Welcoming a new baby comes with a lot of new responsibilities. Budgeting for your baby is a big one that many parents struggle to grapple with, but the truth is that flexibility is the key. This new life is going to come with some financial changes. So we’ve put together tips for budgeting to help you prepare and better understand what kind of budget you may need for baby. Use this as a guide to budgeting for your new baby.
How To Budget For A Baby
As is expected, your baby budget will require some new expenses. A great way to start to plan your budget is to split it up by expenses, wants, debts, and savings. A typical approach to this method is the 50/30/20 budget.
The 50/30/20 method works like this:
- 50% of your income is dedicated to necessary expenses including bills and daily needs like groceries.
- 30% of your monthly income goes towards wants like travel or entertainment.
- 20% of your income goes towards savings and debts.
To use this method specifically for a new baby, consider your current expenses and consider the cost of the daily needs for a new baby.
Creating Your Baby Budget
Below is our recommended strategy for building your baby budget.
Expenses
Start your baby budget by creating a list of the items you need for baby. Do this before your baby shower so you can use it to create your registry and hopefully get a few items ticked off the list!
Typical expenses for a new baby include the items needed to prepare for the baby, and daily expenses. These include:
- Crib
- Stroller
- Nursery set-up
- Baby monitors
- Baby safety gates
- Car seat
- Diaper bag
- Diapers
- Bottles
- Clothing
- Pacifiers
- and more
A great way to reduce the expenses you accrue is to get hand-me-downs or used clothing from friends or family. There are lots of ways to reduce expenses but having a budget in mind will help keep you on track.
Remember, 50% is just a guideline, if you need to adjust these numbers to make your budget more realistic, go ahead and do that! If you need help creating your budget, call on one of our expert Baby Buddees!
Wants vs. Needs
30% of your budget should go towards wants, which means that bills or diapers do not go here. For some people it could feel odd to put a set amount of money toward extras, but it’s just as important as saving. Even if it’s closer to 10% than 30%, having a small budget for a trip to the ice cream shop or a new toy will remind you that doing fun things with your baby is important too.
On the list of baby’s wants could include:
- New clothes or shoes
- Opting for a more expensive toy or item for baby
- Taking a trip with baby
- and more
Consider Your Financial Priorities
When you’re determining how much of your budget should go toward financial wants, have your financial priorities in mind. Are you hoping to start a college fund? Are you planning to remodel your home? Is retirement coming up soon? There are still so many aspects of life that should be considered when budgeting for baby.
The key is to balance your day-to-day expenses with your future financial goals. And always keep in mind that things could change with time.
Savings & Debts
A great rule of thumb when it comes to savings and debts is to pay down the most expensive debt you have first. So if you’re anticipating a hospital bill after the baby comes, start saving if you’re able to, but don’t ignore any existing debt that is currently costing you.
This kind of expensive debt is typically credit card debt, or high interest loans. If 20% works for you, put the majority towards paying down debt so you are able to save even more as you get out of that debt faster.
Let us put together a baby budget that works for you! Get a free quote from our Baby Buddees here.
