets both family members involved in the planning process and reveals the mother’s financial expectations for baby time.  My friend emailed me his wife’s findings:

Formula
First 4 months – $72 per month, then after that more like $48 per month.

Diapers
First 4 months – $70 per month, then after that – $35 per month until they are potty trained so plan on this expense until they are 3 to be on the safe side.

Baby Cereal / Food
This starts at about 4 months- $75 per month.

Yearly Expenses
Insurance Co-Pays
$25 per visit – We will have to take the baby in at 1 week, 1 month, 2 months, 4 months, 6 months, 9 months and 1 year and for any issues, then once a year after that.  Figuring in a couple additional appointments, this is $250 for the first year.  We can put this amount plus some for ourselves into the Flexible Spending Account Plan so we don’t have to pay taxes on it.

Clothes
$500, my friend said she buys clothes at the beginning of the season and after holidays (because relatives will get him/ her clothes).

What do you think?  Do the expenses sound accurate?  Did she miss anything? Knowing my friend, he’ll go through and validate each one but I think it was a good idea to get both parents involved in the budgeting process.

Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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Comments

13 Responses to Baby Expense Budgeting – Family Style

  • Penny

    Hi All,

    Can we perhaps run a new post with q4 2009 estimates? I am expecting my first kid in early 2010, live in the Minneapolis area. Daycare will run a solid $225/week (home daycare, 5 days/week), I ESTIMATE diapers will be $100/mo, hope to breast feed, medical insurance SUX—baby will run $250/mo with $2500 deductible, but free ‘well baby” visits with most plans. Cannot get ind baby healthcare until baby is 3 months old! Maternity clothes: $300 (mostly work appropriate stuff), initial baby gear—maybe $1000, baby clothes—hoping for gifts and garage sale/thrift store finds—maybe $25/month? Maternity Leave–I have been saving vacation time, so at least it will be PTO for the full 6 weeks.

    How are my figures compared to every one else’s?

  • Penny

    Hi All,

    Can we perhaps run a new post with q4 2009 estimates? I am expecting my first kid in early 2010, live in the Minneapolis area. Daycare will run a solid $225/week (home daycare, 5 days/week), I ESTIMATE diapers will be $100/mo, hope to breast feed, medical insurance SUX—baby will run $150/mo with $2500 deductible, but free ‘well baby” visits with most plans. Cannot get ind baby healthcare until baby is 3 months old! Maternity clothes: $300 (mostly work appropriate stuff), initial baby gear—maybe $1000, baby clothes—hoping for gifts and garage sale/thrift store finds—maybe $25/month? Maternity Leave–I have been saving vacation time, so at least it will be PTO for the full 6 weeks.

    How are my figures compared to every one else’s?

  • kirk

    I also posted a thread on mitbbs and got the following answers:

    Most people said before day care, the expenses include diapers ($100 per month), formula ($100-$200, if no breast milk; If the mom is a milky cow, then free), clothes (I can always find deals, let my mom buy them from China and get plenty of them from my friends), other stuff baby needs (crib, stroller, etc. Again, I can ask friend or buy a second hand one. For example, a second hand crib or stroller costs only $70).

    Further more, there is a medical insurance. I think our company has very good deal; Also, we can use FSA to save tax on medical expense, even in the near future, on day care expense ($200 per week).

    IRS give each family $3050 tax exampt per kid annually. Also, if at the end, you own tax, you can use the $600 tax credit per kid to deduct it.

  • milana

    Did you forget daycare? or is someone staying home with the baby. $500 for clothes? Try getting some gently used clothes from friends who already have young kids. I buy half and get the other half from my friend whose son is a year older. It gets cheaper as they get older though!

  • Jared

    And don’t forget the simple things like strollers, carriers, car seats, high chairs, etc. Those can add up.

  • zh

    The problem with diapers is as the size gets larger, the amount of diapers you can buy in a package decreases — for instance a package of size 1 you can buy 102 diapers, but a package of size 4, you can only buy 54 (approximately). Granted, the child will use less diapers as he or she grows up.

    We also paid 20% for having our first son — the total hospital costs came out to about $1200.

    You can make baby food as well, especially those first foods. It is much cheaper to buy a big can of peaches and run it through the blender than it is to buy those cutesy little jars. This works for peas, sweet potatoes, broccoli, spinach, you name it. Of course then you have to count the time that you spend cooking and/or processing the items.

    Don’t forget the crib … which will become a bed eventually … which needs sheets and a pad and a mobile etc., and the carseat & stroller as well.

