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If you're planning for a kiddo in the near future, or know someone who is, knowing how to financially prepare can be hugely helpful. This information is courtesy of Morgan Campbell, a Strive STAR, and her baby girl Ella. Most of this is geared towards a first baby, but can obviously be modified if you already have some of the necessities.
EXPENSES TO PLAN FOR:
1. CRIB ($100-$500)
- You can get a basic crib for ~$100, but a fancier model that converts to a toddler bed will be more.
2. CAR SEAT SYSTEM ($150-$500)
- Most include a car seat, one base, and possibly a stroller. Don't forget about a second base for family members or caregivers! You will also likely need a new stroller once your little one grows out of their infant car seat.
3. STROLLER ($75-$300)
- Again, there are a wide range of options and significant price variability here depending on what you choose.
4. PACK N' PLAY ($50-$200)
- Price point depends on if you select a basic model or one with extra pockets, "upper level" for newborn, small changing table, etc.
5. FOOD! BREASTMILK OR FORMULA
- Although breastmilk is free, the supplies are not. You will need a breast pump (some insurance covers this), storage bags, bottles, etc. This will run you approximately $35/month. For full time formula, plan on about $120/month.
6. DIAPERS AND WIPES
- Cost varies depending on size of diaper and if you are buying in bulk, but plan about about $120/month.
7. BABY CLOTHES
- Obviously, the best part. Even if you use hand-me-downs or thrift shop for some of this, you are bound to buy a few new items. Plan on $50/month.
- Don't forget about teething toys, pacifiers, pacifier clips, etc. For ease of calculations, we will pretend you were fortunate enough to receive a lot of these items at your baby shower.
If you're shopping online for these items, make sure to use Ebates (Rakuten) to get cash back!
DON'T FORGET ABOUT:
1. MEDICAL BILLS ($3500)
- This number assumes you have medical insurance! If you require a C-section, anticipate the medical bills to be higher. Plan for this in advance and FUND YOUR HSA (if you have one). It's the most tax effective way to cover this portion of the expenses.
2. ADDING BABY TO INSURANCE
- You will need to add your little one to your medical insurance. Reach out to your HR department to get information on the monthly cost of this in advance so you are prepared.
3. INCOME REDUCTION ON MATERNITY/PATERNITY LEAVE
- If you are fortunate enough to have maternity leave paid at 100%, HOORAY! If not, don't forget to determine your temporary lower income while on leave and what your budget will look like. If dad will be taking paternity leave time off as well, make sure to include that too. Make sure you have a well funded emergency fund.
3. COLLEGE FUNDING
- If you plan to pay for college, front loading a college savings plan can save you a lot of money over the long haul. Remember - compound interest and TIME make all the difference for these large scale investments. The earlier you start, the better. I will do separate content on college savings at a later date.
SO HOW MUCH DO YOU NEED?!
$1605 - $2730. This assumes breastfeeding, and will have you covered for the first 6 months of food, diapers/wipes, etc.
Including medical expenses, you are looking at $5105 - $6230.
This may seem like a daunting and large number, but with a little planning it is absolutely doable. You may be fortunate enough to receive some of the larger items as gifts, but you should be financially prepared should you not. Being a new parent will be stressful no matter what, but you don't have to add to the stress by being underprepared financially!
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