Expecting a Baby? Plan for a Lifetime of Expenses

By Pamela Murphy - March 6, 2018

Bringing a new baby into your family comes with a multitude of emotions. It can spark great anticipation and hope, but also questions. New parents may question their child-rearing abilities. Experienced parents may wonder how their family dynamics will change. Both may wonder how it will affect their finances—and for good reason. It costs a lot to raise a child.

The High Price of Parenting

In 2017, the Department of Agriculture released its latest report   on how much it costs to raise a child from birth to age 17, and it may startle you. The total price tag is nearly $234,000, about $13,000 a year for middle income families. The good news is that you don't have to bank it all before bringing home baby, but you will likely need to make financial adjustments.

Since 1960, the USDA has tracked child-raising expenditures and estimates for future years. For middle income families, the cost is expected to increase to nearly $285,000 by 2032. Unfortunately, this estimate does not include higher education. You can find out your own potential costs using babycenter.com's calculator , which can include college costs.

Paying for Baby and Beyond

Whether you carefully planned for children (when and how many), or you were pleasantly surprised by the prospect, at some point finances need to be considered. It doesn't matter if Junior is two years old or 12 years old, it's never too late to make sound financial decisions for the whole family. Here are some tips to get you started.

1. Start Saving Now

As soon as you hear the news, start saving. Like any large expense, planning ahead is always best, but some may not have that luxury. However, you can begin cutting out the extras and start socking away as much money as you can—not only to pay for any medical costs and additional necessities, but also to start disciplining yourself for later.

2. Budget for Baby

Re-evaluate your budget if you have one; set a budget if you don't. Estimate how much you will need to cover the necessary expenses such as food, clothing, transportation, and of course, child care. This may mean your discretionary spending is reduced, especially during the child care years.

3. Plan Smart for College

It may sound funny to think that far down the road but adding a little each month to a college savings account, like a 529 education saving plan , can have you smiling instead of dreading the tuition bill.

4. Keep Paying for Your Future

No matter how many children you have, retirement is inevitable, and you need to save for it. Don't stop the 401(k) or other retirement contributions and make them automatic to make it easier on yourself. Your children can benefit, too, from you not having to rely on them later in life.

5. Mind the Details

Adding to your family is a good time to review your finances and take care of details like making sure you have enough life and health insurance, getting a will or trust in order and changing beneficiaries on current accounts.