    All this may go out the window if the baby is born with a disability, as well. My second son had many a doctor’s appointment, blood test, and hospital visit that we didn’t even think about, much less budget for (endocrinologist, gastroenterologist, neurologist, geneticist, etc., etc.). This is not to say that you CAN plan for these things … but a little extra set aside wouldn’t be a bad idea and you can always put it toward the baby’s college fund if everything turns out well.

  • Ben

    Wow, you guys definitely have some good suggestions! I’ll be sure to pass them on, sounds my friend and his wife have some more budgeting to do : )

  • The Finance Network

    Excellent post for budgeting, we will be sure to inform our parent readers of your post.

  • broknowrchlatr

    A couple comments.
    1) Diapers. Not sure why this is listed as going down after 4 months. Sure, you use more diapers in the firest few months, but the price per diaper gradually increases. My daughter potty trained at 3 and my son is in diapers at 2. The individual diapers cost like 3 times that of newborn diapers.

    2) Many healthcare plans include preventative visits for free. I even have a high deductible plan and they are free. This includes 1 visit per year for older children and adults, but virtually ALL of a baby’s required visits.

    3) What about hospital costs for having the baby? When our kids were born, we had a $700 deductible and paid 20% coinsurance after that. Havign a baby was around $10,000 and we ended up having soemthign like $2500 out of pocket.

  • The Financial Blogger

    That’s a great start but your friend is forgetting the “miscellaneous” part into his budget. I mean that you have several “one shot deal” expense that will arise such as baby car seats, medical expense, stroller etc.

    In regards to clothes, $500 is not too much. Don’t forget that you have to buy a winter jacket, spring jacket and a fall jacket (kids are growing too fast, you need to buy a jacket per seasons). Sometimes, you’ll have to buy 2 set of shoes in the same year!

    My son is 2yrs and it cost in average between $350 to $400 per month. Keep in mind that I don’t put money aside for his school yet!

  • happy

    I can’t speak about the formula cost very much because feeding my baby was almost FREE for me the whole first year since I breastfed (and pumped at work, so only expense was $250 for electric pump). But I think her costs are underestimated since even when baby starts solids his milk consumption remains constant. Solids are supposed to supplement not replace formula. I sent my child to daycare with 20 ounces of milk a day from 3 months to 12 months and he drank them all, everyday.

    I think her baby food/cereal are overstated a bit, at the beginning at least. When baby starts solid he won’t be eating all that much at first. So it will be much less at the beginning. May I also suggest making her own baby food, it’s not only cheaper but healthier and better tasting than the jarred stuff. Seriously, a $0.79/lb of sweet potatoes takes you a long way in baby food consumption.

    Diapers are pretty acurate I would say. Those little ones fly through diapers the first few months and then less.

    Copays, I would say it depends. If baby is going to be in daycare then I would say he will probably need more than a couple of extra visits to the doctor per year. Of course we all want to be blessed with a healthy child but illnesses are more common in a daycare setting. However is she’s staying home with him then probably less visits. But you also have to account for “first-time parent paranoia”, AKA the parents who takes his kid to the dr because he sneezed once. Some times common illnesses such as colds just need to be waited out but it’s hard as a first parent to just sit and wait. We want to see the DR. over and over.

    Finally, I would like to challenge her to track her expenses on baby clothes during the first year to see if she ends up spending only $500. I would also suggest they pad their budget a bit for those things you didn’t think you needed but end up needing. Regarless of what they are they will end up spending extra on “stuff” the first few months. Also, don’t forget childproofing items and developmental toys.

    Babies really need not be expensive but it does take a lot of parental restraint.

  • Chief Family Officer

    I completely admire your friend for planning ahead, *but* I would caution that things may not go as he expects them too. Baby could have a soy/dairy intolerance and require a more expensive formula (why are they not planning on breastfeeding, by the way? not that it is necessarily cheaper – see my blog for proof of that! – but it certainly can be). Making baby their own baby food would really reduce that cost significantly. And as for clothes, I think $500 per year is a lot at the beginning, especially if they’re going to be getting clothes as gifts. Also, I think they’re missing a significant category, i.e., baby gear – what about strollers, car seats, bottles, pacifiers, cribs, toys, highchair, etc.? Those costs really add up.

  • Big Cajun Man

    Seems ok,

    For clothing look at used clothing stores. Kids typically grow OUT of clothes before they wear them OUT.

    Formula, powder or concentrate? Breast feeding out of the question?

    Doctor visits costing money for kids? That is criminal (I am Canadian, sorry).

    c8j

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