Having a baby is one of the greatest joys someone can experience in life, but it is also one of the costliest. The cost of preparing for an infant will depend on where you live and personal decisions, but on average, families can anticipate spending at least $15,000 in the first year. Don’t let the sticker shock scare you, there are a few things you can do now to to financially prepare for a baby.

Preparing for the medical bills

One of the first costs you will incur when you find out you are expecting is the doctor’s bill. According to the Kaiser Family Foundation, the average cost of pregnancy and childbirth is nearly $19,000. If you have insurance, most likely your benefits will cover a large portion of the bill, but you will still have a couple thousand dollars of out-of-pocket-expenses to budget for.

Cody Sparks is director of retail banking at UMB Bank.

If you are planning for pregnancy, look at your company health benefits during open enrollment and see which plan would offer the best coverage for your needs. If this is an unexpected pregnancy, check with your insurance company to see what your benefits include and ask about additional costs you would need to cover. Your doctor’s office should also be able to help you forecast expenses for the pregnancy that includes the different tests, ultrasounds and visits that the mother will need.

Next, use your health savings account (HSA) and flexible spending accounts (FSA) to your advantage to pay medical bills. Both accounts pull money from your paycheck pre-tax, which also provides a tax benefit for you. Don’t be afraid to ask about payment plans with the doctor’s office or hospital.

Preparing for the baby items

Babies require a lot of gear, diapers, food and clothing. There are several baby cost calculators that you can use to estimate your expenses. By using these tools, you can plug in different expenses and see a list of potential costs to help you budget. When it comes time to make your list of everything you need, try and spread out the purchases and watch for sales. Also, be sure that you do plenty of research and read reviews about products to ensure you’re making the right choice for you and your baby.

Use social media to your advantage. Search for parenting Facebook groups that you can join to buy gently used clothing or toys. Also, look for different discount codes through influencers so you can save money, but be mindful if you actually need the product the influencer is selling. Finally, talk with family and friends and see if there is anything you can borrower as babies quickly outgrow clothes, gear and toys.

Diapers could end up being one of your largest expenses and something you need to in put in your budget for years. The National Diaper Bank Network averages out that diapers will cost $70 to $80 per month. Research your local community options to find a diaper bank if diapers will place a financial burden on your family. You can also consider having friends and family throw you a diaper shower, where the guests bring diapers as gifts, to help you offset some of the cost.

Preparing for the daycare/childcare expenses

If you and your partner work, you will likely need to find safe, reliable care for your infant. The average cost of infant care in Missouri, where UMB is headquartered, is $10,041 a year. You can see the average cost for your state by visiting the Economic Policy Institute.

For some, a dependent care FSA might be offered by your employer. This account lets you put $5,000 a year toward daycare costs pre-tax, which lowers your taxable income. Then you can pay yourself back throughout the year. While this doesn’t cover the entire annual cost of care, it can still help.

This can be a daunting cost for many but lean on your banker to help you determine a budget for your family to ensure you can afford the care needed for your child.

Preparing for long-term savings for the child

While you discuss your new budget and financial changes with your banker, be sure to ask about long-term savings options for your child. Once your child is born, consider opening a 529 account to start saving for educational expenses like private school or college. Your bank could also offer a youth savings account for your child so you have a safe place to deposit money the child might receive on their birthday or holidays.

In addition, talk with a financial advisor about if stocks, bonds or CDs are a better option to save for your child’s future.

Preparing a baby-friendly space 

With all the new baby stuff that you will quickly accumulate, you might find that the walls are busting at the seams. Finding out you are expecting gives you several months to decide if you want to buy a new home, move to a different rental or stay where you are and make updates. Each of these decisions brings with it a different financial strategy:

• If you would like to buy a new home – talk with your banker about getting pre-qualified for a mortgage and learn how a monthly mortgage payment would fit in your budget.

• If you decide to rent – talk with your banker about how your current rent – or new rent if you move – would fit in your monthly budget.

• If you decide to stay in a house you own and want to make improvements – discuss if a home equity line of credit is a good fit for start making home improvements.

Finally, you might need a larger car to accommodate the new member of your family. Your banker can walk you through how much you can afford and if an auto loan is the right fit for your family. If you decide to buy a new car, don’t forget to ask about insurance, repairs and gas mileage so you can estimate costs over the car’s lifetime.

Preparing your documents 

Finally, with the responsibility of a child comes the need to ensure you have your wishes stated in a will or trust. In a worst-case scenario situation, your loved ones will have less stress if your documents are prepared, and your preferences are clearly stated.

Becoming a parent is a huge life event. As you prepare to grow your family, work with your banker on a full financial review so you can forecast expenses and build a plan that is personalized to you.


Author: Cody Sparks is director of retail banking at UMB Bank.